Beyond Performance 2.0

A Proven Approach to Leading Large-Scale Change

Scott Keller, Bill Schaninger

• Editorial: Wiley
• Año: 2019
• ISBN:
  9781119596660
• Edición: 2
• Categoría: Business
• Categoría: Organisational Behaviour

Double your odds of leading successful, sustainable change

Leaders aren't short on access to change management advice, but the jury has long been out as to which approach is the best one to follow. With the publication of Beyond Performance 2.0, the verdict is well and truly in. By applying the approach detailed by authors, Scott Keller and Bill Schaninger, the evidence shows that leaders can more than double their odds of success—from thirty percent to almost eighty.

Whereas the first edition of Beyond Performance introduced the authors' "Five Frames of Performance and Health" approach to change management, the fully revised and updated Beyond Performance 2.0 has been transformed into a truly practical "how to" guide for leaders. Every aspect of how to lead change at scale is covered in a step-by-step manner, always accompanied by practical tools and real-life examples.

Keller and Schaninger's work is distinguished in many ways, one of which is the rigor behind the recommendations. The underpinning research is the most comprehensive of its kind—based on over 5 million data points drawn from 2, 000 companies globally over a 15-year period. This data is overlaid with the authors' combined more than 40 years of experience in helping companies successfully achieve large-scale change. As senior partners in McKinsey & Company, consistently named the world's most prestigious management consulting firm, Keller and Schaninger also draw on the shared experience of their colleagues from offices in over 60 countries with unrivaled access to CEOs and senior teams.

Beyond Performance 2.0 also dares to go against the grain—eschewing the notion of copying best practices and instead guiding leaders to make choices specific to their unique context and organization. It does this with meticulously balance of focus on short- and long-term considerations, and on fully addressing the hard technical and oft cultural elements of making change happen. Further, the approach doesn't just focus on delivering change; it builds an organization's muscle to continuously change, making it healthier so that it can act with increased speed and agility to stay perpetually ahead of its competition.

Leaders looking for a proven approach to leading large-scale change from a trusted source have found what they are looking for in Beyond Performance 2.0.

PART I
The Big Idea

Chapter 1
Performance and Health

When Neville Isdell took over as CEO of the Coca-Cola Company (TCCC), it was during troubled times. In his words, “These were dark days. Coke was losing market share. Nothing, it seemed—even thousands of layoffs—had been enough to get the company back on track.”¹ TCCC’s total return to shareholders stood at negative 26 percent, while its great rival PepsiCo delivered a handsome 46 percent return.

Isdell was the former vice chairman of the Coca-Cola Hellenic Bottling Company, then the world’s second-largest bottler, and had enjoyed a long and successful career in the industry. Since retiring from that role, he had been living in Barbados, doing consulting work, and heading his own investment company. However, the opportunity to lead the transformation of one of the world’s most iconic companies was a powerful lure. Isdell was clear-eyed about the challenge ahead as he recognized, “There were so many problems at Coke, a turnaround was risky, at best.”² For the former rugby player, however, the game was on. He was soon installed in the executive suite at headquarters in Atlanta.

Isdell had a clear sense of what needed to be done. The company had to capture the full potential of the trademark Coca-Cola brand, grow other core brands in the noncarbonated soft drinks market, develop wellness platforms, and create adjacent businesses. These weren’t particularly new ideas, however, and each of his predecessors had failed to make change happen at scale. Why would his tenure be any different?

Experience told him that focusing solely on “what” needed to get done—the new strategy and initiatives to support it—wouldn’t get TCCC where it needed to be. Regardless of what direction he set, progress couldn’t be made while morale was down, capabilities were lacking, partnerships with bottlers were strained, politics were rampant, and its once-strong performance culture was flagging.

Just a hundred days into his new role and having got his head around the current state of the organization, Isdell announced that TCCC would fall short of its meager third- and fourth-quarter target of 3 percent earnings growth. “The last time I checked, there was no silver bullet. That’s not the way this business works,” Isdell told analysts.³ Later that year, TCCC announced that its third-quarter earnings had fallen by 24 percent, one of the worst quarterly drops in its history.

