Here is an excerpt from another “classic” article for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.
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The changing face of transformations
The latest survey results indicate that success remains elusive. Only 37 percent of respondents report successful implementations; we call this group “top implementers.” The most common practices for supporting successful change efforts remain the same as in 2014. These include leaders owning and committing to the change being made, role modeling new behaviors, and devoting appropriate time and energy to supporting the change. But compared with the previous survey, smaller shares of respondents report leaders’ ownership of and commitment to change, effective processes for prioritizing change initiatives, and regular tracking of change efforts’ progress (Exhibit 1). When asked about organizational practices more broadly—beyond change efforts—respondents also report declining employee commitment. Fifty-five percent of respondents say employees spend most of their time on organizational priorities and value-adding activities associated with the transformation, down from 68 percent of respondents who said so previously.
These individual practices (out of 30 the survey tested) support seven core implementation capabilities that, in our experience and past research, are most critical to the successful implementation of change. Among top implementers, 85 percent agree that the change effort included all seven core capabilities, while only 41 percent of other respondents say the same.
The digital challenges ahead
Over two-thirds of all respondents agree that implementation capabilities are more important to the outcomes of major change efforts than they were three years ago. But to complicate matters, the results suggest that the very nature of change efforts is evolving. More than half of respondents say their organizations’ most recent major transformations involved the implementation of digital solutions.<a “=”” class=”link-footnote” rel=”#footnote3″ role=”tooltip” tabindex=”0″ aria-label=”Open tooltip”>3 The results suggest that digitization poses new, and meaningful, disruptions to implementing organizational change. One such challenge is the scope and scale of digital transformations. Seventy-five percent of respondents whose companies have undertaken them say their change efforts span more than one business unit or function, compared with 64 percent who say the same about traditional transformations.
Digital transformations also require new skill sets and resources, but finding the right people for this work is a major hurdle. Just one in three respondents say it has been easy for their organizations to internally source the necessary piloting and rapid-prototyping skills for digital solutions. Even respondents from the top implementers are more likely to say their organizations struggle with sourcing skills than with any of the other digital-implementation practices we asked about.<a “=”” class=”link-footnote” rel=”#footnote4″ role=”tooltip” tabindex=”0″ aria-label=”Open tooltip”>4 Yet only 57 percent of respondents say that if their companies did not have the right skills in-house, they had a process for sourcing them externally.
Last, digital change efforts necessitate new approaches, particularly for assessment. Respondents are less likely now than in 2014 to say that their organizations regularly assess the impact of initiatives and changes once they have been implemented. But among the top implementers, those undergoing digital transformations are more likely to report this practice—along with testing major changes in smaller, controlled environments—than their peers involved in conventional change efforts. This result suggests that assessment is even more critical to the outcome of a transformation that involves digital solutions.
Of the seven capabilities, successful digital implementers most often report that their organizations plan for long-term sustainability and demonstrate commitment to the changes (Exhibit 2). The top digital implementers are more than three times likelier than others reporting digital transformations to say that from day one, their organizations planned for the long-term sustainability of the changes they made. Across the core capabilities, the top digital implementers are furthest ahead of their peers in effective program management.
The keys to success in digital transformations
In addition to assessing the outcomes of the overall transformations, respondents whose organizations have implemented a digital solution were asked to evaluate their organizations’ execution of four phases of a digital transformation: setup, piloting, scaling and implementation, and sustaining changes. Notably, while following every practice within each phase correlates with more successful outcomes, the responses suggest that some practices in each stage are particularly critical.
During the setup of a digital transformation, the results suggest that communicating clearly and establishing priorities are the most important practices for the successful management of that effort (Exhibit 3). When respondents agree that their organizations’ desired outcome for the digital solution was clearly communicated prior to its launch, they are 3.5 times likelier than others to report a successful transformation. When potential ideas for the digital solution are prioritized clearly, success is 2.7 times more likely. Expertise is also a success factor. Forty-seven percent of respondents report that implementation is successful when people with the most relevant expertise develop the business case for the digital solutions. When the business case was developed by others in the organization, such as the program-management office, just 18 percent of respondents report success.
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Here is a direct link to the complete article.
The contributors to the development and analysis of this survey include Blake Lindsay, a senior implementation leader in McKinsey’s Denver office, as well as Eugéne Smit, a partner, and Nick Waugh, a senior implementation leader, in that office.
They would like to thank Mehmet Baser and Bruce Delteil for their contributions to this work.
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