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Recent EY and Oxford University research suggests that 85 percent of senior leaders have been involved in two or more significant transformations in the last five years alone. Approximately two-thirds said they had experienced at least one turbulent transformation during this time. That’s a remarkable number. And it takes on an entirely new meaning in today’s incredibly fast-paced market. The EY 2021 Global Board Risk Survey shows that 82 percent of board members and CEO’s say market disruptions have become more frequent and impactful, and companies have begun to transform more frequently to keep pace. Organizations are failing to deliver successful transformations even as the urgent need to transform picks up steam and becomes an ever-more critical business imperative.
So, what are the driving forces behind this need to transform?
Firstly, technology, particularly artificial intelligence, is evolving at a breakneck pace. According to Goldman Sachs, AI investment will reach $200 billion globally by 2025. Businesses need to transform to leverage these technologies to stay competitive. This includes adopting digital solutions, automating processes and harnessing data analytics for better decision-making. Linked to AI, the ability to collect, analyze and act on data is a significant source of competitive advantage. Transformation enables businesses to become more data-centric, improving strategic planning, customer insights and operational decisions.
Externally, on the consumer side of things, people today expect personalized, seamless and fast experiences. Businesses must transform to meet these external needs, often through digital transformation initiatives that enhance customer engagement and satisfaction. Furthermore, globalization and the digital economy have lowered entry barriers increasing competition. Also, market conditions can change rapidly due to economic shifts, regulatory changes or unexpected events like the COVID-19 pandemic, and war. Businesses must be innovative, agile and adaptable, which requires continuous transformation to respond effectively to external competition and market changes.
Internally, transformation often focuses on improving efficiency and reducing organizational costs. Businesses can enhance productivity and profitability by streamlining operations, adopting lean practices and utilizing automation. Furthermore, the nature of work is changing with the rise of remote work, the gig economy and the need for new skill sets. As many as 64 million Americans are freelancers or gig workers, according to a 2023 Upwork report. While this provides opportunity to access talent globally and flexibly in ways not previously possible, workforce productivity is increasingly a problem with remote work. New strategies to engage, performance manage and upskill workforces are needed.
Finally, stakeholders are increasingly pressured for businesses to operate sustainably and responsibly. Gartner‘s research finds that 85 percent of investors considered ESG factors in their investments in 2020, while 91 percent of banks monitor the ESG performance of investments. Transformational initiatives often include adopting sustainable practices, improving governance and ensuring social responsibility, which are critical for long-term success. Regulatory environments constantly evolve, with new laws and regulations affecting various industries. Businesses must transform their compliance processes to avoid legal issues and penalties, ensuring they operate within the legal framework.
Defining transformation is the starting point in any change journey.
Before taking-off on a significant change journey and setting up new capabilities to drive and orchestrate transformation, it’s important to define upfront what transformation means to your organization. In our experience, transformation is a profound, fundamental, often radical change in an organization’s mission, strategy, structures, systems and culture rather than incremental change and improvement.
In addition, defining transformation top-down helps determine the changing scope and forms the basis of what should be in the CEO’s purview. It delineates what is transformative instead of continuous improvement or business as usual. Without clearly articulating what transformation means, leaders focus on the wrong or too many things, risk losing focus, and potentially cause confusion.
When defining transformation for your organization, you must consider which areas to focus on. According to a report by EY report, transformation can be categorized by three specific focus areas, or pivots, that leading organizations consider:
- The scale of transformation: Transformation means significant changes. It’s about looking at the whole, not examining parts. Instead of incremental or minor improvements, it is about fundamentally changing the game via culture, process, system and (not ‘or’) technology advancements to create an inspiring vision for employees and drive significantly greater value for shareholders.
- The focus of transformation: Transformation doesn’t happen accidentally. Transformation must be deliberate, fast-paced and time-bound to deliver more significant, better measurable results. Transformation requires intensity, focus, collaboration, clear accountability and a strong purpose to create the momentum needed to drive and sustain changes to behaviors and outcomes.
- Nature of transformation: Transformation isn’t comfortable. It’s bold, inspirational and creative to generate exponential differences in how a company works. Transformation is about expecting significant changes right down into the organization’s DNA: how people work, what technology they use, what data they rely on and how they interact with each other every day.
The top 10 attributes of a successful CEO in transformational change.
In our minds, having the right kind of leader to fill the CEO role is essential to the success of the change and transformation that needs to happen. The CEO must pilot the transformation, closely liaise with the executive team, including the Chief Transformation Officer (CTO) and Board and ensure the organization thrives after the transformation. The CEO wields substantial organizational influence and can be a formidable tool for the Board.
As illustrated by the chart, at the outset, it’s essential to consider the degree of change needed in the organization because that will drive the type of CEO and broader executive, including CTO focus required to be successful, from small-scale improvements to fundamental restructuring.
