Part I
In today’s business environment, companies cannot settle for incremental improvement; they must periodically undergo performance transformations to get, and stay, on top. But in the volumes of pages on how to go about implementing a transformation, surprisingly little addresses the role of one important person. What exactly should the CEO be doing, and how different is this role from that of the executive team or the initiative’s sponsors?
Based on a series of interviews we have conducted with nearly a dozen executives over the last couple of years — as well as our own experience working with companies — we believe there is no single model for success.
Moreover, the exact nature of the CEO’s role will be influenced by the magnitude, urgency, and nature of the transformation; the capabilities and failings of the organisation; and the personal style of the leader.
Despite these variations, our experience with scores of major transformation efforts, combined with research we have undertaken over the past decade, suggests that four key functions collectively define a successful role for the CEO in a transformation:
nMaking the transformation meaningful. People will go to extraordinary lengths for causes they believe in, and a powerful transformation story will create and reinforce their commitment. The ultimate impact of the story depends on the CEO’s willingness to make the transformation personal, to engage others openly, and to spotlight successes as they emerge.
nRole-modelling desired mind-sets and behaviour. Successful CEOs typically embark on their own personal transformation journey. Their actions encourage employees to support and practice the new types of behaviour.
nBuilding a strong and committed top team. To harness the transformative power of the top team, CEOs must make tough decisions about who has the ability and motivation to make the journey.
nRelentlessly pursuing impact. There is no substitute for CEOs rolling up their sleeves and getting personally involved when significant financial and symbolic value is at stake.
Everyone has a role to play in a performance transformation. The role of CEOs is unique in a way that they stand at the top of the pyramid and all the other members of the organisation take cues from them. CEOs who give only lip service to a transformation will find everyone else doing the same. Those who fail to model the desired mind-sets and behaviour or who opt out of vital initiatives risk seeing the transformation lose focus. Only the boss of all bosses can ensure that the right people spend the right amount of time driving the necessary changes.
Transformations require extraordinary energy: employees must fundamentally rethink and reshape the business while continuing to run it day to day. Where does this energy come from? A powerful transformation story helps employees believe in the effort by answering their big questions, which can range from how the transformation will affect the company down to how it will affect them. The story’s ultimate impact will depend on not just having compelling answers to these questions but also the CEO’s willingness and ability to make things personal, to engage others openly, and to spotlight successes as they emerge.
Personal approach
CEOs who take time to personalise the story of the transformation can unlock significantly more energy for it than those who dutifully present the PowerPoint slides that their working teams created for them. Personalising the story forces CEOs to consider and share with others the answers to such questions as “Why are we changing?”, “How will we get there?” and “How does this relate to me?”
Some leaders include experiences and anecdotes from their own lives to underline their determination and belief — and to demonstrate that obstacles can be overcome. Klaus Zumwinkel, the Chairman and CEO of Deutsche Post, talked about his passion for mountain climbing, linking the experience of that sport and the effort it requires to the company’s transformation journey.
Openly engage others
When a CEO’s version of the transformation story is clear, success comes from taking it to employees, encouraging debate about it, reinforcing it, and prompting people to infuse it with their own personal meaning. Most CEOs invest great effort in visibly and vocally presenting the transformation story. In “Leading change: An interview with the Executive Chairman of Telefónica de España,” Julio Linares says that, for him, the most important and hardest part of the transformation was “To convince people of the need for the programme.” N R Narayana Murthy, Chairman of the board and former Chief Executive of Infosys, agrees and says, “The first responsibility of a leader is to create mental energy among people so that they enthusiastically embrace the transformation.”
His view matches the experience of Banca Intesa’s Passera, who spearheaded communication efforts to get the story out to 60,000 employees by travelling the length and breadth of Italy. Passera says, “It is a long process, but you have to put your face in front of the people if you want them to follow you.”
Spotlight success
As the company’s transformation progresses, a powerful way to reinforce the story is to spotlight the successes. Sharing such stories helps crystallise the meaning of the transformation and gives people confidence that it will actually work. Mr Murthy of Infosys describes how high-performing teams were invited to make presentations to larger audiences drawn from across the company, “To show other people that we value such behaviour.”
Ravi Kant, the Managing Director of the integrated Indian auto business Tata Motors, deliberately identified people who would serve as examples to others. In “Leading change: An interview with the Managing Director of Tata Motors,” he talks about how he highlighted the achievements of one young man whose success on a risky project and subsequent promotion showed colleagues that talented and determined people can rise through the hierarchy.
Emphasising the positive, behavioural research shows, is especially important. In 1982, University of Wisconsin researchers who were conducting a study of the adult-learning process videotaped two bowling teams during several games.
The members of each team then studied their efforts on video to improve their skills. But the two videos had been edited differently. One team received a video showing only its mistakes; the other team’s video, by contrast, showed only the good performances.
After studying the videos, both teams improved their game, but the team that studied its successes improved its score twice as much as the one that studied its mistakes. Evidently, focusing on the errors can generate feelings of fatigue, blame, and resistance. Emphasising what works well and discussing how to get more out of those strengths taps into creativity, passion, and the desire to succeed.
Role-modelling
Whether leaders realise it or not, they seem to be in front of the cameras when they speak or act. “Every move you make, everything you say, is visible to all. Therefore the best approach is to lead by example,” advises Joseph M Tucci, CEO of EMC, the US-based information storage equipment business, in “Leading change: An interview with the CEO of EMC.” Ultimately, employees will weigh the actions of their CEO to determine whether they believe in the story.

Part II of this article will feature in next week's columns.

The writers Carolyn Aiken is a Consultant in McKinsey’s Toronto office and Scott Keller is a Principal in McKinsey’s
Chicago office.