Why do most transformations fail to deliver the value that organizations expect? And what should CEOs do when a transformation goes off track? These questions have confounded companies the world over for decades. In 2021, the University of Oxford’s Saïd Business School and EY (EYGS LLP) formed a long-term research collaboration to find out why.
We began with the hypothesis that the human factor is the secret to success in transformation programs. Our research has brought this to life. The heart of a successful transformation is an environment in which people thrive: an environment in which they can do the work needed to deliver the transformation; an environment of experimentation and learning.
Our 2022 research report identified six factors that help create this environment. Organizations that excel in addressing these six factors increase the likelihood of a successful transformation 2.6-fold – from 28% to 73%.
The CEO Imperative Series provides critical answers and actions to help leaders reframe the future of their organizations. Chief among the constant questions we faced when we talked with C-suite executives and board members about our initial research were: What do I do when things go wrong? How can I detect the problem earlier? Some CEOs with extensive transformation experience even asked: How can I use these pivotal moments to my advantage? This is the focus of phase two of our research.
Almost every transformation (96%) has at least one moment of truth, when the program goes off course and leaders intervene. We call these crucial moments “turning points.” How CEOs plan for them and respond to them can make or break the entire transformation.
Successful transformation programs are built to anticipate and navigate turning points. Through our research, we have found that they deliver multiple benefits, including:
- Accelerating momentum as people across the transformation work together to solve challenges
- Dramatically improving the chance to exceed outcome measures
- Developing greater capability and setting the organization up for future transformations
All too often, however, turning points are poorly addressed. Leaders may panic and drive a flurry of uncoordinated action that causes chaos and stalls the program. Alternatively, they react too late, convening a small leadership group that imposes solutions on the wider program that tend to focus on the symptoms rather than the cause. Both reactions aggravate the situation, diminishing workers’ emotional well-being and performance, and greatly decreasing the chances that the transformation will succeed. This highlights a paradox whereby embracing tensions or issues can accelerate and amplify the impact of transformation programs.
There are a couple of deeply human reasons addressing turning points is more complex than we would like:
CEOs often subconsciously pressure the program to “get to green”
Humans have a deeply embedded aversion to “failure” – and the psychological damage that it causes. Furthermore, leaders are often achievement-oriented drivers1 – people who strive for success and are constantly driving for results. Perhaps subconsciously, the fear of failure, and their achievement orientation, often means that CEOs are signaling that the program needs to be progressing faultlessly – that they want to be presented with green dashboards, even if the underlying issues are trending red.
CEOs believe that people feel safer to speak up than they do
Senior leaders often inadvertently signal their team to be quiet. Research2 shows that senior leaders and their teams diverge widely on whether it’s safe for team members to speak up. CEOs base their belief on how safe they feel expressing their views. Teams on the other side of the power dynamic don’t share that optimism. They feel their voices are heard less. The most recent EY Workforce Reimagined Survey supports the divergent perceptions of trust. Where 81% of leaders say that employees feel trusted and empowered by their leaders, only 64% of employees feel the same way. CEOs should start by assuming their teams don’t feel safe speaking up – and then find authentic ways to hear their voice and how they are feeling.