Forward-looking statements may appear throughout this report, including the following sections: Forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties that may cause actual results to differ materially. We undertake no obligation to update or revise publicly any forward-looking statements, whether because of new information, future events, or otherwise.
In many cases, this was because shareholders or the board felt that the previous leaders did not understand the massive disruptions facing their industries. These are not isolated events.
Churn within many industries, due to incessant technological change, now means that leaders are being overtaken by their competitors at an unprecedented pace. Within that group, one-third fail to recover within the following five years.
Even companies that are current industry leaders are vulnerable to disruption. And even the new leader of a top-performing company needs to watch over her shoulder for—and transform the company in anticipation of—the next disruption, for it is surely coming.
Many new CEOs come in with a mandate to transform the company—including its strategy, business model, organization, operations, and culture. A transformation is not a series of incremental changes. Rather, it is a fundamental reboot that enables a business to achieve a dramatic, sustainable improvement in performance and alter the trajectory of its future.
Because they are comprehensive by nature, transformations are complex endeavors, and the majority fall short of expectations for achieving their target value, coming in on time, or doing both. BCG has helped companies execute more than transformations, and currently, we are working with more than companies on large-scale transformation programs.
Among that group, two-thirds have a new CEO in place.
We also recently conducted an extensive quantitative analysis of transformation performance among large US companies. The good news is that changing CEOs increases the odds of success.
The bad news is that new CEOs—particularly those hired from outside the company—also show a wide range of success in leading transformations. This report summarizes the best practices from our direct experience and analysis and offers new CEOs an evidence-based approach for developing and implementing successful transformations.
CEOs must continually balance short- and long-term objectives.
At the same time, the new CEO must reinvent the business model, enhance product and service offerings, and invest in other long-term initiatives. The best CEOs can do both.
CEOs must quickly reset investor expectations. They must not only develop a strong plan—including potentially painful measures to restructure, sell, or close legacy businesses—but must also communicate this plan to their investors.
CEOs must develop a clear purpose for the change effort. At any given time, in this era of always-on transformation, companies have multiple initiatives underway, which can be exhausting for people in the organization as they cope with constant change.
CEOs must adopt agile and digital methods to drive change.Scenario Analysis Allows Management to Easily Understand Changes And How To Respond Effectively. The more your business experiences supply side volatility, demand uncertainty, or both, the more you need to understand their impact and the ability to respond.
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