The Role of Executive Leadership in Organizational Transformation: Setting Direction
Jul 27, 2020
- Joe White, Director, AEU LEAD
At AEU LEAD, we help companies make needed transitions – and for many, change presents a seemingly insurmountable challenge. In this blog, the first of a three-part series, we will highlight executive leadership’s role in the strategic planning and change management process. The catalyst for change and active ingredient behind most transformations begins with leadership direction.
The Enemy Within
In their book, Stall Points, authors Matthew Olson and Derek van Bever studied more than 600 of the Fortune 100 companies, all of which rose and fell from prominence over a half-century, to understand the basis and consequences of stalled growth. Among the most telling of their conclusions is the fact that the enemy of progress or sustainability exists within most organizations.
According to Olson and Bever, only 13% of economic stalls impacting organizations result from external forces. A whopping 70% can be attributed to strategy. That is, direction from leadership in response to shifting market conditions was either off the mark or too late in the making.
Positioning for Success
While the impetus for change can and ideally should be able to start at any point in the organization, the formality of the process is set into motion at an executive level. Shop floor employees and middle managers alike look for decisive and proactive leadership from executives. Positioning the organization for current and anticipated market opportunities is a core expectation employees have of those at the top.
A Case for Change
When setting direction, executives need to build a case for desired operational or organizational shifts. In a study by McKinsey & Company, a majority of companies indicated that if given the opportunity to do so again, most would spend more time developing and communicating a change story before implementing the strategy. A compelling case for change helps create buy-in and answers a question many employees will have: “Why?”
A Future Vision
Closely aligned with communicating a case for change is sharing a vision for the desired future state. Executives must recognize change as the new reality and adjust to the new norm. Operational states reflect consumer demands, and both must remain fluid in the 21st century. Creating and sharing a vision of where the organization ideally needs to be in two to three years is an exercise that will likely be repeated early and often going forward. The sobering reality is that many organizations may never reach desired future states again, as market conditions ebb and flow and adjustments must be made in real-time. The truly successful companies will quickly learn that positions held at any moment in time are temporary, at best.
An Opportunity for Involvement
Beneath the heading of providing direction, executive leadership also has the burden of performance. While 98% of all companies have undertaken a change initiative of some sort within the past five years, only 28% have achieved desired objectives. When first-line managers and front-line employees aren't involved, success plummets to just 3%. To succeed, change initiatives must have the support and buy-in of all employees. Building strategic plans with their input and involvement is not only important – it’s essential to achieving desired outcomes.
The opinions and comments expressed in this article are those of the authors and do not reflect the opinion of ALMA, The American Equity Underwriters, Inc. or AmWINS. None of the aforementioned parties or the authors are responsible for any inaccuracy of content or for any loss or damages incurred by any party as a result of reliance on information contained in this article. Content may not be published or reproduced without the written consent of the authors. Prior articles may not be updated for accuracy as pertinent information changes over time. The AEU LEAD blog is intended to provide general information and should not be construed as legal advice.