How do you self-disrupt, not self-destruct?
Article was written by Adam Lee Canwell, Oceania Workforce Advisory Leader, EY and Andrew White, Senior Fellow in Management Practice, Saïd Business School, University of Oxford
Failed transformation is rarely about technology. The tech sector understands this better than any. But recent research from EY and the University of Oxford’s Saïd Business School provides the evidence to help the tech sector transform the way it transforms.
Studies consistently show that only 10% to 30% of transformations succeed. But as the rate of change accelerates, corporations can no longer consider transformation a once-in-a-decade event. It is now a continuous process of self-disruption.
The 2021 CEO Imperative Study of EY found that 65% of the world’s top 2,000 companies plan to spend 20% more on transformation in the next three years than they did in the last three. So how do organizations build the institutional capabilities and culture to transform again and again?
In 2021, we investigated the “secret sauce” of successful transformation programs. We surveyed 935 senior leaders, direct reports, and 1,127 employees, around half representing a successful transformation project and the other half an unsuccessful one. The respondents came from 23 countries, seven industries and 16 sub-industry sectors. We also took 25 deep-dive interviews with CXOs from multiple global companies.
We wanted to understand the emotional state of both leaders and employees, and to map the twists and turns they take, depending on success or failure.
All transformations start at the same emotional point: excitement and optimism. But as the going gets tough – and all transformations, by their very nature, are hard – negative emotions emerge. As pressure is applied, confidence dips.
Pressure is not always bad. At the gym, for instance, we must tear our muscles to build strength and boost performance. So, too, pressure in the right conditions can lead to higher performance because we learn to do better.
But there is a point where an unsuccessful transformation begins to spiral downward. Stress shifts from a motivating factor to one that reduces productivity, drive and job satisfaction. Negative emotions spike and underlying challenges become harder to address. Leaders start to distance themselves to reduce their own brand damage.
Without a compelling vision or a visible shift in resources, workers also lose faith in the transformation. They often bear the brunt of the failure and feel broken by the experience. Workers we interviewed who had experienced an underperforming transformation were more likely to see the process as “just another word for layoffs”, to be more worried about job security, and to believe the change was never necessary in the first place.
Stepping back onto the transformation treadmill
If successful transformation builds muscle that allows organizations to step back onto the transformation treadmill, what are the factors that increase the odds of success? Transformations with humans at center can double your success. With the help of predictive analytics, our research team identified six key drivers that can improve the odds of better transformation performance by more than 2.6 times. These are:
- Lead: Adapt and nurture leadership skills
Workers rank leadership as the top driver regardless of the success or failure of the transformation. Leaders, on the other hand, see leadership as the number one driver in successful transformations, but as inconsequential when the transformation underperformed.
- Inspire: Create an inspirational vision your workforce believes in
Nearly half (47%) of the respondents in a high-performing transformation said the vision was clear and compelling compared with 26% of those in a low-performing transformation.
- Care: Build a culture that embraces and empowers everyone’s opinion
Leaders who provided greater emotional support improved the average likelihood of transformation success by 17%.
- Empower: Set clear responsibilities and be prepared for change
More than half (52%) of the respondents in high-performing transformations said that employees were assigned clear roles and responsibilities, and 49% said that decision-making authority was delegated appropriately (versus 29% in low-performing transformations).
- Build: Use technology to drive visible action
Nearly half (48%) of the respondents in successful transformations said investment in the right technologies helped to meet the transformation vision versus 33% of the respondents from underperforming transformations.
- Collaborate: Find the best ways to connect and co-create
Forty-four percent of the respondents in high-performing transformations said that their organization’s culture encouraged new ways of working, compared with 28% in low-performing transformations.
What’s the name of the game?
Riot Games, one of the most sophisticated technology companies in the world, understands that transformation is a human journey. Riot Games, the developer and publisher behind blockbuster PC games, including League of Legends and Valorant, needed to transform its culture.
Riot had a clear mission – to be the most player-focused game company in the world. But to meet that mission, Riot’s leaders recognized that they needed to build an inclusive environment where all voices could be heard.
As Senior Vice President and Head of Global Corporate Affairs Gaude Paez explains in Oxford University’s podcast on transformational leadership. “Empathy played a massive, massive part” in the transformation. Creating a psychologically-safe environment took months of careful communication, and was backed up by a clear technology strategy. For example, internal communication evolved from large open forums where people with the loudest voices could express themselves to channels that aligned with specific brand pillars. This encouraged “a much more interesting dialogue and information sharing and feedback loop”.
Humans were placed at the center of every company decision, even the “tech heavy” ones. Leaders asked: “How is [the change] communicated? Who’s involved in the decision? How do we bring people along for the journey? And how do we give people the ‘why’ behind it so that they understand why this change is happening?”
With a “deliberate” and “methodological” approach to transformation, Riot Games co-created a social movement that has transformed its operational model and culture, boosted employee engagement and readied it for the next phase of growth. What does Gaude Paez advise other leaders thinking about the tough transformations ahead? “Transparency is key, and it doesn’t always have to be scary. Give people credit for just how open they are to receiving honest conversation.”
Riot’s experience aligns with our research. In our study, 79% of workers reported positive emotions after a successful transformation, the majority of which were happy or content – 50% higher than before the transformation.
Change is always hard – but constant change can be overwhelming and exhausting. How does an organization self-disrupt, not self-destruct? Start with the six drivers that put humans at center.
The views reflected in this article are the views of the author and do not necessarily reflect the views of Tech Wire Asia and the global EY organization or its member firms. The views of third parties set out in this publication are not necessarily the views of the global EY organization or its member firms. Moreover, they should be seen in the context of the time they were made.
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