A Leader’s Guide to “Always-On” Transformation

A Leader’s Guide to “Always-On” Transformation

          
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A Leader’s Guide to “Always-On” Transformation

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    Implications for Leadership

    There are many things that company leaders must do in any transformation, including defining the ambition; energizing the organization; and preparing, launching, and driving the transformation. (For more on how incoming leaders at organizations should handle transformation, see The New CEO’s Guide to Transformation: Turning Ambition into Sustainable Results, BCG Focus, May 2015.) In the era of always-on transformation, there are two additional critical success factors for leaders: applying a leadership approach that is both directive and inclusive, and charting the optimal path for ingraining the six imperatives described above.

    Apply directive and inclusive leadership. As noted earlier, one of the inherent challenges of transformations is that they often take place under intense pressure to achieve rapid results. Under these conditions, leaders cannot afford to be hands-off after they set a broad vision; they cannot delegate the execution and stand back to wait for results. To deliver a fundamental change in performance at an accelerated pace, leaders not only need to define and articulate the vision but also must clearly articulate strategic priorities, set the transformation ambition and milestones, and hold employees accountable for results through regular checkpoints. Still, while strong directive leadership is necessary, in the era of always-on transformation it is not sufficient—because it fails to provide the motivation required for sustained performance and the new ways of thinking needed to develop fundamentally better ways of working. Instead, leaders need to develop a more balanced, “transformational leadership” approach that is both directive and inclusive. (See Exhibit 4.)

    exhibit

    Inclusive leaders involve employees early in the process—well before implementation—and make clear how their contributions help fulfill the larger purpose and objectives of the transformation. By taking these steps, the company’s leadership is able to secure a more authentic commitment from employees. Inclusive leaders also mobilize and empower teams by giving them some freedom, within a prescribed framework, to define and implement specific initiatives in the transformation. And they solicit honest feedback and take it into account in modifying the transformation in light of issues that have come up during implementation.

    Transformational leadership that is both directive and inclusive clearly raises the bar for executives. It requires an investment in time, energy, and management focus when demands on leaders are, typically, already very high. The bandwidth required to lead in this way is often one of the biggest constraints in a transformation. However, in our experience, making the needed investment of time, energy, and management focus pays off through more efficient and effective execution and more sustainable results. Over time, as the transformation takes hold, leaders can shift to a more delegating style. (For an example of how leaders can steer a company through multiple transformations, see the sidebar “A Global Consumer Company Prepares for the Era of Always-On Transformation.”)

    A GLOBAL CONSUMER COMPANY PREPARES FOR THE ERA OF ALWAYS-ON TRANSFORMATION

    For more than a decade, a leading global consumer company has delivered double-digit revenue growth and strong profitability. To achieve this performance, the company has successfully implemented multiple transformations aimed at improving its innovation capabilities, developing world-class manufacturing operations, expanding into emerging markets, and reshaping its leadership model.

    To support these initiatives, the company has adopted, and directly benefited from, several of the six imperatives discussed in this report. It has an explicit purpose—and the leadership team has taken steps to ensure that transformation programs are tightly linked to that purpose and that employees understand how their actions contribute to achieving that purpose. It also has a learning mind-set and strong cross-functional collaboration, which are wired into the organization’s processes and culture (and monitored through key performance indicators).

    In addition, the company is taking steps to improve in several other important areas. Specifically, the leadership team has realized that setting the right pace and sequence of activities is critical to sustaining employees’ energy across multiple transformations, and it has prioritized among the programs currently under way. It also recently assessed its capability gaps and launched a program to build the pivotal capabilities required to continue to grow while adapting to market dynamics. Recognizing the importance of change management, it has set up a transformation office led by a senior executive who holds responsibility for overseeing and integrating the various transformation initiatives and for building organization capabilities.

    In addition, the company is elevating, and reshaping, the role of HR into a strategic transformation partner—including appointing a senior executive to lead the function and redesigning the HR operating model to better support the company’s transformation agenda. For its part, the leadership team has truly embraced its new transformational style and role—setting clear direction while being highly inclusive (rather than simply telling employees to “get with the program.”)

    Through all of these actions, the company is taking deliberate steps to compete in a highly dynamic market, in which success comes not from any single transformation but from the ability to launch and implement multiple transformations over time.

    Ingrain the six imperatives. In addition to applying the right style of leadership, leaders also have to chart the best path for ingraining the six imperatives into the company’s organization and culture. While all six are important, management teams and organizations may not have the capacity to incorporate them all at once. Some will be more critical to a company’s unique situation and to the types of transformation it is undergoing. For example, a company that already has a well-defined and articulated purpose need not spend time developing and communicating it but can move quickly to ensuring that the organization understands how the transformation links to it. Similarly, the pivotal capabilities required by a company that is launching a major operational improvement effort will be different from the capabilities needed by a company that is rolling out a digital initiative. A deliberate approach to prioritization and pace—as well as a thoughtful assessment of internal leadership and organizational bandwidth—will help leaders reach the best outcome.




    The days of short-term, one-off transformations are ending. In this extremely dynamic business environment, we have reached the era of always-on transformation. The old approach—that is, top-down orders to employees, with enough oversight to hit short-term targets and declare victory—is no longer a viable option. Instead, companies need to launch near-continuous transformations across business units and functions.

    Companies that integrate the six imperatives and adopt the HR and leadership roles outlined in this report should be well positioned to gain sustainable improvements in performance from individual transformations and to ingrain the ability to transform repeatedly over time. Doing so is a significant challenge, but companies have little choice. They can cling to the old ways and become less relevant, or they can embrace a new approach that will enable them not just to survive but to thrive in the era of always-on transformation.