1. Organization Transformation
POINT OF VIEW
CHANGING BEHAVIORS TO DRIVE
GROWTH AND PERFORMANCE
A ROADMAP TO OVERCOMING RESISTANCE AND ACHIEVING
SUCCESSFUL TRANSFORMATION
For most executives and senior leaders today, the consequences of not
transforming organizations at the right moment or of managing change
poorly are much more visible and more widely understood. Once-successful
companies considered “too big to fail” have done just that, by not addressing
performance issues in time, by sticking to a flawed strategy in the face of
disappointing results or by simply not embedding the required behaviors to
deliver sustainable results.

2. Copyright © 2013 Oliver Wyman 2
OVERCOMING
OBSTACLES
TO CHANGE
The first thing leaders of change have
to realize, as they prepare to turn
everybody’s life upside down, is this
one simple truth: for the foreseeable
future nobody is going to love them
for what they’re about to do.
For most people, the notion of
dramatic change is downright scary.
The natural response is resistance;
it might not be obvious or overt, but
rest assured it’s there. The depth
of this resistance bears a direct
correlation to the scope and intensity
of the change at hand.
Because resistance is so common,
learning to overcome it is crucial
to managing change at every level.
The issues inherent in transitions
present problems and challenges
no CEO can handle without the
active support of senior executives
and middle managers up and
down the line.
– David A. Nadler
Champions of Change, How CEOs
and their Companies are Mastering
the Skills of Radical Change
ACCELERATING SUCCESSFUL
BEHAVIOR CHANGE
Why is it that about two-thirds of major organizational transformations still fail
to achieve their stated goals, despite the reality that “ability to lead change”
is now a required core competency in most leaders’ job descriptions? From
experience, we’ve learned that most efforts derail because people are not
fully engaged in, or committed to the transformation and don’t adopt new
ways of working that will sustain changes for the long term. When we analyze
change efforts that are in trouble, what we see most often is that one or more
of the following has been forgotten or taken for granted:
SETTING CLEAR AND SHARED OBJECTIVES
FOR THE TRANSFORMATION
It’s difficult to motivate people to support – let alone drive – a trans­formation
effort if they’re at all fuzzy about what the organization is trying to achieve,
what the desired end state looks like, and why they might care about
getting there.
ENGAGING LEADERS IN THE CHANGE PROCESS
Failure of leaders at all levels to engage their teams and act as role models
for the change is a sure path to disappointment. Any whiff of dissension
or misalignment among the senior leaders over the fundamental strategic
direction of the change – as opposed to the details of how to get there – will
encourage people to retreat into wait-and-see mode and ultimately delay
the application of new ways of working.
OVERCOMING RESISTANCE TO CHANGE
Change is a journey – creating an emotional connection to the future is
an essential ingredient to initiate movement. Likewise, providing tools,
training and time while building awareness, understanding and ultimately
commitment, are all keys to overcoming resistance.
PERSISTENCE, FOLLOW THROUGH, AND ACCOUNTABILITY
Some leaders confuse the direction to “make it so” with an actual
transformation. Many leaders vastly underestimate the resources,
time, and effort that will be required to execute well. Unclear
accountability, insufficient attention to managing risks, and lack of
regular monitoring against clear targets are all factors we see at play
in organizations that are struggling to execute or sustain change.
Thenecessityofpayingattentiontoalltheseissuesdoesnotreallycome
asasurprisetoexecutiveswhenweidentifytheweaknesseswesee.The
challengeisthatmostwerealreadyworkingflat-outontheirdayjobswhen
thetransformationeffortwasaddedintothemix.Tryingtomanageboth
duringamajortransformation–lastingmonthsorevenyears–isnota
sustainableproposition.

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CHANGING BEHAVIORS TO CLOSE THE PERFORMANCE
GAP AND ACHIEVE SUSTAINABLE RESULTS
Organization transformation can be a messy and
difficult journey – especially because it typically
requires people to join a journey, not of their choosing.
In our experience, the likelihood of staying on course
and reaching the destination goes up dramatically if
leaders focus on six key elements on which they must
personally engage.
We know that at the launch of any major transformation
effort, productivity will immediately go down as
people turn their attention to mentally processing
what’s happening and what it might mean for them.
A disciplined, well-executed change plan can make
this gap smaller and close it faster. It can minimize the
transition costs – in terms of actual funds expended
and time before benefits are realized – and also the
soft costs of disruption to customers, employees,
and shareholders...clearly elements of success.
1. ESTABLISH THE VISION AND ARTICULATE THE CASE
FOR CHANGE
A clear view to where the organization is heading and a strong business rationale is essential.
The fact that this mantra is repeated in every discussion of change doesn’t make it any easier
to do. Leaders are often very clear in their own minds why the organization must move in
different directions, but struggle to put it into terms that will resonate with others.
What is the key business challenge the transformation is addressing? Outdated strategic
positioning coupled with increased threats from new competitors? Costs going up while
revenue stays flat? Exodus of key talent? Loss of ability to innovate? Whatever the reason
driving the need to transform, it’s important to set measurable (and achievable) targets that
ground the change in something concrete. Doing so helps people to see the destination,
and understand how they’ll know when they’ve reached it and clearly links the vision
to the expected benefits from the perspective of the shareholders, the company and
the employees.
Although change can be complex, using the power of leaders communicating and cascading
to leaders, with patience, persistence and commitment, top leaders can share and establish
the case for change with hundreds of middle and front line managers who can ultimately
reach the front line employees.
EXHIBIT 1: DEFINING SUCCESS
TIME
Response to
change if transition
is well-managed
The typical
response
to change
PRODUCTIVITY
Source: Adapted from William Bridges’ Managing Transitions
“Transformation is a
strategic imperative. It is
the CEO’s job to manage
the transformation. To
speed it up if necessary.
It means overcoming
any resistance to change
in the organization. It
means disrupting the
status quo. The CEO
has to communicate
his vision, and to keep
everybody on board.”
SCOTT DAVIS
CEO, UPS

