A Business Transformation Starts From Within

A Business Transformation Starts From Within

Leadership teams that address inside-game risks are nearly twice as likely to achieve their ambitions.

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A Business Transformation Starts From Within

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When launching major corporate change, it’s common for leaders to focus first on designing a compelling plan to win the “outer game” of external, competitive strategy.

Ask leaders post-mortem, however, what really made the difference, and they overwhelmingly cite “the inner game.”

The inner game is about unleashing the discretionary energy of the organization, on engaging the rank and file. It’s building and sustaining energy across the organization. When asked which factors deserve the credit for their success, leaders who achieved or exceeded their transformation targets cite these inner-game factors 80% of the time.

Bain research has found that leadership teams that address inside-game risks are nearly twice as likely to achieve their ambitions. And that their success is three times as likely to last.

The importance of inner focus reflects a broader shift to a more collaborative management culture. In Bain & Company's 2018 Management Tools and Trends survey, more than three-quarters of executives reported that business leaders today must "trust and empower people, not command and control them.”

Playing the inside game well starts with the recognition that a traditional communications plan isn’t enough. One-way communication, no matter how much logical information and data it imparts, isn’t particularly effective in winning hearts and minds. Room must be made for true two-way dialogue and engagement.

The executives of a large industrial conglomerate I recently worked with learned this lesson the hard way. About a year into their transformation, progress had stalled. Employee feedback from around the globe suggested that people weren’t changing their behavior as the strategy called for and didn’t fully understand the need for change. Initially this was both frustrating and confusing to the leadership team, as they felt they had already invested a lot of time communicating the new company strategy. After reflecting on this feedback, however, they realized that the messages they were trying to communicate simply weren’t getting through. Their narrative was overly analytical and too directive. People didn’t feel they had a say, nor did they feel the directions were particularly relevant to what mattered to them.   

The team decided to pivot. They started by bringing together the top three dozen leaders from around the world to spend a day and a half together creating a new script: why change was needed, why the future was an exciting one, and what it all would mean for employees. Now feeling like they had some level of ownership and authorship of the narrative, this group returned to the field, where they began to argue for the changes passionately, engaging more and more people.

By engaging the rank and file and giving them time to embrace the logic of the transformation plan, executives ensure the organization feels involved and respected. More people support the change, their heads are in the game, energy will increase, and the organization’s overall ability to implement change and sustain it will climb.

Right from the start, it’s important to identify these critical internal factors that can derail change, and work to mitigate those risks. Successful leaders listen especially closely to the individuals who will bear the brunt of change. Then when pain grips the organization at the halfway point of the transformation, threatening to derail progress as it often does, leaders should redouble their commitment to restoring their team's faith in the promises they made.

This is time well spent. Five years after launching a transformation, the average shareholder return for companies that managed internal risks well were more than twice those of the weakest companies, Bain research has found.

That’s the kind of final score an executive can be proud of.


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