| Our best ideas, quick and curated | FEBRUARY 11, 2022
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| This week, we look at how companies can avoid the common pitfalls that befall most transformations. Plus, potential solutions for the nursing crisis from a McKinsey senior partner—herself a registered nurse—and the trends shaping the sporting-goods industry in 2022. |
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| What makes a transformation successful? Often, companies apply the term “transformation” loosely to any form of change, however minor or routine. But McKinsey looks at transformation in a more comprehensive way: as an intense, organization-wide program to enhance performance (an earnings improvement of 25 percent or more) that also boosts organizational health. When such transformations succeed, they radically improve important business drivers, such as topline growth, capital productivity, cost efficiency, operational effectiveness, customer satisfaction, and sales excellence. |
| A longer-term horizon. After adapting to the COVID-19 pandemic and new ways of working, many employees may expect that change is the new constant. But because successful transformations instill the importance of rallying around a common vision and strategy, they change culture and mindsets in a way that allows companies to improve their results year after year. And they can energize a workforce if done correctly. |
| The exception, not the rule. Still, the average success rate of a comprehensive transformation remains dramatically low. According to a recent McKinsey Global Survey, less than one-third of respondents—all of whom had been part of a transformation in the past five years—say their companies’ transformations have been successful at both improving organizational performance and sustaining those improvements over time. The difference between success and failure isn’t whether an organization follows a specific subset of actions but rather how many actions it takes, including adapting goals for employees at all levels. |
| The 7 percent solution. In companies big and small, successful transformations ultimately affect every worker. Nevertheless, leaders sometimes hesitate to bring the whole group on board at the start of a transformation because doing so can use up too much energy, attention, and resources. At the same time, it’s a mistake to keep the core transformation team small. So what’s the minimum level of involvement? When looking at data from 60 organizations that are at least two years into their transformations, McKinsey discovered that transformations with at least 7 percent of employees owning part of the transformation are twice as likely as those with less than 7 percent initiative ownership to have TSR in excess of their representative sector and geographic stock indexes. |
| Digital guardians. Digital transformations, too, require widespread involvement. They are business-model reinventions that require different functions across an organization to work together in new ways and can happen only through large-scale investments in building an entirely new set of capabilities. The role that can make that level of sustained change happen is the CEO. The most successful CEOs prioritize tech and data in two ways: they obsess about how to apply tech and data to solving business problems or finding new opportunities, and they make organizational changes to ensure that tech and data are embedded in the business. CEOs shouldn’t tolerate a structure where the business sets requirements on which IT must deliver. Rather, they should develop an operating model where technology and business teams collaborate on developing and delivering digital products and services. |
| Show them the … financial incentives. While some employees may throw themselves into improvement programs for the challenge or love of the job, companies that use generous and specific financial incentives can significantly improve the odds of their transformations’ success while unleashing sustainable value. This article looks at seven principles that can help ensure that the programs achieve the desired outcomes. |
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| OFF THE CHARTS |
| Coal prices and steelmaking’s future |
| Demand for coking coal, an essential raw material in the production of steel, was extremely strong in 2021 as the wider global economy recovered from its sharp contraction at the height of the COVID-19 crisis—even as supply chain issues constricted availability. Safety challenges and flooding affected domestic mines in China; border closures between China and Mongolia, as well as strikes in the US, also curtailed trade. In addition, diplomatic tensions between Australia and China compounded the situation. That confluence of events created tightness in the market and contributed to surging prices for coking coal. McKinsey looks at this long-term trend that may mean that prices stay elevated.
