This article originally appeared on Forbes.com.
Given how 2020 has gone, the dawn of a new year can’t come soon enough. The turn of the calendar brings both the opportunity to reflect on the last 12 months and the chance to begin planning for the next dozen. The New Year is traditionally the time for resolutions. As you think about yours, let me share my own: to better harness the power to change.
Although 2021 won’t look entirely like 2020, there’s no reason to believe the era of constant change is anywhere close to over. The forces behind it are deep and fundamental; indeed, change is changing. Digital technologies’ transformation of industries, already well underway before Covid-19, has only accelerated during the pandemic. Retailers’ current holiday shopping season is just one example of industry transformation at top speed. Meanwhile, the demographic shift to a millennial-dominated workforce continues, altering career paths, corporate strategy and even purpose. How we work is changing too, transformed by technologies like Zoom and Slack, but also by what many of us have learned from months of working and managing from home.
Overall, the pandemic has widened the gap between top performers and other companies. To thrive today, leaders and their organizations must become better at change.
But how to improve, if historically there has been no clear way to measure progress? How do you systematically bottle the secret sauce that some companies seem to have and others lack?
Earlier this year, my Bain & Company colleagues and I studied the factors that contribute to a company’s ability to change. We ran a number of surveys, consolidated experiences working with numerous boards of directors with executive interviews and dove into several organizations in depth. We wanted to know what skills the companies that consistently and successfully manage the unexpected possess.
It boiled down to nine critical elements. Three factors reflect a company’s ability to lead change—specifically, purpose, direction and sense of connection. Three more speak to a company’s skill in forming strong teams: its capacity for change, along with its ability to choreograph (including planning and executing) and scale change. Finally, three organizational elements come into play: talent development, bias toward action and flexibility.
Companies that score highly on these factors have what we call stronger “change power” and are significantly more profitable, with margins twice those of companies with lower change power. Change masters also grow revenue up to three times faster. Their CEOs and senior management teams earn higher approval ratings. And twice as many of their employees report being very inspired by their jobs. Even companies that don’t score well benefit from seeing how they stack up and what areas of strength they can build from. Understanding your organization’s capacity to change is the first step toward improving it. (For more on this, please see Measuring Your Organization’s Ability To Change, July.)
Better decision making
This year has reminded me how quickly companies can act in times of crisis. Covid-19 forced many organizations to make decisions faster and become much more focused. Some 62% of respondents to a recent Bain survey described their companies as making decisions more efficiently since the crisis started, and just as many hope this will continue beyond Covid-19. To do that, many have had to give up their typical processes in favor of informal and improvised approaches.
On the whole, companies are doing three things to make better decisions right now. First, they have improved data tracking and visibility to get the right information to the right people at the right time. Second, they are using technology and creative partnerships to quickly tap internal and external expertise. Finally, they are clarifying who makes certain decisions and how they should go about that. (For more on this, please see Better Decision-Making In Times Of Change, October.)
Leading through crisis
This year has tested every leader. In Coronavirus: Leading Through A Crisis, published in March, I reflected on our tendency to adopt a more protective, or fixed, mindset and behaviors during times of crisis. This can lead to defensiveness, denial, intransience in the face of changing facts on the ground and even blaming others. Unfortunately, we have seen a lot of that in the months since.
A more effective approach is to embrace a growth mindset. This helps you adapt to what is needed in the moment, be willing to adjust the game plan as new facts emerge, and address challenges openly and optimistically, conveying empathy for your people. Remember, it’s not only what you do that matters. How you do it is just as relevant, and in times of crisis, even more important to get right. Indeed, integrity in leadership mattered this year, as it will in 2021 and beyond.
If you too are looking to strengthen your ability to change, or that of your organization, how will you start? Do you know what levers to pull and in what sequence? What will your New Year’s resolution be?