The CEO's role in managing change

Undergoing change is invariably a difficult experience, which is why companies as well as individuals spend a great deal of time and energy attempting to manage the timing and speed of the process.

by McKinsey Quarterly online
Last Updated: 23 Jul 2013

But change often has a force and motion of its own and cannot be controlled. In such instances, good leadership is crucial. But in the volumes of literature on how to implement effective change, there is surprisingly little attention paid to the role of the one person. What should the CEO be doing, and how different is this role to that of the executive team or the initiative's sponsors?

In a report published by the McKinsey Quarterly online this week, Carolyn B Aiken and Scott P Keller argue that there is no template for success. The exact nature of the challenge facing the CEO will be determined by magnitude, urgency and nature of the transformation; the capabilities and failings of the organisation; and the personal style of the leader.

But despite these variations, Aiken and Keller identify four key functions which they say collectively define a successful role for the CEO in a transformation. These are:

1) Making the transformation meaningful. People will go much further for a cause they can believe in. Therefore a powerful transformation story can help employees believe in the effort by answering their big questions, which can range from how the change will affect the company to how it will affect them. The CEO's willingness to and ability to make things personal, to engage others openly and to spotlight successes as they emerge can make a huge difference.

2) Role-modelling desired mindsets and behaviour. The CEO is the organisation's chief role model. Successful CEOs typically embark on their own personal transformation journey, and if they do this successfully their actions encourage employees to support and practice new kinds of behaviour. Naranyana Murthy's 2002 decision to take on the role of ‘chief mentor' at Infosys meant that he had to lay aside his formal CEO responsibilities. "You have to sacrifice yourself for a big cause before you can ask others to do the same," he says. "A good leader knows how to retreat into the background gracefully while encouraging his successor to be more and more successful in the job."

3) Building a strong and committed top team. To harness the transformative power of the top team, CEOs must make tough decisions about who has the motivation and ability to make the journey. This means spending time assessing the abilities of individual team members and acting swiftly on the result. Many CEOs find it useful to map team members on a matrix, with "business performance" on one axis and "role-modelling desired behaviour" on another. Those in the top right box (desired behaviour, high performance) are the organisation's stars, and those in the bottom left box (undesired behaviour, low performance) should be motivated, developed or dismissed.

4) Relentlessly pursuing impact. Organisational energy -- collective motivation, enthusiasm and intense commitment -- is a crucial ingredient of a successful transformation. There is no substitute for a CEO directing his or her personal energy toward ensuring that the company's efforts have an impact. Leaders must be willing to leave the executive suite to help difficult operational issues.

For CEOs leading transformation, no guaranteed models of success exist. But Aiken and Keller claim that by following certain basic functions, CEOs can generate the energy needed within the company to achieve successful change.

Carolyn B. Aiken,
McKinsey Quarterly online
Review by Nick Loney

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