The secret to successful transformation initiatives is setting targets differently (if at all), getting the right people to drive them and baking them into your operating rhythm.
When asked to consider the amount of organisations currently undergoing some form of transformation, Michael Mankins, a Partner at Bain and Company, suggests that approximately a third of large organisations will have some kind of transformation initiatives underway at any given time – be that a merger, a large-scale restructure or a complex technology implementation.
When interviewing CEOs last year, Mankins and his co-researchers learned that half reported implementing at least two “major changes” within the past five years and 20 per cent cited taking on three or more.
While the majority of these transformations were likely necessary (or at least would have felt so at the time), Bain and Company’s research uncovered a finding that should ring alarm bells for anyone investing significant hours, effort and budget into transformation projects: only one in twelve initiatives actually produced impactful, lasting results.
Why do so many transformations fail?
“We’ve had the same model for transformation in place since the late 1980s/early 90s,” Mankins tells HRM. “There was this seminal piece written by John Kotter in the early 90s, in HBR, that said that ’70 per cent of transformation efforts fail’. What he didn’t say was how many succeed – and there is a difference between that.”
Mankins and his co-authors decided to explore this further, surveying 300 companies across the globe to see how Kotter’s 1993 finding fared decades on.
“We started doing our research in 2013 and by then, the failure rate had halved to about 38 per cent and only 12 per cent succeeded. [To define] success, we mean delivered 100 per cent or more of what senior leadership was targeting for the transformation; out-right failure was 50 per cent or less.”
Ten years later, in 2023, that failure rate dropped even further – sitting at 13 per cent – however, the success rate still sat at 12 per cent.
This, Makins and his co-author wrote in HBR, suggests that “instead of pushing their organisations to deliver more, many senior leaders seem to settle for improved but still unexceptional performance”.
This can result in employees half-heartedly engaging with change, assuming that things will eventually return to normal. At the more extreme end, it can foster workplace cynicism, eroding trust in leadership and commitment to transformation efforts.
“So companies are failing less, but they’re actually not succeeding more.”
Kotter’s research – while important and seminal – was driven by preventing failure. But what Makin’s and his team wanted to research was: what explains that 12 per cent of success stories?
In undertaking this research, they discovered six mistakes that businesses often make when undergoing transformation. Below, HRM unpacks these and shares Mankin’s advice for remedying them.
Mistake #1: Most transformation efforts are treated like projects
Mankins guesses that most business leaders and HR practitioners treat transformation initiatives as a project with a clear beginning, middle and end.
“It’s based on a [model] that says: ‘You unfreeze, you change, then you refreeze.’ The reality is the transformation today is continuous. There isn’t an end. As Michael Dell [the CEO of Dell] says: ‘It’s a race without a finish line.'”
The world is increasingly less predictable than it used to be, so we need to build adaptive systems that facilitate smooth, agile change that’s not overly disruptive to your workforce, but still ensures your business keeps pace with the fast-moving world.
“The reality is the transformation today is continuous. There isn’t an end.” – Michael Mankins, Partner at Bain and Company
For example, Mankins notes that the key to Dell Technology’s success is its CEO’s approach to baking transformation into everyday processes.
He created ‘the Dell Agenda’ – a collection of the most important issues facing the organisation that leaders would discuss on a weekly basis. What made this work so well was that it was treated as a living document, so when specific initiatives were ticked off the list, another would be put in its place.
This normalises the fact that change is constant and, while it’s rarely easy to implement, it doesn’t have to be treated as a behemoth task that will suck up everyone’s time and attention – it’s just part of how the business runs. Which leads on nicely to the second element of a successful transformation…
Mistake #2: Transformations aren’t included in the business’s operating rhythm
When transformations are siloed rom the company’s core operations, they often fail to create lasting impact.
“Successful transformations are essentially managed through the [business] operating rhythm. The example we used was Alan Mulally when he took over Ford [and wanted to streamline and standardise processes],” says Mankins.