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EXHIBIT 2: A SENIOR TEAM THAT THINKS AND ACTS AS A TEAM IS A MUST-HAVE FOR SUCCESS
CEO LEADING THE CHARGE EXECUTIVE TEAM LEADING THE CHARGE
DECIDING TO PULL
THE TRIGGER
•• Making sure you have a license
for change (board approval, ...)
•• Confirming your hunches on
the vision, case for change and
future state
EMBARKING THE
EXECUTIVE TEAM
•• Building the case for change
(why, what, how, when)
•• Building the target blueprint
•• Taking ownership of the change
•• Adjusting the team as/
if necessary
MOBILIZING THE
LEADERSHIP COMMUNITY
•• Communicating the case
for change
•• Presenting the new
organization principles
•• Ensuring buy-in, leading
by example
•• Addressing pockets
of resistance
•• Engaging leaders in thematic
workstreams
EMBARKING THE
WHOLE FIRM
•• Rolling out the new organization
•• Leading change (envisioning,
energizing, enabling)
•• Providing guidance and
coaching
•• Monitoring and
managing change
2. ENGAGE AND DEVELOP AN ALIGNED
LEADERSHIP COMMUNITY
A cornerstone of the foundation is the engagement strategy. Once again, skipping steps
in this process in the interest of speed often leads to circling back and time wasted.
Engagement starts with a shared vision and a definition of the future state. Then, there
needs to be a clearly defined mandate with the associated resources and a clear view of the
expected returns. Next up is gaining alignment among the senior leaders who will play key
roles in making change happen and/or influence how others will view it.
Gradually the circle of engagement widens to the larger leadership community. Time
spent with front-line managers in advance of broader communication is a wise investment.
Employees will listen to messages from the top, but then turn to their direct managers to
understand what it really means to them. If managers are taken by surprise, the risk is they’ll
speculate wildly or wonder out loud whether senior management knows what they’re doing.
Briefed in advance and equipped to answer questions, they can be supportive change agents.
“In an uncertain
environment, people
naturally look for
leadership. They are
looking for a vision.
If you are honest
with them and if you
consistently walk the
talk, the organization
will start to believe.”
PETER CUNEO
former CEO,
Marvel Entertainment

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3. TAKE A SYSTEMATIC PERSPECTIVE LINKING STRATEGY
AND ORGANIZATION
We think of organizations as systems – where strategy in response to external drivers
ultimately defines organizational performance. In a high-performing organization,
there is a high degree of congruence or “fit” among the major building blocks.
work. While some organization systems are more favorable for cost reduction and
operational efficiency, others are capable of unleashing the potential for growth.
Whenever anything changes in any one of these – the environment, the strategy, the
people, the work, or the formal and informal organization – the whole system goes out of
whack and performance suffers. Tinkering with one piece without analyzing the impact
on the whole can be dangerous.
EXHIBIT 3: THE CONGRUENCE MODEL INTEGRATES THE VARIOUS ELEMENTS OF TRANSFORMATIONAL CHANGE
Strategy Work
Formal
organization
Performance
Informal
organization
People
State at
departure,
constraints,
resources and
environment
OUTPUT
Desired state,
behaviors and
operating
model and
performance
INPUT
Note: Congruence Model: Tushman/Nadler
“With Airbus’ current
decision making
process,youcaneasily
lose 3-6 months. We
want to recreate the
sense of operating as
multifunctional teams
on a local level.”
FABRICE BREGIER
CEO, Airbus
4. IDENTIFY DRIVERS TO SHAPE BEHAVIOR
To change behavior, it’s important to understand its roots in the organization. Behavior is
shaped by organizational systems, policies, and practices, as well as leaders’ behavior.
Changing employee behavior requires changing those aspects of the organizational context
that produce or “drive” the behavior – examples include: compensation, professional and
career development, performance metrics, and the mechanics of recognition and reward.
Considering these drivers and the extent to which each driver supports or inhibits the
desired behavior is key to aligning desired behaviors to the vision, future state and ultimately
the desired performance outcomes.