Once the change needed and CEO focus is established it’s important to define the key attributes a CEO must possess to effectively lead transformational change. Through our experience, we have identified ten crucial attributes that a leader should emphasize, adjusting their prominence based on the desired outcomes. While excelling in all ten attributes might be a tall order, it is essential for the CEO to ensure that the right attributes are present within the transformation team. Some of these attributes will be inherent to the top individual, while others will need to be sourced as the team is assembled around the CEO:
1. Creates a strong and committed leadership team (Team Builder)
As described in the Harvard Business Review, the top people in an organization must be able to reimagine the company’s place in the world and transform the organization to live up to a more ambitious purpose. CEOs need to build this committed leadership team because such a team provides the unified direction, support and momentum essential for driving change throughout the company. A committed leadership team ensures that strategic goals are consistently communicated and reinforced at all levels, aligning efforts and resources toward the transformation objectives. Their dedication and collaboration foster a culture of accountability and resilience, enabling the organization to navigate challenges and complexities effectively. Moreover, a cohesive leadership team can better inspire and engage employees, creating a strong network of advocates and change agents.
2. Challenges the status quo (Agitator)
Willingly and sometimes publicly challenges entrenched thinking of leaders and employees resistant to change. It’s typical in organizations that need to change to have people stuck in old ways of doing things. Leaders designated as agitators pledge to understand organizational challenges and solve them. Once an underlying challenge is identified, the goal is to mobilize diverse parties to find solutions. Communication is critical in this role, as the agitator spends significant time listening and actioning change with stakeholders.
3. Brings new solutions to complex problems (Innovator)
Sometimes, the old ways of working do not work anymore in terms of delivering the service or product quality needed. The CEO must anticipate storms on the horizon and be prepared to outline multiple scenarios. Innovators need to ask if their proposed solutions address problems most effectively and efficiently. While narrow focuses can be beneficial, being realistic and open to feedback can result in more successful change leadership during transformation.
4. Values culture & people issues (Cultivator)
Longer term sustainable change and transformation requires culture change, and as we all know, culture ‘eats’ strategy for breakfast. A report by Spencer Stuart outlines how everyone has a role to play in building culture, but ultimately, the CEO must steer the way. The CEO needs to understand the organization’s culture and the impact of the culture on the pace of change. Affecting culture change and, therefore, transformation requires a slow, continuous push of values and behaviors.
5. Understands & leads change (Change Leader)
Steve Jobs once said, “The people who are crazy enough to think they can change the world are the ones who do.” Part of being able to lead change is being a strong ‘communicator,’ someone who can clearly articulate the burning platform for change (step 1 of driving change). The CEO needs to establish accountability across the organization quickly, define the necessary results from the culture change, develop and communicate the case for change and consistently ensure alignment across the leadership team.
6. Responds to feedback (Listener)
Upfront, the CEO should ask external customers or stakeholders what they think about the organization, both good and bad. By engaging with customers directly, according to a report in Harvard Business Review, a CEO can get a better idea of the company’s internal workings and the marketplace’s external dynamics. The CEO needs to be open, look for signs of past failure, and understand and fix what went wrong. Being open to feedback is vital; the CEO must ask for input and commit to responding to it.
7. Manages stakeholders (Orchestrator)
Orchestrators maintain change leadership’s role in achieving large-scale transformation and measurable results. Orchestrators are hands-on leaders who guide business stakeholders through every imaginable scenario, including short-term wins and unanticipated disruptions. Amid change, an agile leadership style best serves this role because most initiatives don’t progress as planned. Consistently keeping the power of vision alive can ensure an orchestrator stays on track. A critical component of the CEO’s skill set is masterfully navigating the various stakeholders. According to a report in Forbes, to effectively pilot a business, it’s important for leaders to keep their stakeholders informed on all relevant matters.
8. Makes transformation meaningful (Personalizer)
CEOs must make transformation meaningful and personal to drive success because it fosters a deeper connection and commitment among employees, enhancing engagement and motivation. When a transformation is presented as a personal endeavor, it resonates more profoundly with individuals, aligning their values and goals with the organization’s vision. This approach mitigates resistance to change and empowers employees to take ownership of the transformation process.
9. Role models desired behaviors and mindsets (Leader)
CEOs need to role model mindsets and behaviors during transformation to drive success because their actions set the standard and tone for the entire organization. When CEOs embody the change they wish to see, it signals their genuine commitment and provides a clear, tangible example for employees to follow. This alignment between words and actions builds trust, credibility and a sense of shared purpose, reducing resistance and encouraging a cohesive effort toward the transformation goals. By demonstrating the desired mindsets and behaviors, CEOs inspire and empower employees at all levels to adopt these changes, fostering a culture that supports and accelerates the transformation process.
10. Focuses on impact and results (Deliverer)
Finally, a CEO needs to relentlessly focus on landing transformational impact and results to be successful because this unwavering emphasis ensures that all efforts are aligned with the organization’s strategic objectives and measurable outcomes. A report by Investopedia claims that the CEO influences 45 percent of company performance. By prioritizing impact and results, the CEO drives a performance-oriented culture, motivating employees to stay focused and committed to the transformation goals. This relentless focus helps maintain smooth momentum, quickly address setbacks, and adapt strategies as needed, ensuring that resources are efficiently utilized and the transformation delivers real, sustainable improvements. Furthermore, it fosters a sense of urgency and purpose essential for overcoming inertia and achieving lasting change.
In summary, the CEO as the pilot is vital in navigating transformational change, because they set the strategic vision and direction, steer alignment across the organization while leveraging their authority to mobilize resources and overcome resistance. The CEO reads the instruments of market trends, adjusts the strategy and communicates clearly with the team to ensure everyone is aligned with the transformational plan.
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