Here is a brief excerpt from an article written by Claus Benkert and Nick van Dam for the McKinsey Quarterly, published by McKinsey & Company. Their thesis is that successful transformations demand new capabilities. To build them, experiential learning leverages the intimate link between knowledge and experience. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

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There is an intimate and necessary relation between the processes of actual experience and education. —John Dewey (Experience and Education, 1938)

Leading organizations in every walk of life have already had to cope with more change in this millennium than was seen in the entire second half of the previous century. Most global companies have undergone more than one technological and workforce reorganization in the past decade. Launching one change program after another, they have had to embrace automation and digitization, shared services, lean operations, and other transformative innovations. The prognosis for business planners: more transformative change. On the horizon, for example, is the full digitization of economies on a national scale, with big data, advanced analytics, and the “Internet of things”—where connectivity goes beyond company and consumer, to interactive smart products and services.

Efforts to keep pace have so far had mixed results, to say the least. McKinsey research reveals that two-thirds of business transformations do not adequately meet their objectives.1 Only one in ten companies actually sustains cost improvements beyond four years. Programs are sometimes mismatched with needs or poorly executed, but in most instances the broken link in the chain has been capabilities. Successful programs are by and large those that create needed capabilities. Transformational aspirations must be adequately supported by a skilled workforce, ready to achieve the change mission.

Capability building through experiential learning

Our 2014 research results indicate that capability building has become one of the top three priorities of executives around the world. How can these leaders best address the priority? To begin with, we know that in successful transformations, organizations identify relevant skill gaps and use needed resources to fill them. To sustain the improvement over time, new capabilities have to become the new norm, so learning and development must take place throughout the organization.

Organizations make significant investments in learning and development, but too little of it actually results in behavioral change in the workplace. Like change programs, learning and development efforts can fall short of their objectives for a number of reasons, often in combination. The basis of the effort could have been misconceived: key capabilities may have been overlooked or the skills learned may have few on-the-job applications. Participants may not be sufficiently informed of why the new skills are needed; the learning experience may be overly abstract and unconnected to the actual tasks it is meant to serve. The effort, furthermore, may not recognize the importance of personal motivation or foster a new mind-set.

Cognitive scientists and educational philosophers have long grappled with the concepts inherent in these issues, as they sought to discover how people learn. In the 20th century, insightful educators such as John Dewey and Jean Piaget closely explored a concept known even to the Greeks — that knowledge and experience are intimately linked. They came to recognize that approaches to education must respect this connection and in their writings especially emphasized the importance of experience-based learning.

In the workplace, experiential learning has a long tradition, having proved itself over time to be the most effective means to acquire skills. It is an essential component in the functioning of society and in economic well-being — as the ubiquity of internships, apprenticeship programs, and on-the-job training shows. When it comes to the systematic acquisition of the knowledge and skills needed to support business transformations, success depends on a combination of intellectual comprehension and hands-on experience. In modern corporate settings, effective capability builders rely on dedicated experiential-learning programs to achieve the results they need. Our latest research shows, however, that too many companies struggle with capability challenges while leaving the path of experiential learning unexplored.

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Experiential learning to build capabilities is one of the most important elements of a successful company transformation. Our experience has taught us that to ensure success in any industry or functional area, leaders must put a few things in place: resources sufficient to gain momentum and achieve rapid progress, clearly defined pivotal roles and responsibilities, and fully engaged employees and leaders. Employees need to be drawn in with clear and open lines of communication. Leaders must take an active role in designing the changes and modeling results in their own conduct. Change is challenging, but successful companies know how to achieve it. So can you.

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Here is a direct link to the complete article.

Claus Benkert is a director in McKinsey’s Munich office; Nick van Dam is a partner in the Amsterdam office and the firm’s global chief learning officer.