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Danger of “Echo Chambers” for CEOs Leading Business Transformations

It’s a challenge all businesses try to overcome: How to transform, whether to keep pace with new competitors or pivot in new directions. The big question, though, always is: why?

McKinsey outlined the problem in its report titled “How to beat the transformation odds.” The management consulting team found that “just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time.”

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It's a challenge all businesses try to overcome: How to transform, whether to keep pace with competitors or pivot in new directions. The big question: why?

It’s a challenge all businesses try to overcome: How to transform, whether to keep pace with competitors or pivot in new directions

But it turned out, specific tactics existed that business leaders could take to measurably improve the odds of success: “At organizations that took a rigorous, action-oriented approach and completed their transformations (that is, all of their initiatives have been fully implemented), executives report a 79 percent success rate—three times the average for all transformations.”

Specifically: “These practices include communicating effectively, leading actively, empowering employees, and creating an environment of continuous improvement so organizations can keep their performance from stagnating (or even regressing) once a transformation’s goals are met.”

“Echo Chamber” Danger in Business Transformations

According to the Harvard Business School’s Working Knowledge series, “Leaders often get stuck in echo chambers that merely reinforce their own ideas… Meanwhile, lower-level employees are often fully aware of the problems that plague a company or the reasons a particular strategy won’t work, but they tend to remain silent, fearful that speaking up could put their careers at risk.”

The concepts are the result of work completed by Harvard Business School Professor Michael Beer. Says Beer: ““A CEO might be trying to execute this corporate strategy and everybody in the organization knows it’s off the rails, but no one wants to be the bearer of bad news or be seen as a complainer or a non-team player. So there’s this organizational silence, where no one feels comfortable speaking truth to power.”

Beer further addresses the challenge in his book “Fit to Compete: Why Honest Conversations About Your Company’s Capabilities Are the Key to a Winning Strategy.” Here Beer “presents an antidote to silence–principles and a time-tested innovative process for holding honest conversations with everyone in your organization. Used by over eight hundred organizations across the globe, the strategic fitness process has helped leaders in a diverse range of industries–including medical technology, information technology, banking, restaurant chains, and pharmaceuticals–hear the raw but necessary truth about the sources of misalignment between their strategies and their organizations.”

In fact, the McKinsey report supports the approach: “Of the eight continuous-improvement actions we asked about, one was an outlier: only one-third of executives say teams of employees begin their days discussing the previous day’s results and the current day’s work, compared with strong majorities of executives who agree that their organizations take each of the other actions. But respondents whose organizations had implemented daily discussions were twice as likely as others to report success.”

Keys for CEO Action

So what can CEOs do? Beer and his colleague Russell Eisenstat outline several keys for action:

  • “Focus the conversation on the issues that matter most. Develop questions for workers that tap into the heart of the strategic and cultural problems that are getting in the way of the organization’s ability to deliver on its value proposition and create a competitive advantage. Managers don’t often take this diagnostic step to understand the systemic issues, in many cases because they’re afraid to make themselves vulnerable.”
  • “Iterate between advocacy and inquiry. Leaders should start these honest, public, and collective conversations with employees by advocating where they want to take the organization, then ask for input on the strategic plans.”
  • “Make it safe to share the whole truth. The goal is to encourage honest feedback, so managers should be careful to avoid saying things that might inhibit input.”
  • “Reflect, diagnose, and develop a plan. The leadership team needs to reflect on the truth, diagnose the root causes of problems in the organization, and develop a systemic plan for change that will realign the company with the new strategy and cultural values.”
  • “Make yourself and the rest of the leadership team accountable & repeat the process periodically.”

Meanwhile, McKinsey offers these three tips:

  • Focus on people, not the project. Transformations are about the people in the organization as much as they’re about the initiatives…To build broad ownership, leaders should encourage all employees to experiment with new ideas: starting small, taking risks, and adapting quickly in their work. Doing so can create far-reaching and positive support for change, which is essential to a transformation’s success.”
  • Communicate continually. When embarking on a transformation, executives should not underestimate the power of communication and role modeling. The results suggest that continually telling an engaging, tailored story about the changes that are under way—and being transparent about the transformation’s implications—has substantially more impact on an effort’s outcome than more programmatic elements, such as performance management or capability building. But the communication doesn’t end once the change story has been told. Leaders must continually highlight progress and success to make sure the transformation is top of mind across the organization—and to reduce the gap between what employees believe is happening and what they see.”
  • Take more action. Transformation is hard work, and the changes made during the transformation process must be sustained for the organization to keep improving.”

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