accelerating corporate transformation
TRANSCRIPT
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Spotlight BELOW Michel de Broin, Révolutions, 2003
Aluminum, 5 x 5 x 8.5 m
Maisonneuve-Cartier Park, Montreal
SpotlightSPOTLIGHT ON REINVENTION
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Robert H. Miles([email protected]) is the president of Corporate TransformationResources in Charlottesville,Virginia, and senior
adviser on corporatetransformations to TheMonitor Group. He is acoauthor, with MichaelKanazawa, of Big Ideas toBig Results (Financial TimesPress, 2008).
Accelerating Corporate
Transformations(Don’t Lose Your Nerve!)Six mistakes that can derail your
company’s attempts to change
by Robert H. Miles
HBR.ORG
January–February 2010 Harvard Business Review 69
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sk any CEO who has over-
seen a corporate transorma-
tion what should have been
handled diferently, and you
are likely to get this answer:
“We should have—and could
have—moved aster.”
Such executives have a
long list o regrets: They wish
they had uniied the leader-
• During business-as-usual periods, these brakes may
be irritating, but their eects on perormance are
reasonably benign. However, during a bold trans-
ormation, which requires rapid action, any one o
them can derail the larger efort.
• To accelerate transormations, managers need to re-
lease each o these brakes, in a particular order.
Let’s examine the diferent types o brakes and
discuss how and when to release them.
SPEED BRAKE #1
Cautious Management CultureWhen companies pursue variations on the same
business model or an extended period o time, they
become preoccupied with incremental improve-ment. Rather than teeing up big ideas and targeting
big results, executive decision makers try to avoid
big mistakes. They hunker down in their respective
areas o responsibility, believing they are too busy
with daily operations to get involved in reimagining
the entire business. The problem is, transorming an
enterprise requires intensive cooperation among ex-
ecutive peers. Strong traditional units have to share
resources with unproven or underperorming units,
and oten they must sacrice something they value
or the good o the whole.
An incremental, parochial mind-set also a rmsthe traditional executive pecking order. Those who
control the most resources or institutional assets
tend to monopolize discussions, trump new ideas,
and strong-arm decision making, thereby reinorc-
ing the status quo. The management culture in the
U.S. automotive industry was so cautious a couple o
decades back that General Motors had to create Sat-
urn, a geographically separate greeneld subsidiary,
to ree up the executive attention and the design and
development resources needed to respond to the
small-car challenge o oreign competitors.
In a conservative culture, no one is certain thatthe leader in charge will stay the course on a trans-
ormation agenda. Typically, a history o hal-baked,
hal-hearted, and hal-lived change programs under-
mines condence that the current challenge will be
ship team right away. They wish they had engaged
employees sooner and quickly drummed up support
or the new vision. They wish they hadn’t waited so
long to test their assumptions and rene their key
initiatives. And they wish they had generated somevisible returns early on, to accelerate the commit-
ments and reinorce the expectations o employees,
customers, suppliers, and investors.
Any corporate transormation—launching the
next major phase in an organization, executing a
new corporate strategy to achieve breakthrough per-
ormance, enabling a new executive leader to take
charge, or integrating an acquisition—is raught with
challenges. More than 25 years ago, I began chair-
ing an innovative program that convened groups o
CEOs and their executive teams or two-week ses-
sions at Harvard Business School, where they col-laborated with aculty members and noncompeting
peers on solving their most serious challenges. They
met again nine months later to share their experi-
ences. Within a ew years, a clear pattern emerged
rom the program: The biggest barrier to corporate
transormation was getting organizations to execute
their bold new ideas quickly. Since then, rom my
direct involvement as principal process architect in
more than 25 corporate transormations led by new
and sitting CEOs, I’ve concluded that many talented
executives don’t ully appreciate the ollowing subtle
but powerul insights:• Transormation launches must be bold and rapid
to succeed. Yet, embedded in most organizations
are six kinds o “speed brakes” that can slow things
down to a grinding pace.
If team members feel they don’t have quiteenough time, you probably have the pacingabout right.
ASPOTLIGHT ON REINVENTION
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treated any diferently. Without a clear vision and
denite commitment rom above, even the most ca-
pable and energetic members o the leadership teamwill hesitate to raise new ideas or moving orward—
and the less-proven executives will eel even more
reluctant to speak their minds about what is wrong
and how to improve things.
Successul transormations call or a rigorous
conrontation o reality, both external and internal.
But all that work will be wasted i the leader hasn’t
paused to establish that all executives must help
chart the new course. Every member o your man-
agement team must understand the requirement
to take an active role—no exceptions. I you permit
walllowers during the planning phase, they arelikely to cast long, passive shadows over the organi-
zation when it comes time or execution.
