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Why transformations fail - it’s all in the mind.

In the past month I have been working with two ASX20 leadership teams. Both are in the early stages of leading major transformations of their businesses. Both are having to confront the brutal reality that 70% of organisational transformations fail.

Transformational failure rarely has one culprit, however inadequate leadership is prominent in the line-up. It’s a tremendously tough gig to lead a successful transformation. I explored the reasons why in an early episode of the Xtraordinary Leaders Podcast. One of the major challenges discussed in that popular episode was the huge number of contradictions and tensions that must be managed. The average leader is simply not equipped with the requisite complexity of mind to do so.

Complexity of mind allows a leader to hang out with paradox and contradiction, without being paralysed by it. It facilitates agility in thinking whereby multiple competing perspectives can be understood and integrated. In transformational contexts it is essential for acknowledging and honouring the legitimacy of past practices, whilst at the same time nurturing innovation and breakthrough thinking that challenges the status quo.

Complexity of mind is not a measure of intellect though. Nonetheless, various studies suggest that less than 30% of leaders will possess sufficient complexity of mind to successfully play the transformative role.

One such study was conducted by Bill Torbert, a highly respected business leader and academic from Yale University. Along with David Rooke, he authored the seminal article ‘Organisational transformation as a function of CEOs’ developmental stage’. This was followed in 2005 by ‘Seven Transformations of Leadership’, one of the most-downloaded leadership articles of all time from the Harvard Business Review.

Their research involved a random sample of experienced CEOs who were then clustered into two groups. The first group was characterised by higher complexity of mind as shown by independent assessment. The second group was made up of leaders whose complexity of mind was evaluated as being lower.

Their business records were then examined, along with historical performance of the companies they had led. Torbert and Rooke were specifically interested in counting the number of successful organisational transformations or company turnarounds that each CEO had led.

When Torbert and Rooke tallied the results, the outcome was striking. Of the leaders possessing greater complexity of mind, each had led on average three successful organisational transformations. And how many successful transformations had the other group led? Exactly zero.

These results are striking and sobering. Being an experienced and competent business leader is a necessary, yet insufficient condition to successfully lead a difficult business transformation. Complexity of mind is also required, although often ignored in the selection of senior leaders for key transformational roles. This will be important to rectify in the rapidly changing business environment many organisations currently find themselves in, where leadership of change, innovation and transformation will be the keys to success and sustainability.

Gerard Penna is a teacher, advisor and coach to leaders at all stages of their journey, from CEOs and boards to supervisors and leaders just starting out. He works in diverse settings from desert mining camps to hi tech start ups and sky-scraping boardrooms. He is the author of Xtraordinary: The Art and Science of Remarkable Leadership, host of the Xtraordinary Leaders Podcast, and founder of Xtraordinary Leaders; a training company deeply committed to lifting the bar on leadership and leadership development.


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