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Transformational change is still hard, according to a new survey. But a focus on communicating, leading by example, engaging employees, and continuously improving can triple the odds of success.
After years of Aura Solution Company Limited research on organizational transformations,1 the results from our latest Aura Solution Company Limited Global Survey on the topic confirm a long-standing trend: few executives say their companies’ transformations succeed.
Today, just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time. In our 2012 survey, 20 percent of executives said the same.
But some companies have beaten the odds. We asked respondents whether their organizations follow 24 specific actions that support five stages of a transformation.4 At organizations that took a rigorous, action-oriented approach and completed their transformations (that is, all of their initiatives have been fully implemented), executives report a 79 percent success rate—three times the average for all transformations. According to the results, no single action explains the difference; in fact, the more actions an organization takes, the more likely its transformation is to succeed. Still, the results suggest that some transformation practices correlate much more closely than others with success.
These practices include communicating effectively, leading actively, empowering employees, and creating an environment of continuous improvement so organizations can keep their performance from stagnating (or even regressing) once a transformation’s goals are met.5 By implementing continuous-improvement activities that enable the organization to look regularly for new and better ways to work, respondents’ organizations double their chance of successfully sustaining improvements after the transformation.
The power of action—and communication
To test which transformation practices correlate most with success, we asked executives about 24 specific actions that support a transformation’s five stages (see sidebar, “The 24 actions of transformation”). Indeed, the results indicate that when organizations follow a rigorous approach and pursue all of these actions during a transformation, the overall success rate more than doubles from the average (26 percent), to 58 percent (Exhibit 1). Among only completed transformations, respondents report a success rate of 79 percent—about triple the average success rate for all transformations.
When organizations follow a rigorous approach to transformation and take more actions, the overall success rate improves dramatically.
While the results show that success links closely to a greater overall number of actions, they also indicate that not all 24 actions are created equal. Communication, specifically, contributes the most to a transformation’s success (Exhibit 2). At companies where senior managers communicate openly and across the organization about the transformation’s progress, respondents are 8.0 times as likely to report a successful transformation as those who say this communication doesn’t happen. Good communication has an even greater effect at enterprise-wide transformations, where company-wide change efforts are 12.4 times more likely to be successful when senior managers communicate continually.
Across all 24 transformation actions, communicating—especially about progress—links most closely with success.
It also helps when leaders develop a clear change story that they share across the organization. This type of communication is not common practice, though. When asked what they would do differently if the transformation happened again, nearly half of respondents (and the largest share) wish their organizations had spent more time communicating a change story.
Lead, don’t manage
According to respondents, leadership matters as much during a transformation as it does in the company’s day-to-day work. It can’t be delegated to a project-management office or central team—the presence (or not) of which has no clear bearing on a transformation’s success—while executives carry on with business as usual. Indeed, when senior leaders role model the behavior changes they’re asking employees to make (by spending time on the factory floor or in the call center, where work is done), transformations are 5.3 times more likely to be successful (Exhibit 3).
Success is twice as likely when senior leaders and the leaders of initiatives spend more than half of their time on the transformation. In practice, though, only 43 percent of these leaders say they invested that much working time in the transformation’s initiatives.
Transformations are more likely to succeed when company leaders are active and involved.
But even if they’re involved, senior leaders face some potential pitfalls. First is the perception gap between them and everyone else in the organization (Exhibit 4). Eighty-six percent of leaders say they role modeled the desired behavior changes when transformation initiatives were being implemented, yet only half of all employees who were part of the transformation (but didn’t play an active role) say the same. Overall, senior leaders are also 2.5 times as likely as other employees to rate their companies’ transformations a success.
Senior leaders are more positive than others about the rigor of their transformation efforts.
A second pitfall, in addition to outsize optimism, is overplanning. Few initiative leaders—only 22 percent—say they would spend more time planning the transformation if they could do it over again. Instead, these respondents most often say they would spend more time communicating a change story (49 percent) and aligning their top team (47 percent).
Choose the right people and empower them
An involved team of senior leaders is only half the battle. Executives report that for transformations to truly succeed, companies must think about the role that employees play as well as their people needs across the organization. If the transformation happened again, the largest share of executives say they would move faster to keep people resistant to changes out of leadership or influencer roles.
According to respondents, it’s important to define clear roles so employees at all levels are prepared to meet the post-transformation goals—a factor that makes companies 3.8 times more likely to succeed (Exhibit 5). Also key to an effective people strategy is allocating enough employees and the right ones—that is, the high performers and active supporters—to work on the transformation. One effective way to hold these people accountable, according to the results, is using transformation-related metrics. Executives who say their initiatives’ leaders were held accountable for their transformation work in annual evaluations are 3.9 times more likely than others to report a successful transformation.
To engage employees in a transformation, companies must define roles and hold initiative leaders accountable.