When Mulally took over the struggling automaker in 2006, rather than establishing a standalone transformation team to run this initiative, as many companies do, he reinforced that transformation was the leadership team’s responsibility.
To align Ford’s leadership around a unified direction, he introduced the business plan review (BPR) – a structured weekly meeting that became the organisation’s single source of truth. The BPR provided a disciplined framework for decision-making, tracking progress against strategic priorities and ensuring leaders were consistently engaged in the transformation effort.
Despite facing significant financial strain following the Global Financial Crisis, Ford’s commitment to integrating transformation into its core operations paid off. By the time Mulally stepped down in 2014, after eight years at the helm, the company’s stock price had nearly doubled, reflecting the sustained impact of his transformation approach.
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Mistake #3: We are too reliant on setting targets
In most organisations, senior leadership teams set targets and then those in the lower levels of the organisation are expected to determine how to meet them, says Mankins.
In their HBR article, Mankins and his co-author Patrick Litre say that setting targets often limits organisations within “the art of the possible”, when they want to be thinking beyond what’s currently possible.
“Successful transformations actually don’t set targets, per se. They set aspirations. It’s about things that are beyond the scope of what we know how to do – and that’s the point. This stretches the organisation further and encourages people to identify changes that go beyond a typical target,” he tells HRM.
Often, once targets have been met or exceeded, people stop thinking of additional ways to make further gains. Mankins says it’s rare for teams working towards a target to say, ‘Now that we’ve done that, let’s explore additional opportunities to improve performance in this specific area’ – which might just be where the true gains lie.
Instead, we’re quick to move onto the next target which might take us in a completely different direction.
Adobe is an example of an organisation that focuses on aspirations over targets. When Shantanu Narayen took over as CEO in 2012, he set a “bold aspiration” that the company would move 100 per cent of its products to the cloud – a move that Narayen saw as crucial to futureproofing the company, as it could make faster product updates in real-time rather than via its former 18-24-month cycle due to being reliant on a physical product.
“He said: ‘We’re not going to sell shrinkwrap software anymore.’ Now, at the time, he didn’t know if they could do that or not, so he wasn’t going to destroy the model that sold the shrinkwrap software. But 18 months after the start of this transformation, they did announce that they were no longer going to sell shrinkwrap software.
“They were one of the first, biggest and most successful [transitions to the cloud]. Now they’re doing the same thing with AI. They want AI features in all of their products by the end of 2025. I wouldn’t be surprised if they’ve already achieved this.”
So what did Adobe do differently? Beyond setting a bold aspiration, it also utilised the capabilities of its leadership team strategically. One interesting point that Mankins notes is that its Chief HR Officer, Gloria Chen, is also the organisation’s Chief Customer Officer.
“This emphasises how much cross-functional thinking there is at Adobe.”
It also highlights the importance of taking a broad, enterprise-wide view when working in HR and not only focusing on enhancing internal stakeholder experiences, but external stakeholders’ too.
“The traditional functions at Adobe were all individually great, but they had to change. It’s all about cross-functional cooperation and engagement.
“You can train people to be more effective in teams and work more collaboratively. You can also reward cross-functional teams based on the team’s overall performance, versus stacked ranking of individuals within teams. That facilitates greater collaboration.”
Mankins notes that simply telling people to stop setting targets probably isn’t going to work. Most CEOs, CFOs and CHROs will likely believe that targets are important, he says.
“So the question is, ‘How can you do that in a way that’s effective?’ If you’re going to set targets rather than aspirations, how can you do it in a way that’s most likely to produce change?”
He suggests instead of setting targets in relative terms (e.g. We will improve training completion rates by 25 per cent year-over-year), which leaves you open to leaders debating the baseline, consider doing so in absolute terms (e.g. We will maintain an employee engagement score of at least 80 per cent in our 2025 survey).
“If you have head count targets, don’t state them in terms of headcount reduction, state them in terms of the total size of the organisation that you want to have by the end of 2026. Because that’s trackable – you can’t debate the baseline. The total is the total. You hit that or you don’t.”
