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How increasing leadership effectiveness will boost transformation success

Photographic portrait of Peter Whealy
Peter Whealy

Partner, People Advisory Services | EY Switzerland

7 minute read 21 Mar 2023
Related topics
Workforce

Most transformations fail. Yet our research shows six distinct leadership drivers that improve transformation success by 2.6x.

In brief

  • A minority of major corporate transformations succeed within budget, on time and with high adoption and satisfaction levels.
  • People and leadership aspects are major elements of any transformation, yet often the focus is incorrectly on processes and structures excluding mindset and behaviors.
  • EY’s research shows, that when leadership focus on six distinct drivers, the likelihood of transformation success increases by up to 2.6 times.

Corporate transformation successes are rare: EY Japan found in 2021 that only 19% of transformations launched in the 3-5 years prior to publication were successful1. Harvard Business Review mirrored this in their analysis: Among 128 multinationals that underwent a transformation between 2016 and 2020, only 22% succeeded2.

However, despite the many challenges and cited research, there are some companies that have managed their transformations successfully. In a joint research project, EY and the Saïd Business School at University of Oxford3 identified the key areas that have the ability to significantly increase the chances of successful transformations:

Organizations must recognize the ‘whole human’ (rational and emotional) and put them at the center of the transformation effort.

To drive this mindset of Humans@Center, the leadership team must excel at implementing six distinct drivers during the entire transformation life cycle.

six distinct drivers during the entire transformation life cycle

How EY can help

Call to action: Preparing leaders to master the six drivers

These six key drivers can be developed and enhanced. Leaders can learn how to master them. Forward-looking companies have understood their strategic importance and therefore invest in leadership development focused on the drivers, significantly increasing the probability of successful transformations.

Such impactful leadership development programs should be built on four pillars:

  1. Buy-in
    Executive buy-in is essential for the success of any organizational transformation. Leaders must role-model the leadership behaviors they want to encourage within the organization. They must cultivate a growth mindset and openness to adapt and invest in their personal development. Ultimately, this will enhance their own leadership behaviors which will send ripples through their teams and any transformation they lead. Only through active buy-in to self-development will leaders proactively change their behaviors and apply their learning in a way that will allow better decision making, team participation, delegation, and communication.

  2. Alignment
    Leadership programs should be aligned to business strategy and ideally also to the imminent transformation. This includes clear goals, a vision, defined actions, and an agreement on how to achieve them and how success is measured. A thorough analysis of organizational needs and leadership skill gaps can then prepare the ground for a targeted program that meets the specific needs of an organization in a particular moment. It further helps leaders better understand the pain points they may soon oversee and prepares them by developing the required skills and capabilities.

  3. Mindset
    Leadership that puts Humans@Center is not a “nice-to-have”. It is required to succeed. As discussed, the adoption of all six drivers more than doubles the transformation success likelihood!
    Setting up a leadership development and coaching program that shifts leadership from “transactional and directive” to “transformative, human centered and adaptive” will help support an organization’s future-readiness for change and enable successful transformations. But how can leaders shift their mindset away from long-held behaviors and legacy beliefs? Leadership development programs create safe spaces to explore behaviors that can be enhanced, and to consider what capabilities and mindsets are needed to effectively act on each of the six drivers. EY recommends a bespoke programmatic approach to create a unique solution taking into consideration the company’s industry, business model, geography and culture. A detailed analysis of the current state of the organization and “leadership gap” ensures leadership programs are carefully curated and are therefore impactful.

  4. System
    Leaders operate within a particular context and system. Both have reciprocal effects on each other, so a successful leadership development program should be built within the company’s corporate environment, it’s culture and values. Clearly there are times when these foundations must be shifted, so successful leadership development will actively convey the enhanced behaviors and actions that will drive and promote the six drivers. To further embed systemic and culture change, successful companies will offer development opportunities across all levels of the organization which not only help build strong next-generation leaders, but also aligns the organization on a common vision, leading to deep rooted systemic change.

Summary

All organizations go through frequent transformations and major change programs. Significant resources are committed to these initiatives, and the cost and business impact in not getting these right are huge. Transformations that center on operating models, IT systems and business strategies will always fall short of their potential. Instead, putting Humans@Center will increase transformation success rates by up to 2.6x. However, doing so requires leaders to change behaviors and long-held beliefs about leadership. A well-designed leadership development program, built on the need of each company, provides a greenhouse where leaders acquire and enhance the skills required for a successful transformation.

Acknowledgments

We would like to thank Catalina Rozmarin and David Leicht for their valuable contributions to this article.
 

About this article

Photographic portrait of Peter Whealy
Peter Whealy
Partner, People Advisory Services | EY Switzerland
Peter’s focus is learning strategy and implementation, emphasizing design on solutions that improve behavior, mindset and long-term performance. In his spare time, he likes triathlon, skiing, cycling.
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