Success factors for transformations

During times of transformation, a company's leaders are responsible for actively shaping the organizational culture and mindset, selecting the right leadership team and ensuring internal communication. A strong leadership team and good employees who are prepared to help enact the change are often the key to success. The CEOs we surveyed said that leadership skills, persuasiveness and integrity are key competencies for them during times of transformation. Eighty-four percent of them said that they use specific measures to nurture and support their own leadership teams in acquiring these transformation competencies.

Which critical factors does it take to ensure the success of a transformation? The CEOs we interviewed all described these factors differently, yet they were strikingly consistent in terms of the overarching, recurring themes. Nearly all of the answers fall into one of two categories: people and culture. Daniel H. Schmutz, CEO of the Helsana Group, put it this way:

Transformations are always about people.

Daniel H. Schmutz
CEO of Helsana Group

When talking about people, the CEOs either refer to a successful leadership team or to an engaged, strong employee base. The successful change culture becomes visible by focusing on the goal of the change, a strong “winner” mentality and perseverance, as well as open communication and a culture of learning from mistakes. 

The results of the quantitative survey show a similar trend. When asked about which of their tasks are decisive for ensuring successful transformation, the following three tasks topped the CEOs’ lists: 

  • shaping a company culture/mindset,
  • recruiting the right people for the leadership team and 
  • internal communication

These aspects all reflect the psychological side of the change process. Number-four on the list is defining the strategy and vision/mission, which relates to the content-logical aspects of change as important guarantors for success. 

The CEOs were asked to rate each of the following tasks on a scale of one to five:

  • Defining the vision/mission statement
  • Defining the strategy
  • Shaping the company culture/mindset
  • Defining the incentive system
  • Recruiting people for the leadership team
  • Internal communication
  • External communication
  • Cultivating strategic relationships (customers, mergers, suppliers)
  • Budget, cost management and controlling
  • Risk management
  • Other

During the interviews, the CEOs also mentioned other success factors, such as having a clear strategy, focusing on customer benefits and monitoring what is economically viable. However, these topics came up far less frequently than the aforementioned psychological aspects of a strong leadership team and motivated employee base.

Peggy Johnson, Executive Vice President for Business Development at Microsoft, described it as follows: “When a culture is broken, the cracks show – morale is weakened, but so are profit and performance. That´s why culture has to be at the core of any business.” Referring to times of digitalization, Bill Aulet, Managing Director of the Martin Trust Center for MIT Entrepreneurship at MIT, expanded the famous quote from Peter Drucker “Culture eats strategy for breakfast,“ to include “… and technology for lunch.” That means that the CEOs we surveyed are not the only ones who see company culture as a key ingredient for a successful transformation. During times of transformation, stabilizing structures change. Past habits and processes can no longer be used effectively. And familiar processes break away only to be redefined. It takes clear guidance from leaders and trust in people and the culture in which the change can be effectively put into place.

Leadership competencies & company culture

What are the characteristics of a strong leadership team? And how can leaders shape a transformation-friendly company culture? The CEOs we surveyed rated leadership competency as their most critical tool for success, followed by persuasiveness, integrity, entrepreneurial competency as well as perseverance and persistence.

During the interviews, the CEOs provide us with a clearer view of how they define high leadership competency and a strong leadership team during times of change. 

According to the survey results, such a leadership team shares a common philosophy and sticks together. Leaders get their team members on board by communicating clearly and consistently with them, serving as role models for change and convincing them of the common goal. As Jacques Sanche, CEO of Bucher Industries AG says,

Transformation originates in dialog.

Jacques Sanche
CEO of Bucher Industries AG

Only an ongoing exchange can lead to a shared, transformative impact on everyone. The interviews make clear that not only the leaders but also the employees themselves are a decisive success factor during the multi-layered implementation process. Only motivated employees who are willing to push forward the change, to commit to it and to get out of their comfort zones can ultimately lead to the successful implementation of what the leadership level has initiated. 

The leadership characteristics which the surveyed CEOs consider relevant for success are very similar to the means of persuasion that Aristotle described in his work Rhetoric, which is often cited in modern theories of leadership (Antonakis & Day, 2017): 

  • the character/credibility of the speaker (ethos), 
  • the emotions (pathos) and 
  • the argument (logos) (Krapinger, 1999). 

Leaders convey credibility by communicating consistently and serving as a role model for the transformation. At the same time, they build trust and offer security and stability, especially considering the upcoming and ongoing changes and the uncertain conclusion. By creating a picture of the shared goal and the possibilities and opportunities for development that it brings, and getting the employees involved in the change process, leaders create an emotional impact and clarify the purpose behind the transformation. Proper transfer of information and clear communication also address the need for rational arguments. Marianne Wildi, Chairwoman of the Board at Hypothekarbank Lenzburg, understood this and put it into practice. She says,

It is important that the ways of thinking and acting become so self-evident and understandable for everyone, so that ultimately no CEO communication is necessary.

Marianne Wildi
Chairwoman of the Executive Board of Hypothekarbank Lenzburg

In addition to rational arguments and external incentives, the CEOs emphasized the importance of creating an emotionalized and purposeful vision so that everyone involved sees how meaningful their work is. If the leaders succeed at conveying the purpose of the desired change and enabling their employees to identify with the goals they are pursuing, it leads to a demonstrable increase in motivation and the willingness to expand existing patterns of behavior and invest energy in the transformation (Bono & Judge, 2003). To equip leadership teams for these tasks and strengthen their skill set, it takes training and time to reflect. That is why the CEOs also invest in training their leaders. Eighty-four percent of the CEOs we asked said that they support and foster their own leadership team during transformations. The support measures they mentioned most often were internal training programs and specific one-off training sessions.