Transformational Leadership

1
Transformational Leadership
Presentation to the 6th World Chambers
CongressKuala Lumpur
June 4, 2009
CONFIDENTIAL AND PROPRIETARY Any use of this
material without specific permission of McKinsey
Company is strictly prohibited
2
According to last Quarters survey most business
leaders are experiencing significant change
Percentage of organizations undertaking major
change efforts
Cost cutting
Restructuring
Searching for MA
SOURCE Economic Conditions Snapshot, March 2009
McKinsey Global Survey Results
3
We know leading successful change during tough
times redefines industry winners
,
Recessions lead to a significant re-shuffling of
industry leaders
And so the cycle goes recessions happenand then
they come to an end
Leadership changes in recession1 1998 2002
Real GDP change (over prior quarter)
Recession
100
100
40 of leaders were not leaders prior to recession
40
60
60 of leaders retained their leadership position
Pre- Recession Leaders
Post- Recession Leaders
15 recessions in US in the last 100 years
1 Before recession ranking based on 1998 and
1999, after recession ranking on 2001 and 2002
evaluating change in position of 1,024 US
industrial companies
SOURCE McKinsey analysis
4
Leading a successful transformation is tough
10
How successful was the transformation overall in
reaching the targets your company set?
Extremely successful
Just over a third of our respondents said their
transformations succeeded
Successful
Very successful
Somewhat successful
Unsuccessful
Not successful at all
Source McKinsey Quarterly Performance
Transformation Survey, July 2008
5
We also found change takes place in different
contexts and in todays context the likelihood of
success is lower
34
Percentage of all transformations1
Progressive
Offensive
16
12
Success rate 1 in 2
Transformation objective
Defensive
Defensive
14
19
Success rate 1 in 3
Reactive
Proactive
Transformation trigger
1 39 of transformations fit into an other
category
4
Source McKinsey Quarterly Performance
Transformation Survey, July 2008
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4 sets of tactics improve the odds of a
successful transformation
Change management tactic
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• Establishing well-defined stretch targets

Aspiration
2

• Assuring strong CEO/senior leader involvement

Leadership
3

• Organizing a clear structure for change

Process
4

• Ensuring frontline ownership
• Using an equal mix of positive and negative
  messages
• Launching large-scale, collaborative planning
  effort

Energy
Source McKinsey Quarterly Performance
Transformation Survey, July 2008
7
Setting a well defined stretch target is the
single tactic most tied to success
1
Nearly 90 of change efforts with badly defined
targets failed
Not ambitious/ stretching enough
Incremental
Here today, gone tomorrow
Wrong balance between performance and health
Unengaging, failure to mobilize
Lack of focus and precision
No momentum, fail to sustain
Slow pace of transformation
Source The discipline of leading
transformations (Lecture by Giancarlo
Ghislanzoni) PT tool kit
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The power in these tactics are when they are
used together
Success rate of transformation Percent
Used stretch-targets tactic plus any 2 others
Used any 1 tactic
Used stretch-targets tactic only
Used all 6 tactics
Used none
Use of tactics
Source McKinsey Quarterly Performance
Transformation Survey, July 2008