Our Thoughts on Transformations that Work

Business transformations aren’t uncommon: Our research shows that more than one-third of large companies are currently in a transformation effort. But are they successful? Usually, lasting results are hard to achieve; our research finds only 12% of transformations meet the original ambition. So, how do you build a successful program?

Look to your leaders

One of the strongest predictors of a transformation’s success is having the right people in the critical strategy roles. The three common mistakes companies make? 1) Not focusing on the critical roles; 2) Not looking beyond the “star players,” which can lead to oversubscription and burnout; and 3) Spending too little time thinking about the long-term vision for the future.

There is growing support around the role of the chief transformation officer. This is a newer role, so people stepping into it often don’t have a predecessor to lean on. Based on input from attendees of our Full Potential Transformation Forums and work on more than 700 transformations, we’ve outlined that the CTO must serve as a strategic architect, integrator, operator, coach, and controller, often serving in the roles simultaneously.

A valuable component is having frontline ownership of a transformation effort. Leveraging cross-functional ability and creating line-led teams that run and deliver transformations while also running day-to-day responsibilities keeps the workforce mobilized and engaged. The keys to executing a line-led transformation are 1) intent, which consists of a well-articulated goal, empowerment, and sense of urgency, and 2) accountability: having specific targets, consequences, and transparency.

Middle management can also play a key role in transformation efforts. Transformations need a mix of creativity and innovation, and involving middle managers is a great way to build your next generation of leadership. You should also encourage middle managers to bring forth innovative ideas and be sponsors of your transformation, and reward bold action and results.

Steps for success

Our research on transformations that work found six practices are key to successful programs:

Treating transformation as a continuous process: Today’s highly dynamic environment no longer allows for a structured program with a beginning and end, but rather a state of constant transformation, adjusting programs accordingly.

Building transformation into the company’s operating rhythm: Don’t think about transformations as a separate entity. Keeping leadership involved around one vision can help keep the program moving.

Managing organizational energy effectively: When you find the key players of a transformation, make sure they’re not disrupting multiple routines at once. Our research has found that if companies try to change more than two routines at once, there are increasing odds the transformation will fail.

Using aspirations to stretch management’s thinking: Don’t just examine external benchmarks. You need new ways of thinking beyond your current practices, and so benchmarks might not be available yet.

Driving change from the middle out: Move away from a top-down approach, since senior executives are usually too far removed from daily operations to understand the real issues. Middle managers have a better understanding of what needs to change, but typically aren’t at risk of getting lost in the weeds.

Accessing external capital from the start: Transformations are expensive, and our research has found nearly all failed transformations were underfunded, as they were financed by cost-cutting measures. By contrast, nearly all the successful transformations we studied used capital markets.

How Bain enters new markets

We don’t just advise on transformations, we do them ourselves. In this episode of Beyond the Bio, Tamara Lewis explains how Bain goes about entering new markets, based on her firsthand intrapreneurial experience opening our Seattle office in 2018. Opening an office isn’t just about growing our presence: We think about it from both a client rationale and a people rationale. Having a presence in Seattle’s innovative market created a lot of opportunity for Bain to build a stronger business with clients. And, when it came to our employees and the talent market, there was a real desire to be in Seattle. But there’s no perfect formula when it comes to building a culture. Tamara explains the Seattle leadership team focused on our values, behaviors, and rituals, taking the best of Bain and applying it to our clients’ needs for innovation, creating norms in which everyone is included and serves in a mentor role, and placing a focus on local social, community, and environment involvement.