Read HRM’s article on effectively enabling enterprise-wide change.
Mistake #4: Transformation projects are usually driven from the top down
Senior leaders are sometimes disconnected from the realities of what’s happening in the business at a granular level. They don’t necessarily have the right amount of detail into specific pain points, work flows or enablers within each team – and they shouldn’t be expected to.
However, when transformation initiatives are set from the top without consultation with other levels in the organisation, it can result in the transformation being less sticky – or a complete failure.
The same goes for those sitting in the lower rungs of the organisation, says Mankins.
“They lack the context necessary to understand the magnitude of what needs to change. So they have a tendency to recommend things that are simply tweaks rather than wholesale change.”
Successful transformations are managed from the middle out, he says.
“The middle level of management [should be] rewarded, accountable for and essentially empowered to drive the identification of breakthrough changes that can produce fundamental step-change improvements in performance, however that’s defined.”
Mistake #5: We don’t factor in energy levels often enough
Most employees are naturally resilient to change – after all, the pandemic years demanded it. However, when organisations subject their people to continuous, overlapping waves of change without factoring in energy management and recovery, they risk fostering change fatigue and growing employee resentment. Over time, this can erode engagement, productivity and trust in leadership.
“The most successful transformations manage organisational energy explicitly,” says Mankins. “[Leaders] sort of treat it like an engineering problem. You can only ask certain people to change so many things at the same time.”
This is why it’s important to develop processes and frameworks (such as the example below) to consistently monitor energy levels in relation to transformation projects.
Part of energy management is also about considering how many things you might change at once.
“If you ask organisations to change two or more of their standard routines at a time and they shut down. [Employees] start spending a lot of thinking about how they are going to resist the change as opposed to how they are going to cope with it.
“You need to figure out how you sequence things so employees are not overloaded.”
Another way to avoid depleting a team’s energy levels towards embracing change is to make sure that transformation efforts don’t only focus on financial gains, which employees may view as self-serving, compromising their buy-in, engagement and morale.
“It’s incredibly important to set more than just financial targets. The successful transformations we looked at typically had at least a customer experience measure as well as performance measure. Some also set some kind of human capital measure. Glassdoor ratings tend to be one people use.”
Importantly, these weren’t always stated as targets but as objectives that the business needed to meet.
“For example, they might say that we can’t do anything that reduces the customer net promoter score or increases our carbon footprint. These are certain constraints which mean you can’t make decisions to [quickly] cut costs in a year, which cost you a lot in terms of customer loyalty or employee engagement.”
“Successful transformations actually don’t set targets, per se. They set aspirations. It’s about things that are beyond the scope of what we know how to do – and that’s the point.” – Michael Mankins, Partner at Bain and Company
He refers again to Dell Technologies as a company that is doing this well. All employees have the same four performance targets: meet your operating plan, grow relative market share, increase customer net promoter scores and improve employee net promoter scores.
Employees will then also be financially rewarded for meeting or exceeding all four of those performance targets.
“Reward people for identifying ways that would improve performance [even more]… it’s important that there is an upside associated with going beyond [set targets].”
When organisations exhibit five or six* of these attributes when setting a transformation goal, they can experience a five-fold improvement in their success rate, says Mankins.
Ultimately, transformation success isn’t just about setting bold targets – it’s about embedding them into the organisation’s operating rhythm, aligning incentives and ensuring that constraints are carefully considered.
By adopting these principles, organisations can significantly increase their chances of achieving meaningful, lasting change – not just incremental improvements, but transformation that truly moves the needle.
*The sixth attribute to a successful transformation, which is not expanded upon in this article, was accessing external capital to fund transformation initiatives rather than deploying internal cost-cutting methods in a bid to fund such projects, which often lead to underfunding them.
Gain the required knowledge and skills to navigate organisational changes successfully in your business with AHRI’s Change Management short course.