BCG – The Science of Organizational Change

There is a gap between where most organizations are today and where they will need to be to succeed in the coming decade. The companies that win in the 2020s will be designed to constantly learn and adapt to changing realities, combine artificial and human intelligence in new ways, and harness the benefits of broader business ecosystems. Reaching this necessary future state will require a fundamental transformation.

This change effort will be challenging. Many businesses have deeply entrenched operating systems that are predicated on hierarchy and human decision making. They will need to redesign their internal processes and build new capabilities and business models. Furthermore, this will not be a one-time change effort: the dynamic nature of business will require organizations to build capabilities for ongoing large-scale change to keep up with evolving technology and competition.

Traditional approaches to enacting organizational change are generally not very effective. Change management is generally thought of as one-size-fits-all and based on plausible rules of thumb. But our research shows that only about one in four transformations succeeds in the short and long run, and the success rate has been trending downward. Meanwhile, the stakes are extremely high: the cumulative difference between success and failure for the largest transformations over a decade can add up to the company’s entire market value.

Leaders need to take a new approach to change—one that deploys evidence, analytics, and emerging technology. In other words, leaders must apply the emerging science of organizational change, which is based on five key components. (See Exhibit 1.)

  1. Ground change programs in evidence.
  2. De-average change strategies according to the nature of the challenge at hand.
  3. Embrace uncertainty and complexity in change management.
  4. Use technology to identify the right talent to execute change.
  5. Tap into emerging science to enhance change programs.

By Lars Fæste, Martin Reeves, and Kevin Whitaker

More: www.bcg.com/publications/2019/