Business transformations are designed to boost overall performance through increased revenue through better customer satisfaction, and lower operating costs through total factor productivity.
https://www.mckinsey.com/featured-insights/mckinsey-explainers/what-is-business-transformation
The CEO helps a transformation succeed by communicating its significance, modeling the desired changes, building a strong top team, and getting personally involved.
The chief transformation officer (CTO), a C-suite role is the high-level orchestrator of the transformation process. The CTO should be an extension of the CEO, with the mandate and authority to make decisions about personnel, investments, and operations. The CTO may be in charge of hundreds of initiatives related to the transformation, but responsibility for making day-to-day decisions and implementing those initiatives lies with line leaders, transformation managers, and others.
Transformations with at least 7 percent of employees owning part of the transformation are twice as likely to deliver better total shareholder returns. While 7 percent may seem like a small number, even at a medium-size organization that can mean hundreds of employees.
The most successful transformations turn ideas into specific projects with detailed business plans with trackable, time-bound metrics to measure outcomes. These pilot projects should result in value creation, cost savings, growth opportunities, and other improvements. Then they are embedded into regular commercial activities by scaling. As they succeed in the annual plan, they become part of the regular annual plans.
Many transformations are enabled by a central transformation office (TO), with the CTO at the helm. The TO models new ways of working, and ensures that the overall program and specific work streams stay on track. It also offers a repository for leaders to get help when faced with difficulties and to develop new skills.
TO helps to ensure that the organization changes the way it works over the long term, so that the company doesn’t revert to old ways as transformation initiatives are completed.
Three core actions are especially predictive of transformations that capture the most value:
Using an objective fact base to identify opportunities for improvement.
Communicating a compelling reason for why a transformation is necessary.
Utilizing the company’s best talent to its most crucial initiatives.
When it comes to widespread results, generous and specific financial incentives are one of the most effective tools to motivate employees. According to McKinsey analysis, companies that implemented financial incentives tied directly to transformation outcomes achieved almost a fivefold increase in total shareholder returns compared with companies without similar programs. In tandem, a well-crafted program of nonfinancial incentives is also required and can create a higher level of energy and excitement across the organization and boost employees’ discretionary efforts.
Several additional behaviors can put a transformation at risk:
Declaring victory too early.
Not establishing clarity on resources.
Failing to refine as they go.
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