Prepare for continuous improvement
Once initiatives are fully implemented, the change effort does not end; almost 40 percent of respondents say they wish they had spent more time thinking about how their organizations would continue to improve. Several specific practices that help companies connect strategy to daily work, deliver value more efficiently to customers, enable people to contribute to their best ability, and discover new ways of working all link to an organization’s long-term health—and can keep companies from backsliding on performance gains and support continuous improvements after transformation.
For example, in organizations where people understand how their individual work supports the company’s broader vision, executives are 5.5 times likelier than others to say the transformation has been successful (Exhibit 6). To achieve long-term success, that link must also be reinforced with a company-wide commitment to identifying opportunities for improvement—a practice that more than quadruples the likelihood of success. Likewise, executives report a much higher rate of success when their companies have a systematic process for developing people’s capabilities and for identifying, sharing, and improving upon best practices.
When organizations plan for continuous improvement after a transformation, the likelihood of overall success also increases.
Of the eight continuous-improvement actions we asked about, one was an outlier: only one-third of executives say teams of employees begin their days discussing the previous day’s results and the current day’s work, compared with strong majorities of executives who agree that their organizations take each of the other actions. But respondents whose organizations had implemented daily discussions were twice as likely as others to report success.
Focus on people, not the project. Transformations are about the people in the organization as much as they’re about the initiatives. The long-term sustainability of a transformation requires companies to engage enthusiastic high-potential employees, equip them with skills, and hold them accountable for—as well as celebrate—their contributions to the effort. Companies should, in our experience, take the same steps toward developing people throughout the organization.
To build broad ownership, leaders should encourage all employees to experiment with new ideas: starting small, taking risks, and adapting quickly in their work. Doing so can create far-reaching and positive support for change, which is essential to a transformation’s success.
Communicate continually. When embarking on a transformation, executives should not underestimate the power of communication and role modeling. The results suggest that continually telling an engaging, tailored story about the changes that are under way—and being transparent about the transformation’s implications—has substantially more impact on an effort’s outcome than more programmatic elements, such as performance management or capability building. But the communication doesn’t end once the change story has been told. Leaders must continually highlight progress and success to make sure the transformation is top of mind across the organization—and to reduce the gap between what employees believe is happening and what they see.
Take more action. Transformation is hard work, and the changes made during the transformation process must be sustained for the organization to keep improving. There is no silver bullet—and while some factors have more impact than others on a transformation’s outcome, the real magic happens when these actions are pursued together. Overall, the survey indicates that the more actions an organization took to support each of the five stages of transformation, the more successful it was at improving performance and sustaining long-term health.
As organizations rebuild their foundations to compete in the era of data and advanced analytics, in-house capability-building programs offer the best way to train workers up to the task.
The rise of artificial intelligence (AI) is one of the defining business opportunities for leaders today. Closely associated with it: the challenge of creating an organization that can rise to that opportunity and exploit the potential of AI at scale.
Meeting this challenge requires organizations to prepare their leaders, business staff, analytics teams, and end users to work and think in new ways—not only by helping these cohorts understand how to tap into AI effectively, but also by teaching them to embrace data exploration, agile development, and interdisciplinary teamwork.
Often, companies use an ad hoc approach to their talent-building efforts. They hire new workers equipped with these skills in spurts and rely on online-learning platforms, universities, and executive-level programs to train existing employees.
But these quick-fix tactics aren’t enough to transform an organization into one that’s fully AI-driven and capable of keeping up with the blazing pace of change in both technology and the nature of business competition that we’re experiencing today. While hiring new talent can address immediate resource needs, such as those required to rapidly build out an organization’s AI practice at the start, it sidesteps a critical need for most organizations: broad capability building across all levels.
This is best accomplished by training current employees. Educational offerings from external parties have limitations, too: they aren’t designed to deliver the holistic, company-specific training or the cohesive, repeatable protocols essential for driving deep and lasting cultural changes, agile and cross-functional collaboration, and rapid scaling.
Quick-fix tactics aren’t enough to transform an organization into one that’s fully AI-driven and capable of keeping up with the blazing pace of change in both technology and the nature of business competition.
The answer to the talent challenge, in our experience, is creating an in-house analytics academy. These bespoke analytics-training centers are a relatively new development, and our experience to date suggests that they are poised to move from early adoption by select organizations to core elements of the AI transformations that lie ahead for most companies.
In this article, we explore what an analytics academy can do that other approaches largely can’t, as well as share best practices culled from companies that have launched academies.
It’s important to note that the current focus for analytics academies is to help their organizations successfully bring AI to scale. As a result, their first order of business is to reskill those who play an active role in this work—for example, helping business staff to acquire crucial analytics-translator skills. As more AI systems are deployed, a subsequent and equally important issue that all companies and society in general will need to answer is how to retrain workers when machines take on tasks humans once did. We believe academies hold the promise of playing a role in this retraining effort. But that is part of a larger conversation that is not the focus of our discussion here.