Organizations do not change. People change!

Addressing an organization’s mindset has a tangible business impact and is the key that opens the door to successfully transforming an organization.

Albert Einstein once famously remarked, “Today’s problems cannot be solved with the same level of thinking that created them.”
Consider the example of a Latin American consumer goods manufacturer under pressure to change its performance after not having performed well for several quarters. Due to urgency, the chief transformation officer went off to set more stretched targets and created a weekly governance to review performance initiatives with more rigor.

Yes, people worked hard. Yes, at first some KPIs improved, but all of this drained more energy than the results it was delivering. It soon became clear that the people would not last a marathon at the speed of a sprint; they had started to become disengaged.
Like in this organization, most enterprise transformations focus on changing business metrics and, at best, employee behaviors—and not the thinking what created the need for a transformation in the first place. And, not surprisingly, 70% of them fail. Companies with failed transformation programs identify employee resistance or management behavior as the major barrier (72%) to success.

To avoid that statistic, this manufacturer for the first time shifted the focus on the people. What was driving their behavior? What made their eyes shine? What would truly engage them in a transformation? Looking for these answers, the top team discovered that up until then, people were gaining praise for doing new things even if they were not delivering their promised results. They thought that short-term results were more important than satisfying the consumer. And when the time came to choose, they felt that their individual goals were bigger than the company’s. All this was limiting them from participating wholeheartedly in the transformation underway.

In fact, these mindsets, as we call them, needed to be flipped to make things work. Through a set of targeted initiatives, these mindsets were shaken. The people came to realize that satisfying the consumer is what will bring the short-term results. There is no success for the individual if the company is not doing well. And they started to be recognized for executing with discipline focusing on our full potential to deliver challenging goals. Sharing the story of why the transformation was necessary and addressing these mindsets engaged the employees with a whole new level of energy, and only few months later the organization was able to deliver its first quarter back on track and continue the trend.

Companies that take the time to identify and shift deep-seated mindsets were 4x more likely to rate their change programs as “successful,” according to the McKinsey Quarterly Transformational Change Survey, 2010. In fact, mindset shifts are linked to the highest impact behaviors a person wants to change.

Unless you first identify the mindsets, both limiting and enabling your people, your transformation initiatives may be wasting resources, time and energy. Another company, a telco, found that managers spent the majority of performance reviews explaining the complex rating process vs giving feedback. So, the telco simplified the process and rating system, increased frequency of conversations, and provided training on delivering feedback. However, it’s important to keep in mind that “from” mindsets aren’t necessarily bad; many rational, competent and well-meaning people could and do operate in this way.

In the case of the telco, leaders cancelled reviews and/or spent most time on small talk. Why? Leaders actually avoided difficult conversations and focused the feedback on process because they were afraid that criticism and difficult conversations would damage their relationships. Once this mindset transformed into “honesty (with respect) is the essence of building strong relationships,” leaders started to engage in regular, honest and courageous feedback conversations, and focus their feedback on performance.
Addressing the organization’s mindset has a tangible business impact and is the key that opens the door to successfully transforming an organization. In our next articles, we explore how to uncover those mindsets and how to turn them around.
The authors wish to thank Natasha Bergeron for the practical insights she provided for this post.

Source: McKinsey.com, October 2019
Authors: Anita Baggio, Eleftheria Digentiki and Rahul Varma
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