McKinsey’s Report on Transformation Misses The Point

I was excited to find the latest update from McKinsey on their much quoted Transformation survey How To Beat The Transformation Odds. Somehow I had missed it last year when it was released (I was busy on a transformation project). I was looking for more up to date references and comparison for our own survey of change programs. The authors define transformation as:

“… large-scale efforts to achieve substantial, sustainable changes in performance, enabled by long-term shifts in the mind-sets, behaviors, and capabilities of employees.”

On the surface, this seems fair enough.

There Is Good Stuff In This Report

The report itself is full of great factoids:

“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. …
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.”

So that’s a home run for communicating openly about change. What a surprise! Yet we still find plenty of organizations that think they can beat the odds. In a recent engagement I found myself pointing out to the senior executives that it was strange how they didn’t feel comfortable about coming clean on the 30-40% planned downsizing, yet their competitors were addressing those sorts of issues head on.

It’s All About Leadership

“… leadership matters … 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. 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.”

Let’s turn that around. The majority of leaders don’t walk the talk with a visible time investment. So perhaps they shouldn’t be surprised with the alleged failure rate. McKinsey also point out that:

“… senior leaders are also 2.5 times as likely as other employees to rate their companies’ transformations a success.”

Hmmnn – that one did surprise me a little. One wonders whether that is due to the rose tinted glasses that the functional hierarchy apply to executive feedback. But the real bombshell was:

“… for transformations to truly succeed, companies must think about the role that employees play as well as their people needs across the organization.”

Now that’s starting to sound more like it. Companies need to think about the role that employees play. Huh – who would have thought that changing people would actually involve thinking about their needs? Wow. I guess that’s what you pay the big bucks for. Clarity of thought and insights like that.

My Big Caveat

I suppose my primary issue with the report is that it treats transformation as an exercise in “tell-sell” with the primary focus on lean efficiency. And that's my big issue; it comes across as very internally focused. The survey makes an assumption that transformation is about “doing things right” rather than “doing the right things.” And when you look through the report, you find the word “customer” used just once in the body of the report, and even then it flips it into the efficiency side of the equation.

“… deliver value more efficiently to customers …”

So that’s efficiency for the organisation rather than value as perceived by customers. The only other use of the C word was in the definition of one of the 24 actions of transformation:

“Everyone is actively engaged in identifying errors before they reach customers.”

Let’s be honest, that’s also about doing things right again; rather than challenging the role of the existing functions or the shape of the services/products offered, it’s about ensuring the quality of whatever you do today.

The real challenge for this report, and the survey itself, is that the research deftly avoids considering how to rethink or reinvent how value is designed and delivered. I would have thought was a key ingredient for true transformation.