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“The leader must shift the
culture, the employee
mindset, from living with
the status quo, to one
that celebrates success.”
JIM SKINNER
former CEO,
McDonald`s
EXHIBIT 4: CULTURAL DIMENSIONS AND BEHAVIORS TO ALIGN WITH STRATEGIC PRIORITIES
STRATEGIC
WHAT PEOPLE FOCUS ON
WORK
HOW PEOPLE APPROACH THEIR WORK
INTERPERSONAL
HOW PEOPLE WORK TOGETHER
External Orientation
•• Competitor focus
•• Customer focus
Corporate Responsibility
•• Corporate responsibility
Process excellence
•• Cost sensitivity
•• Discipline/rigor
•• Quality/excellence
Growth
•• Partnerships
•• Acquisitions
Autonomy
•• Independence
•• Uniqueness
Adaptability
•• Flexibility/adaptability
Entrepreneurial spirit
•• Entrepreneurship
•• Innovation
•• Creativity
Learning Orientation
•• Learning orientation
Future Orientation
•• Future orientation
Enthusiasm
•• Energy
•• Optimism
Bias for Action
•• Calculated Risk-taking
•• Speed
•• Aggressiveness
•• Results orientation
Personal Responsibility
•• Personal responsibility
Cooperation
•• Cross-unit collabration
•• Teamwork
•• Collegiality
Informality
•• Fun
•• Informality
Ehtics
•• Integrity
•• Respect
•• Acceptance of diversity
Openess
•• Open debate/courage
•• Openess/honesty
•• Trust
Diplomacy
•• Diplomacy
5. ANTICIPATE AND MANAGE RISK ­–
MANAGING THE EMOTIONAL RESPONSE
Leaders are continually surprised by others’ “irrational” responses to change – and
sometimes also by their own. Even when people intellectually accept that transformation
is necessary for the organization, there are darker forces at play that should not be ignored.
They fear loss of control as they try to imagine themselves in an unfamiliar context. They
suffer anxiety about the future and how it will impact them personally. The power games
ramp up as people jockey for position or try to protect themselves and their teams by not
taking sides or showing all their cards too soon.
Transformation leaders should expect to spend considerable time managing and shaping
these dynamics. Whether it is garnering support from the informal power groups,
motivating constructive behaviors or simply working with their own teams to reassure key
people, it will be important to acknowledge these natural responses while being clear on
the expectation that they will be handled appropriately, to reassure without sugar-coating
reality, and to constantly remind people of the case for change and the end state vision.
6. MANAGE THE PACE OF TRANSFORMATION
The team needs to understand what time pressures they are under and leaders need to think
carefully about how pacing and sequencing change. What is the right balance between
speed-at-all-costs and thoughtful execution? At what point does a motivating sense of
urgency tip over into burnout, low morale, and sloppy work?

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EXHIBIT 5: MANAGING THE PACE OF TRANSFORMATION TO ENSURE SUSTAINABLE SUCCESS
Engage
leadership
Executive
alignment on
vision, strategy,
desired culture
and behaviors
Assess gap
between current
and desired
behaviors
Audit the key
drivers of
the desired
behaviors
Design targeted
interventions to
change drivers
Prepare
change plan
Transition
Change
monitoring and
adjustments
Stabilization,
light monitoring
and continuous
improvement
TRANSITION IMPROVEMENTFOUNDATION
In setting the pace of change, it’s important to remember that there are steps to be taken in
logical order. Trying to jump to the middle without laying the foundation rarely works. It’s
also dangerous to think that the transformation is complete when the transition is over.
Neglecting to build in time to adequately monitor what’s happening, to adjust plans and
to continuously improve are also errors shared by leaders in a hurry to see the results of
change – this generally backfires and makes sustainability virtually impossible.
TAKING ACTION
The reality is that senior leaders really have two jobs for the duration of any given
transformation. One role should be focused on short-term objectives and day-to-day
operations. The other focused on engaging people, overcoming resistance, changing
behaviors and driving the strategic change agenda.
Here are a few questions that CEOs and senior executives must address to change behaviors
and drive sustainable results:
1. Have we created a compelling case for change and communicated the vision of
the future?
2. Have we taken the time as a leadership team to ensure we’re aligned and committed
to the process?
3. Do we understand our role as change leaders and are we prepared to help our
employees overcome their resistance?
4. Have we identified the necessary behaviors and the drivers that will make us successful?
5. Are we managing the transition so the desired behaviors are encouraged and rewarded
and there is no chance of reverting to the status quo?
Armed with answers to these questions, we believe leaders will be able to achieve their
expected results faster, in a manner that reduces risk and with the behaviors that will support
growth and sustain performance in the long term.

8. Copyright © 2013 Oliver Wyman
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With offices in 50+ cities across 25 countries, Oliver Wyman is a leading global management consulting firm
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Oliver Wyman’s Organization Transformation practice works with C-suite leaders and business unit executives to
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consulting services throughout the entire transformation process, including strategy execution, organizational review,
implementation support, and attainment of measurable results.
For more information please contact:
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laurent.thomas@oliverwyman.com
SCOTT DURIE
scott.durie@oliverwyman.com