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THE TRANSFORMATION FIRM

What does it take to transform?

Across 30+ years running change agendas as operators and studying them as management consultants, we keep coming back to five conditions that separate the transformations that realize their ambition from those that don’t.

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THE STATE OF TRANSFORMATION
All companies
100%
50%
Recently underwent or will soon undergo a major cross-functional change effort
Outcomes of major change efforts
38% Fail to deliver more than 50% of expected value
50% Settle for partial value
12% Achieve their goals
Source: Harvard Business Review, “Transformations That Work,” May 2024
Every leader can be in the 12%.
What does it take?
OUR CORE HYPOTHESIS

An organization aligned around a strategy— with the capacity and capabilities— that is acting in a structured approach can achieve its transformation ambition.

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The next decade will be defined by transformation. AI is changing how work gets done and reshaping the economics of entire industries. At the same time, companies are navigating a volatile tariff and trade environment, generational ownership transitions, private-equity hold periods and exits, changing labor markets, consolidation, and continued shifts in customer expectations. For many leadership teams, transformation is no longer an occasional response to a crisis. It is becoming a persistent part of running the business.

We know what that challenge feels like from inside the organization. As CEOs, functional executives, and Heads of Transformation, we were asked to drive cross-functional change without controlling every resource or decision. The job depended on coordination, persuasion, influence, and clarity — getting leaders aligned, creating room for people to do the work, and helping the organization understand how it needed to show up differently.

There is no shortage of advice on how to lead transformation. Bain emphasizes putting the right talent in critical roles, protecting their capacity, and building the capabilities the future organization will need. McKinsey has identified more than 20 actions associated with successful transformation. The research is valuable, but it can leave the executive responsible for the work with an unwieldy management agenda. The practical challenge is turning dozens of good ideas into a small number of things a leadership team can actually manage every week.

Our answer is: An organization aligned around a strategy — with the capacity and capabilities — that is acting in a structured approach can achieve its transformation ambition.

We believe that statement boils the work down into five manageable parts that can be applied across company sizes and change environments — whether the agenda is a full-scale business transformation, an integration, a turnaround, a functional redesign, or an AI transformation.

Strategy
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THE FAILURE POINT HAS MOVED

Strategy is the scarce allocation of resources. It defines the goals you are pursuing, the markets you choose to compete in, and how you intend to win in those markets.

Historically, many strategy failures started with where to compete: misreading a market, backing the wrong product category, or failing to anticipate a shift in customer behavior. Over the last 20 years, companies have gotten better at this. Not perfect — but better.

Today, the more common miss is how to compete successfully. Companies choose a direction without fully defining the capital, talent, capabilities, and operating changes required to win. Goals reflect the new strategy, while budgets and resource allocation remain anchored in the old business.

The organization never fully reorients around the choice because it never fully understood what the choice required.

HISTORICAL FAILURE POINT Where to compete
MORE COMMON FAILURE POINT TODAY How to win
Alignment
ALIGNMENT BREAKS AT THE SEAMS

Alignment is where strategy becomes cross-functional execution. Most organizations work reasonably well within functions; they break down at the seams.

Misalignment usually shows up in two places:

Decision-making. Leaders understand the strategy, but not always the cross-functional implications of their choices. A good functional decision can still be a bad enterprise decision.

Talent allocation. The same top performers get spread across too many priorities, with unclear tradeoffs about where they should spend their time.

Capacity
TRANSFORMATION CAPACITY IS ADDITIVE

Capacity is the ability to run the transformation while still running the business. In practice, very little actually stops. “Start / stop / continue” exercises may re-prioritize work, but they rarely remove enough from the agenda to create meaningful transformation capacity.

Executives and middle managers can reallocate time, delegate more, and push decisions down. But the core business still has to operate.

Capacity failures usually show up in two places:

Internal capacity. The transformation is layered onto already-full roles, with unrealistic assumptions about how much time leaders and middle managers can actually dedicate to the work. The assessment is whether the organization has enough protected management capacity to carry the change program without starving day-to-day performance.

External capacity. The organization underestimates the additional support required to close the gap — transformation leadership, program management, functional expertise, technical resources, or temporary execution capacity. The assessment is whether the company has added enough outside capability to match the scale and pace of the transformation.

Capabilities
THE CHANGE AGENDA CAN OUTRUN THE ORGANIZATION

Capabilities are the management skills, operating skills, and proprietary assets that allow a company to win. Every organization has a core capability set where it is stronger than competitors; ideally, the change agenda builds on those strengths.

The harder transformations are the ones that require capabilities the organization does not yet have.

Capability failures usually show up when leaders are slow to identify what is newly required and then slow to decide whether to build, buy, hire, or partner for it.

Structured Approach
DISCIPLINE BEFORE AND AFTER THE WORK STARTS

A structured approach is how a change agenda becomes a sequence of executable initiatives. Most companies move too quickly from an idea to “go do it,” without enough discipline around how the initiative is formed.

Structured-approach failures usually show up in two places:

Initiative setup. The work starts before the facts are understood, alternatives are developed, choices are made, and resources are explicitly committed.

Operating cadence. Once the initiative starts, there is no consistent rhythm for reviewing progress, resolving issues, making decisions, and holding owners to commitments.

Great transformations do not just start the right work. They finish it.

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