Individuals, organizations change continuously, reacting to developments in their markets and to the arrival and departure of key people. In a large company, these changes go on more or less unnoticed. But sometimes a company must change more quickly than this gradual evolution allows; it needs a break with the past, an accelerated pace of change—a transformation.
Successful corporate transformations and their leaders become the stuff of business legend. Transformed companies have achieved unprecedented competitive power, a pride in everything they undertake, and outsized returns to shareholders. Rather oddly, it is the leaders of companies in crisis who may be best placed to achieve a true transformation. By contrast, most transformations undertaken in a non-crisis conditions end up failing: employees’ attitudes and behavior remain unchanged, ambitious targets slip downward, and the program is finally abandoned, leaving the company worse off than it was before.
Especially when things are going well, executives are justifiably reluctant to undertake transformation programs. They know that failure to act may condemn the company to slow decline and eventual collapse, but they also justifiably fear the uncertain outcome of a transformation process.
The leader of such a program faces a daunting challenge: nothing less than creating a new corporate reality that changes the way employees, customers, and investors perceive and experience the company will be viewed as success.
This future reality must be so clear and impressive that it seems not only better than today’s reality but also necessary, even inevitable but getting everyone in the organization to move across that threshold of initial experience is undoubtedly the hardest task facing a management team that leads a corporate transformation. We have observed many situations in which a top management group has discovered the causes of the present problems of a company and developed a convincing vision of its future. These leaders have captured that experience in a powerful transformation story but subsequently struggled to help employees, business partners, and customers discover the logic of the transformation for themselves. After all, the company’s leaders cannot know or experience anything on anyone else’s behalf.
Here the leaders face a contradiction. On the one hand, identity transitions must be highly personal, arising from real-life experience. On the other, the transformation won’t succeed unless the transition is carefully choreographed from the centre. Indeed, central leadership is essential to any transformation.
Only a few people in most organizations have the stamina, ambition, and ideas to develop and communicate an effective transformation story. Only central controls can prevent chaos. Ultimately, however, the transformation must proceed without central leadership. To acknowledge the need for a not-yet-existing reality is to make a conscious, free decision. Individuals must make this decision for themselves.
An individual employee forms a transformational outlook primarily as a result of personal experience, not as a result of communication slide deck.
The drama of each corporate transformation unfolds in a different way, and we would be the last people to prescribe a uniform script that must be followed in all cases. We are convinced, however, that success in corporate transformations is more than a matter of luck and that the art of leading them can be learned. In a turbulent competitive environment, this art may be the most important “core competence” of all….