Having acknowledged the shortfall in performance, Isdell ploughed onward, launching what he called TCCC’s “Manifesto for Growth” process. The goal was to outline a path to growth showing not just where the company aimed to go—its strategy—but what it would do to get there, and how people would work together differently along the way. And then, of course, to deliver on it. A number of working teams were set up to tackle performance-related issues such as what the company’s targets and objectives would be and what capabilities it would require to achieve them. Another set of teams tackled organizational effectiveness-related issues: how to work better as a global team, how to improve planning, metrics, rewards, and people development to enable peak performance, and how to go back to “living our values.” The whole effort was designed through a collaborative process that ensured all of the work being done remained integrated, and that the leaders of the organization would feel deep ownership and authorship of the answer. As Isdell explained, “The magic of the manifesto is that it was written in detail by the top 150 managers and had input from the top 400. Therefore, it was their program for implementation.” ⁴

It wasn’t long before the benefit of Isdell’s approach to making change happen became apparent. Within three years of having taken the role, shareholder value jumped from a negative return to a 20 percent positive return. Volume growth in units sold increased almost 10 percent to 21.4 billion, roughly equivalent to sales of an extra 105 million bottles of Coca-Cola per day. TCCC had amassed 13 billion-dollar brands, 30 percent more than Pepsi. Of the 16 market analysts following the company, 13 rated it as outperforming, and the other 3 as in line with expectations.

These impressive performance gains were matched by quantifiable improvements in people-related measures. Staff turnover at U.S. operations fell by almost 25 percent. Employee engagement scores saw a jump that researchers at the external survey firm hailed as an “unprecedented improvement” compared with scores at similar organizations. Other measures showed equally compelling gains: employees’ views of leadership improved by 19 percent, and communication and awareness of goals increased from 17 percent to 76 percent. According to Isdell, however, the biggest change was a more qualitative one that could only be felt in the company’s halls. Three years into the role, Isdell noted, “When I first arrived, about 80 percent of the people would cast their eyes to the ground. Now, I would say it’s about 10 percent. Employees are engaged.”⁵

When Isdell retired as CEO, he was handing over a healthy company that was performing well.

■ ■ ■

To what does Isdell credit the success of the turnaround? In his words, “Having taken the ‘how’ as seriously as the ‘what.’”⁶ Another way to put it would be that he put as much effort into the “soft stuff” as he did the “hard stuff.” Others may prefer terminology such as talking about the balance between the “business and behavioral,” “adaptive and technical,” or “right brain and left brain.” We believe the most helpful juxtaposition is to say that he put equal emphasis on performance as he did on health. But what specifically do we mean by this when it comes to leading large-scale change?

Performance is what an enterprise does to deliver improved results for its stakeholders in financial and operational terms. It’s evaluated through measures such as net operating profit, return on capital employed, total returns to shareholders, net operating costs, and stock turn (and the relevant analogues to these in not-for-profit and service industries). As we shared in our introduction, a more memorable way to think about this is through the lens of a manufacturing company in which performance-oriented actions are those that improve how the organization buys raw materials, makes them into products, and sells them into the market to drive financial and operational results.

Health is how effectively an organization works together in pursuit of a common goal. It is evaluated in levels of accountability, motivation, innovation, coordination, external orientation, and so on. A more memorable way to think about health-related actions is that they are those that improve how an organization internally aligns itself, executes with excellence, and renews itself to sustainably achieve performance aspirations in its ever-changing external environment.

Make no mistake, leaders have a choice when it comes to where they put their time and energy in making change happen. The big idea in delivering successful change at scale is that leaders should put equal emphasis on performance- and health-related efforts, as illustrated in Exhibit 1.1.

Exhibit 1.1 The Big Idea

Some reject this, as they aren’t convinced there is a proven return on investment in the people-oriented aspects of driving change. Those who think this way have their heads well and truly in the sand as the facts to the contrary are incontrovertible, which we’ll share in the next section. Other leaders accept and are even intuitively drawn to the concept, but simply have no idea how they’d fill 50 percent of their time taking action related to the soft stuff. Rest assured, they won’t lack for answers once they understand the Five Frames of Performance and Health that will be introduced at the end of this chapter and expanded on throughout this book.

The Value of Health

That organizational health matters is repeatedly borne out by the testimonies of successful leaders. Larry Bossidy, former chairman and CEO of Honeywell and Allied Signal, comments, “The soft stuff—people’s be...