In a survey of nearly 3,000 executives concerning the success of their enterprise transformation efforts, McKinsey discovered the failure rate to be higher than 60%, while Harvard Business Review conducted a study that suggested more than 70% of transformation efforts fail. Regardless of which research source you cite, the pattern is clear — failure is a more likely destination than success, and winging it is the surest and fastest highway to get there. Leaders who are wary of the ever-present risk of failure will often devote countless resources to planning out the perfect change management initiative. However, a leader who does not seek to transform herself as well as her organization cannot succeed. True transformation happens simultaneously across three dimensions: it occurs within individual leaders, between leaders and the units at critical seams in the organization, and among all components of the organization. Directing transformation on all three domains at the same time can certainly feel like performing a high-wire act without a net. But it doesn’t have to. By adopting a three-dimensional framework — within, between, and among — leaders can integrate transformation into the DNA of their organization.
Transformation Within
Few leaders would disagree that transformation within — change that occurs on a personal, individual level — is the building block of any successful change effort. Unfortunately, too many leaders want transformation to happen everywhere but within themselves, at unrealistic speeds, and with minimal effort. This reflects an endemic lack of self-awareness across leadership culture, and the costs are significant. One study found that, when it comes to decision-making, coordination, and conflict management, teams that have a low degree of self-awareness are less than half as effective as teams that are highly self-aware. Manfred Kets de Vries says in his book, The Leader on the Couch, “organizations the world over are full of people who are unable to recognize repetitive behavior patterns that have become dysfunctional. They’re stuck in a vicious, self-destructive circle and don’t even know it — much less how to escape.”
One behavior that keeps us locked into this cycle is called “transference,” which happens when we transfer our personal fears and self-doubt onto someone else. In moments of transference, a leader’s behavior is shaped and motivated more by their past experience than what is happening in the present. Transformation within requires you to break the cycle by moving beyond transference and engaging in serious self-reflection. Develop your sense of self-awareness — go to uncomfortable places and seek out raw, honest feedback. The better you understand yourself and your relationship to change, the better equipped you’ll be to foster real change in others. One client of ours realized early in the process of leading the turnaround of a flailing division that her tendency toward perfectionism was actually making performance worse and weakening confidence in the future. She was so afraid of failing to turn around the division that she was making it worse. She needed to let go of unrealistic expectations in order to lead others’ to stronger performance.
Transformation Between
Transformation within a leader must inevitably be lived out in the context of other relationships. Therefore, there must also be transformation happening between leaders and between units of the organization. Every leader has a set of stakeholders with whom they must interact to achieve success in their particular part of the organization. These are the most critical relationships to invest in within your organization because these colleagues — be they peers, direct reports, or bosses — are the make-or-break relationships vital to your success.
Borders are especially risky to cross in many organizations. Whether geographic, hierarchical, functional, or cultural, blending the worlds that meet at organizational seams is often ill fated. There are the classics. Supply Chain needs better forecasting from Sales, and Manufacturing doesn’t have capacity to deliver the product plans Supply Chain created. In each situation we find well-intentioned people with conflicting views of the world. This leads to a lack of trust, which in turn leads to conflict. And while conflict can sometimes be a source of productive tension, it more often manifests itself in ways that damage the bottom line. According a 2008 CPP Inc study, U.S. employees spend an average of 2.8 hours per week dealing with conflict at the workplace — a figure that translates to $359 billion in paid hours per year.
I recently saw the consequences of a breach in trust on change management firsthand. A client had been tasked with reducing costs across his company’s Asian supply chain. While his words to the leaders of teams across Asia were reassuring, he failed to demonstrate any real support through substantive action — in fact, he never even traveled to meet the other leaders in their home countries. For their part, leaders of the Asian supply chain felt used and betrayed. By failing to recognize that successful change happens between leaders, this executive created discord amongst the supply chain, nearly derailed the entire strategy, and was ultimately asked to step down from this initiative.
Transformation Among
The key to systemic transformation is to see all of the components of an organization — the individuals, the relationships, and the components— as one system. Far too frequently, leaders see the system as a “checklist” of parts to be worked on in serial fashion. Fix the processes. Then move onto the organization structure. Train the leaders. Reward and retain high performers. Get China back on track. Open the new plant in Mexico and mothball the plant in Iowa. Each is treated as an unrelated “thing to do.” The frequency with which multiple, major, transformative initiatives are launched absent any sense of how they integrate with one another is staggering.
One of the most damaging forces in an enterprise is a massive portfolio of diverse strategic initiatives whose size and scope dwarf the organization’s actual capacity. The culprit is often a CEO that refuses to say no and therefore ends up drowning the team in work they can’t handle. We hear it all the time from exasperated middle management — don’t the execs realize we’re up to our necks already? Every day it’s something new. We don’t even have time to do what we were hired to do!
It’s no wonder then that so many change initiatives fail. Systemic transformation can’t happen piecemeal; it must happen among disparate and seemingly unrelated components of a system, bringing them together toward a common end. Creating healthy cohesion across an enterprise is a necessary art executives must come to master. To bring them together, you must understand your organization as an interdependent ecosystem, one in which everything is connected in ways that are both obvious and invisible. By adopting the ecosystem framework, you can develop change initiatives that operate among the various gears of the organization. Focusing your efforts on the connections that make your company a cohesive unit will help bring about true change from the ground up.
Putting the Three Domains into Practice
If you begin with the understanding that every change endeavor has within, between, and among components to it, you can begin to identify what those are from the outset of your initiative. At each step of the change process, identify each key stakeholders need for transformation within, the key relationships among stakeholders that will require transformation between, and the key components of the broad organization that will require transformation among. Even this simple diagnostic step could yield tremendous value as you bring into view the multiple intersecting change requirements on all three domains.
As you begin to see the world through these three lenses, your understanding of change will fundamentally shift. Remember, your ability to affect change across the organization directly depends on your level of self-awareness. Reflection is an active process — take notes, spot trends, course correct, solicit feedback from others, and keep account of the impact your behavior has on others and how closely your actions are matching your intentions.
When it comes to effecting profitable change within your organization, the odds are not favorable. Leaders can’t afford to succeed in only one or two dimensions. It requires discipline and focus, but investing in your capacity to simultaneously engage in all three dimensions of transformation will yield tremendous benefits far into the future.
To read more about the three domains of transformation, download and read our free e-book, “Leading Transformation in Organizations” HERE.