Keys to Successful Business Transformation: McKinsey interview

In a recent CEO Newsletter, McKinsey published an interview that shows business transformation is more than a one-off.

Many companies turn to transformation because their leaders seek to capture untapped potential or realise growth or efficiency gains. Yet transformations take work to get right. McKinsey research shows less than a third of transformations reach their goals to improve organisational performance and sustain these improvements over time. We analysed the transcript of a podcast interview with two transformation experts, exploring how Change Leaders can beat those odds and sustain a holistic business transformation over the long term.

Roman Regelman was most recently the senior executive vice president and global head of securities services and digital at BNY Mellon, and Kevin Carmody is a senior partner in McKinsey’s Transformation Practice.

We found from their interview that to be successful it needs commitment from all levels of change leadership across a business, as it's a collaborative change journey. It can't be a one-off effort, and if a significant project has been on hold for a while, it may need a relaunch to re-energise people. Successful transformations set their sights beyond next year's financial targets, instead thinking five, 10 or 20 years into the future. They focus on the benefits for the teams that work there, plus external shareholders and stakeholders.

While some transformations may fail to deliver on time or realise the benefits, the ones that do have a targeted approach and get the right people onboard. One transformation that has worked, according to the McKinsey interview linked at the end, was the 240-year-old US bank BNYMellon. The story "Driving long-term business transformation, by Kevin Carmody, offers inspiration and insights. Here are a few tips I've gleaned as a Change Architect, Facilitator and Coach.

And a key factor for success from the interview - the people side of change:

Can transformation also be fun, in addition to hard work?

"Yes, it needs to be fun. And exciting. People just need to be inspired. Otherwise, the transformation will lose steam.

Metrics and employee satisfaction need to be measurable, just like cost and revenue, and customer satisfaction. But it also needs to be something that brings people to work and which people can rally around. You must go hard on metrics and culture."

To your success!

Take a Holistic Approach:

Definition: Transformation is more than incremental improvements; it involves bold, comprehensive changes across the entire enterprise.

Scope: It integrates cost optimisation, growth initiatives, and people investments, aligning strategy with performance objectives.

Continuous Journey:

Ongoing Process: Transformation is not a one-time project but a continuous journey that redefines operating models and culture.

Sustained Change:

Organisations must adapt to ongoing innovation and evolving industry demands, creating a lasting culture of agility and continuous improvement.

Leadership and Commitment:

CEO and Executive Team: Successful transformations are CEO-led with full commitment from the executive team. They must be prepared to inspire and mobilise the entire organization, even when challenges arise.

Alignment and Capacity:

Ensuring alignment at the top and capacity within the organisation is critical before embarking on transformation.

Engagement and Empowerment:

Broad Involvement: Engaging a wide array of employees is essential to avoid burnout and build a sense of ownership across the organization.

Inspiration: Inspiring employees and giving them decision-making authority fosters an owner's mindset, which translates into better performance and commitment.

Emotional Intelligence and Interpersonal Skills:

Evolving Roles: With the rise of AI handling technical tasks, interpersonal skills and emotional intelligence are becoming increasingly valuable for leaders.

Workforce Motivation: Transformations rely on emotionally intelligent leaders who can effectively motivate and engage their teams.

Cultural Integration:

Winning Hearts and Minds: Transformations must capture the hearts and minds of employees, integrating new behaviours and decision-making processes into the company’s fabric.

Balance of Metrics and Culture: A successful transformation balances hard metrics with cultural changes, making work inspiring and fun for employees.

Digital Transformation as a Component:

Integrated Digital Strategy: Digital transformation should be part of the overall business transformation, not an isolated initiative. It fuels efficiency, better client experiences, and reduced risk.

Holistic Digitisation: Rather than creating separate digital labs or parallel organizations, integrating digital changes into existing processes ensures a more profound impact.

Challenges and Realities:

Preparedness for Transformation: Not all companies are ready for transformation. Signs of unpreparedness include a lack of executive commitment or organisational capacity.

Realistic Expectations: Recognising that transformations are complex and require time helps manage expectations. Small early wins can build momentum and support broader changes.

Incentives and Recognition:

Aligned Incentives: Financial and non-financial incentives must align with transformation goals. Employees should feel recognized and valued beyond just financial rewards.

Comprehensive Rewards: Work environment, learning opportunities, and meaningful recognition contribute to sustaining employee motivation.

Monitoring Progress:

Signals and Red Flags: CEOs need candid feedback and should be aware of subtle signs indicating that the transformation might be off track.

Collaborative Efforts: Ensuring cross-collaboration and a united executive front is crucial for addressing emerging challenges and maintaining transformation momentum.

Key takeaways from the interview for success:

In closing here's an inspirational quote on how leaders need to monitor change efforts through a dashboard or ongoing, to ensure success.

Sean Brown: How can the CEO or leader of the transformation get the best sense of the state of their transformation and if it is starting to go off the rails? What are the subtle signs or red flags that something’s not working?

Kevin Carmody: When we talk to CEOs about the signals that things are going off the rails, many times they’re not getting a candid point of view from their executive teams. Sometimes it’s because their people don’t see a problem that has arisen yet, or they do and for whatever reason they don’t bring it up. In other cases, they’ll say their executive teams are not working across the horizontal axis and failing to cross-collaborate. The biggest stories of inspiration that we’ve seen are where executives find a common bond to solve a difficult problem, as opposed to focusing on their business unit at the expense of the other and keeping score.

By following these keys, companies can navigate the complexities of transformation, ensuring they build resilient, adaptable organisations capable of thriving in the long term.

For more information on what it takes to get transformation right, setting a company up to operate better today and handle disruption and change tomorrow with energised, creative employees, here's the original link:

How Roman Regelman and BNY Mellon are driving long-term business transformation | McKinsey