Most chief executives, especially new ones, must fundamentally transform their enterprise at some time during their tenure. Boards are increasingly appointing CEOs with that explicit charter, and almost all CEOs recognize the need to take even successful enterprises to new levels of performance.
We recently talked with 11 chief executives who have successfully driven and sustained fundamental change. They run organizations headquartered in North America, Europe, Asia, and Australia and in fields ranging from manufacturing and finance to the Internet, consumer, retail, and nonprofit sectors.
“The first thing to realize is that there is not a magic formula. If there were,” says Archie Norman, the nonexecutive chairman of ITV and the leader of many successful corporate turnarounds, “we probably would not be having this conversation.”
Even though they lack a magic formula, the CEOs we spoke with have relied on many of the same leadership tools. In fact, the similarities across their approaches far outweighed the differences. In particular, almost all the leaders discussed the three core elements of transformation:
Winning in the Medium Term. Nearly all the interviewees fundamentally changed the business model in order to move their company to a substantially better place. In most instances, these leaders set and achieved enormously ambitious goals in as little as one to three years.
Funding the Journey. Even with ambitious goals and tight time frames, changing a business model takes time. The leaders we interviewed typically had to achieve quick wins and build credibility in order to address near-term pressures or invest in longer-term ambitions—or both. All leaders—even those who were unencumbered by an immediate crisis—needed to find and expend the political capital necessary to make the changes that are essential to the long-term success of an organization.
Building the Right Team, Organization, and Culture. This linked set of topics was the center of gravity among all the perspectives shared by the leaders. Even a grand vision and agenda will fall flat if an organization’s people lack a shared mindset and commitment. And it takes the right culture and talent to drive and sustain change.