Transformation Leadership: Humans@Centre

Executive summary

‘May you live in interesting times.’  While the provenance of this quote is under much debate, the sentiment is as true today as at any other time in history.

Organisations face an increasing number of disruptive challenges, from changing customer demands through to rapidly evolving technology to competitive threats that can come from anywhere. These challenges are compounded by the exogenous risks of climate change, global health crises (such as the recent Covid-19 global pandemic), geopolitical tensions and political market interference.

The need to transform successfully – and to do so continuously – is an imperative for all organisations. And yet, despite all the advances in technological capability, management theory and huge investments of money, time and resources over the last 25 years, the failure rate of transformations remains stubbornly high.

Saïd Business School, University of Oxford and EY are passionate about demystifying where transformations go wrong and what organisations can do to get them right. Recognising our shared passion, in 2021, Oxford Saïd and the EY organisation formed a research collaboration to study the complex factors behind the high failure rate of transformations and explore how leaders can drive transformations that result in lasting change.

We agreed on a theory of change that is contemporary, based on lived experience, and includes both leaders and workers.

Recognising the whole human (rational and emotional) is key to transformation

Historically, leaders have focused on the rational, logical journey of transformation. Yet when we look at our research, we can see the importance of the emotional journey to the success or failure of a transformation.

In high-performing transformations senior leaders remained positive throughout the transformation process. At the end of the transformation, the majority of leaders expressed ‘happiness’ or ‘excitement.’ Workers began slightly less positive than leaders, but ultimately ended up 12 percentage points more positive.

Conversely, in low-performing transformations, senior leaders started out as positively as leaders of successful transformations. However, partway through, negative emotions overtook positive emotions. By the end, the majority of leaders expressed being ‘upset’ or ‘depressed’.

Similarly, workers generally felt positive about the journey ahead, but partway through emotions soured. By the end, the underperforming transformation workforce experienced 13 percentage points more negative emotions than their leaders.

Putting humans at the centre can improve your odds of transformation success by more than two and a half times

To maximise the level of success, organisations need to excel at implementing leading practices around these six drivers:

• Lead: Adapting and nurturing the necessary leadership skills.

Leaders need to start by transforming themselves to deepen self-awareness so that they can manage their own emotions, and in turn help their workers to navigate their emotions.

In doing so, they can develop a skilful blend of advocacy and inquiry, holding passionate beliefs that they can articulate, and demonstrating the capacity to shift their understanding of self and system through action and investigation.

• Inspire: Creating a vision for all to believe in.

Vision forms the foundation of transformation. Leaders need to collaborate on a compelling ‘why’ for the transformation in which both leaders and workers can find purpose. Forty-six per cent of respondents in high-performing transformations said that the transformation energised them to ‘go the extra mile’ (versus 28% in low-performing transformations).

• Care: Building a culture where people’s opinions are embraced and encouraged.

Our interview respondents almost unanimously recognised that strong emotions were part of the transformation. Rather than avoiding emotions, leaders need to lean in. They need to proactively create psychological safety by both encouraging people to speak up, and directly soliciting their opinion, or ‘calling them up.’

• Empower: Setting clear responsibilities and being prepared for change.

Transformation is typically described as a strictly linear process. Our research paints a more nuanced and complex picture that combines the discipline to create genuine impact with the freedom to explore and let new ideas emerge. Leaders need to establish clear boundaries that delineate the scope for experimentation and trial and error, and create a safe space to explore without repercussions.

• Build: Using technology and capabilities to drive visible action.

Getting the right technology is central to the success of organisational transformation. However, technology isn’t the vision itself, it’s what brings the vision to life.

It’s also important to recognise and address the emotional impact of technology. Leaders we interviewed acknowledged that although technology change could create emotional disequilibrium, if the organisation deployed early versions of the technology to concretely demonstrate the organisation was moving forward positively with transformation, they could re-establish emotional stability.

• Collaborate: Finding the best ways to connect and co-create.

Leaders need to be deliberate in shifting to new ways of working, empower workers to redesign and redefine their own work, and consciously build interdependency among teams.

Our research suggests that consciously creating the space for new ways of working was vital to success: 42% of leaders of high-performing transformations consciously defined and implemented a new organisational culture as part of the transformation programme.

Our research suggests that organisations with high adoption of leading practices around these six drivers have a 73% likelihood of success – almost 2.6 times higher than organisations with low adoption practices in these areas. The more impressive inheritance will be a growth-minded workforce that performs better with each new transformation.

Our exploration of transformation performance continues

This research project that the University of Oxford’s Saïd and EY teams have undertaken is not a one-off activity. We plan to continue our collaboration by recruiting a global group of companies to delve into specific elements of transformation in greater detail.

In the meantime, the two project leads, Andrew White from Oxford Saïd, and Adam Canwell from the EY organisation, have created a bonus miniseries as an extension of Andrew’s successful Leadership2050 podcast.

In this Transformation Leadership2050 series we explore the emotional journeys of six global leaders and their workforces as they successfully navigated their organisations through significant organisational change. Guests span both geography (Australia, Europe and the US) and industry (healthcare, consumer products, technology).