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| PODCAST |
| Who’s taking care of the nurses? |
| A recent McKinsey survey found that more than 30 percent of nurses in the US are thinking of leaving direct patient care. The same is true in healthcare systems around the world. McKinsey recently spoke with Gretchen Berlin, a registered nurse and McKinsey senior partner, on the state of nursing and ways to improve the work experience of nurses, practically and emotionally. “A lot of it comes down to the support and recognition that [nurses] feel in their workplace from their leaders, their managers, their team, and through ensuring there’s sufficient staffing, sufficient respite, and gratitude,” Berlin says. |
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| MORE ON MCKINSEY.COM |
| Sporting goods 2022: The new normal is here | The sporting-goods industry continues to evolve amid increased health awareness, shifting channel preferences, and rising sustainability concerns. Sporting-goods players will need to adapt to five trends shaping the industry in 2022. |
| CIO perspectives on leading agile change | In a panel discussion, chief information officers from the banking and telecom industries come together to talk about challenges and lessons learned from leading agile transformations. |
| Building the cloud talent you need | Despite the fact that there is more than $1 trillion of new value at stake in the cloud, organizations are struggling to capture those benefits because they don’t have the right talent in place. Here are six practical ways to build capabilities. |
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| What inspired you to launch Friday Pause? |
| I was taking a walk in Richmond Park on a Friday morning in August when I heard a poem called “Fast forward” on one of my favorite podcasts, Turning Towards Life. The poem, by Debbie Danon, is about how we try to avoid uncomfortable feelings through distractions. One part really hits home: |
And then there are moments,
Quiet still moments
Before my itchy finger can hit the button.
I realize that fast forward isn’t doing what it promised.
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| I am acutely aware of how true this is for pretty much everyone in the world today—how much we multitask in the name of productivity, suppress our feelings rather than listen to what they are trying to tell us, and therefore fail to be fully present for ourselves and others and how all these coping tactics aren’t doing what they promised. Those feelings and nagging doubts don’t go away; online shopping doesn’t buy happiness and a sense of inner peace. |
| I imagine this lack of presence causes some amount of pain for people, though many might not be aware of it, and I wanted to offer a small moment of pause through poetry. As soon as I got home, I sat down at my computer and wrote my first post on LinkedIn. I figured I’d iterate and fail fast. After all, isn’t that the whole spirit of the agile approach to work we write about so often? |
| Why poetry? |
| For those of us used to fast-forwarding through life, I believe poetry can be a simple yet powerful way to begin reconnecting with ourselves. There is so much content being published these days—news and business articles, self-help books, even well-intentioned spiritual books—designed to help us see life in new ways. When I read this content, I sometimes find it difficult to concentrate. The writing styles all blend together, my mind wanders off on tangents, and I need to highlight or take notes just to pull out the main ideas. Otherwise, I forget most of what I’ve read, and there’s no lasting effect on me. |
| By contrast, a good poem cuts through all the mental noise and touches my heart. My attention zeroes in on the words, my breathing slows, and everything around me fades into the background. After I read a good poem, I want to sit with the feelings it has stirred up—whether joy, contentment, longing, sadness, or any other of a number of feelings—and just indulge in that feeling of presence. |
| What are your sources of inspiration? |
| As you can imagine, ever since I started Friday Pause, I’ve been reading a lot more poetry! Poetry is a very personal choice, with many different styles. I like to go to a bookstore every few weeks and browse poetry anthologies until I find one that has me lingering over the pages and then buy that one. The Poetry Pharmacy: Tried-and-True Prescriptions for the Heart, Mind and Soul, by William Sieghart, is a fantastic starter collection for newcomers to poetry—there are two volumes. I also listen to the aforementioned podcast Turning Towards Life, where the hosts share a poem and discuss it for about half an hour, every week. |
| And finally, the book I cannot live without is Change Your Thoughts—Change Your Life: Living the Wisdom of the Tao by Wayne W. Dyer. It offers the 81 verses of Tao Te Ching, each accompanied by a short essay about the verse. Becoming immersed in Taoism through these brief morning readings over the past five years has slowly changed my outlook on and approach to life in a way that I now feel more grounded, centered, and able to meet whatever each day brings me with ease. |
| — Edited by Barbara Tierney |
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| BACKTALK |
| Have feedback or other ideas? We’d love to hear from you. |
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