Introduction

Excellence Found

What is the greatest invention of all time? In our view, it isn't the wheel, it is the organization: people working together toward a common goal. Organizations can achieve feats that go far beyond anything that individuals can accomplish alone. As each successive generation finds better ways of working together, it performs at levels that could barely have been imagined a few decades earlier. And when there are improvements in the effectiveness of our organizations-whether they be private enterprises, governments, public agencies, charities, community groups, political parties, or religious bodies-these gains translate into benefits for society as a whole. Innovations such as mass production, public transport, space travel, the internet, and the mapping of the human genome are all products of human organizations.

When we wrote the first edition of Beyond Performance almost a decade ago, we emphasized what it takes to lead and manage an effective organization (a "healthy organization"). We then outlined the change management needed to get there (the "Five Frames of Performance and Health"). In this, the second edition, we've chosen to flip the emphasis. Why? Well, quite frankly, because you-our readers who lead organizations-told us to! We've received countless e-mails, phone calls, and personal outreaches indicating that struggling change programs had been unlocked by applying the Five Frames of Performance and Health. Further, new change programs that employed the Five Frames of Performance and Health as their change methodology from the outset were delivering results far beyond expectations.

The feedback seemed almost too good to be true, based on the history of the field of change management. As many readers will no doubt be aware, in 1996, Harvard Business School professor John Kotter published one of the best-selling books on the topic, Leading Change. In it, he reported that only 30 percent of all change programs succeed and offered an eight-step process for managing change. The popularity of his work triggered an explosion of thinking on the topic. In the 15 years that followed, over 25,000 books were published, hundreds of business schools built change management into their curricula, and many organizations created change management functions. By 2011, when the first version of Beyond Performance was published, one would have expected success rates to be much higher. The facts, however, were clear: multiple studies, including our own, had shown that the odds of leading a successful change program remained unchanged: just 30 percent.1 The field of change management, despite its prolific output, hadn't changed success rates.

Before we go on, we want to be clear that we are not intending to say that all of the work done by many brilliant people wasn't good and helpful. In fact, it's possible that maintaining 30 percent success rates in a rapidly changing external environment is proof that the state of the art has been continually advanced, and it's also possible-and even likely-that the two variables are intrinsically linked (the more change programs succeed, the more the overall pace of change in the world at large increases). Our goal wasn't to unravel these complex dynamics at play, however, it was simply to offer a better way. Why? Well, put it this way: If we needed to get to London from New York for an important meeting and upon boarding the plane the pilot said, "Welcome aboard, there's a 30 percent chance we'll make it as far as London today.," we certainly wouldn't stay in our seats and discuss why-we'd disembark and catch a different flight with better odds!

Flipping the Odds of Success

Almost five years after Beyond Performance was written, we felt enough time had passed that we could test whether the positive messages we were hearing reflected a broader reality. We conducted a global survey of 1,713 executives who had been part of at least one large-scale change program in the past five years. The sample represented a full range of regions, industries, company sizes, functional specialties, and tenures. The results spoke for themselves: 79 percent of those organizations who fully implemented the recommended Five Frames of Performance and Health methodology reported change success.2

We were obviously thrilled to see these results. First and foremost, however, we credit them to the determined leaders of the change programs in question-having a process and tools laid out is one thing; getting the job done is entirely another. As London Business School professor and influential management thinker Gary Hamel said, "Changing things at scale is never easy: the endeavor is always complex, perilous, and gut-wrenching."3 William C. Taylor, the co-founder of Fast Company, agrees: "The truth is, the work of making deep-seated change in long-established organizations is the hardest work there is."4

We also attribute the results to the many members of McKinsey's Global Leadership and Organization Practice, whose work and insights shaped our methodology. We also add to our acknowledgments the experience and research of innumerable leaders around the world and throughout history whose thinking has informed our methodology-within the Five Frames there are numerous tools and approaches that we in no way claim to be our own. We have endeavored to be students of all that has come before us, and as such, the results are also a validation of what in many ways is our life's work. Both of us have been part of the group that has directed the research that led to this book since its inception almost 20 years ago, and have spent our careers applying the approaches as consultants to organizations around the world. True to Malcolm Gladwell's perspective on what it takes to become an expert, by this time in our careers we've both done our 10,000 hours of practice!5

If you are a leader who wants to beat the dismal odds and successfully make change happen at scale, this book is for you. If you also want to improve how your organization is managed and led so that it has the capability to continuously change to stay ahead of the competition, this book is also for you. What's more, the concepts, approaches, and tools apply to any human system, whether a public company, family-owned business, professional services firm (we at McKinsey & Company take our own medicine!), public sector body, activist group, nongovernment organization, or social enterprise. They also apply to virtually every type of change program, whether related to a company-wide transformation, marketing, sales, technology, operations, finance, risk, culture, talent, and so on.

How can it apply so broadly? Simple: At the end of the day, organizations don't change, people do. Take the people away and the life-blood of the organization is gone, leaving only the skeleton of infrastructure: buildings, systems, inventory. If a change program requires people to think and behave differently, the Five Frames of Performance and Health is proven to be the best approach available to leaders.

What Sets This Book Apart

The central premise of our work is that leaders should put equal emphasis on the health elements of making change happen as they do the performance elements. While these will be described fully in the chapters to come, a simple analogy to a manufacturing company helps explain in brief. The performance elements of a change program relate to the changes that need to be made to improve how the company "buys, makes, and sells": how will it buy its raw materials, make them into products, and sell them into the market more efficiently and effectively? The health elements, on the other hand, relate to the changes that need to be made to how it "aligns, executes, and renews": How does it align the full organization on a shared direction, execute the work that needs to be done with minimum internal friction (e.g., from politics, bureaucracy, silos, and so on), and rapidly adapt and renew itself in response to an ever-changing environment?

In answering these questions, there are at least five things that set this book apart.

1. Research and rigor behind the recommendations. The world of management is rife with opinion and conjecture. In writing this book, we don't just draw on our own experience as management consultants, but ensure that our arguments are as objective and fact-based as possible. That isn't to say that there aren't plenty of other business books out there that do have a strong research base. One of the best-selling and most influential business books of all time, Tom Peters and Robert Waterman's In Search of Excellence: Lessons from America's Best-Run Companies, was based on a study of 43 of the Fortune 500 list of top-performing companies in the United States. Another highly influential bestseller, Jim Collins and Jerry Porras's 1994 book Built to Last, analyzed patterns among 18 successful companies. This book, however, draws on a far broader array of evidence. The first edition of Beyond Performance already represented the most extensive research effort ever undertaken in the field of ­organizational ­effectiveness and change management, and this edition has been fully updated...