Beyond mandating involvement, you have to
provide sae passage—enable managers and employ-
ees to be brutally honest about what they see as the
company’s greatest weaknesses and encourage them
to contribute ideas on how to launch the transorma-
tion and keep it going. You can start by getting the
leadership team to agree on a simple set o ground
rules or discussing ideas, engaging in critical think-
ing, and making decisions. Be ready to enorce them,
because team members are likely to revert to theirold ways i you don’t.
Next, clearly spell out how everyone in the orga-
nization will move rom the current state to the de-
sired new state. You must describe the major steps
and deliverables in your launch process as well as
how and when people at diferent levels in the com-
pany will become engaged in the transormation
launch and journey.
Ater that, have an objective third party conduct
a round o interviews with key leaders about what’s
working or not working and what’s the best way to
proceed. Guarantee anonymity, and assemble the
indings in an unattributed, verbatim ashion. In
addition, gather act-based insights rom inside and
outside the organization to test the assumptions un-derlying your new business model.
Once you’ve completed those tasks, convene a
well-designed “conronting reality” event so that
you and your team can work your way through all o
the new inormation to develop and rene the vision
and supporting business model. And then road test
everything in the organization beore drawing con-
clusions and nalizing the transormation plan.
The above steps will enable you to quickly ad-
dress important issues and make di cult resource-
allocation decisions. By avoiding a alse start with
your management team, you won’t have to revisitstrategic questions, redo key elements o your busi-
ness model, or reprioritize initiatives—all o which
would bog down your launch and sap energy rom
execution.
SPEED BRAKE #2
Business-as-UsualManagement ProcessIn most cases, the day-to-day management process
is already operating at ull capacity when the rm’s
leaders sound the call or big change. There isn’t
room within established systems to plan and launcha transormation—in act, they oten get in the way.
Forcing the launch process into the organization’s
preexisting calendar o meetings will give short
shrit to this important work and not allow adequate
time or the structured dialogue that’s so essential to
breaking new ground.
The solution is to create a turbocharged, no-slack
launch process that runs on a separate track and
promotes both high speed and high engagement.
Running a no-slack launch alongside the routine
management process or a ew months will enable
you to accelerate the transormation, gaining not
Idea in Brief
Six problems canslow your corporatetransformation to acrawl; attack them
sequentially.
Cautious management
culture. Compel all executives
to confront reality and agree
on ground rules for working
together.
Business-as-usual
management process. Run a
no-slack launch on a parallel
track with regular systems;
make sure there are early,
visible victories.
Initiative gridlock. Limit the
company to three or four
initiatives.
Recalcitrant executives.
Compress launch to quickly
engage key executives and to
identify and confront those not
on board.
Disengaged employees.
Rapidly cascade the changes
to all employees to boost
engagement.
Loss of focus during
execution. Anticipate and
defuse postlaunch blues,
midcourse overconfidence,
and the presumption of
perpetual motion.
SIMPLE MEETINGSThe executive vicepresident of humanresources at a globalbig-box retailerreflected, “The agenda,the meeting design,and even the questionsasked need to besimple. This lets peoplefocus on the thinkingrather than on runningthrough a complexprogram. The value is inthe discussions with oneanother.”
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only precious time but also energy, commitment,
and momentum (see the exhibit “The No-Slack
Launch”).
You’ll need to lay out or the management team,and then or all employees, a road map with specifc
waypoints and dates. The road map must be spare.
With proper preparation and good design, your team
and the ones reporting directly to it should go rom
conronting reality to fnalizing initiatives in three to
our meetings, interspersed with prework, testing, and
reinements. The accompanying schedule must be
highly compressed. I team members eel they don’t
have quite enough time, you probably have it about
right. When people receive a ew extra weeks to com-
plete a step, they oten wait until the last week or so to
bear down. Just a ew extensions can balloon a three-month launch phase into six months or even a year.
The senior executives should each be asked to
help crat one o the transormation initiatives and
later to oversee its execution companywide. They
will perorm these cross-organizational duties in
addition to being responsible or their own depart-
ments’ progress on all initiatives. By perorming
both roles, executive leaders will greatly increase
the transormation’s traction.
The no-slack launch stands in stark contrast to
the counsel that everything must be perectly pre-
pared ahead o time, with troves o analyzed data, acompletely articulated strategy and new business
model, and all the right people in the right posi-
tions. Many leaders who ollow that advice ind
themselves shunted onto the side tracks, still wait-
ing to fre up their engine as the market roars by and
valuable employees leave to fnd better vehicles to
advance their careers. Preparation is important, but
not at the expense o motion. And motion is critical,
because it allows you to accrue small victories that
entice the undecided to come on board.
Perhaps the most important reason to get moving
is that every day o action accelerates the cycle o or-
ganizational learning and adaptation. The moment a
solution is envisioned, put it into play. I it proves to
be aulty, quickly drop it—and chalk it up as a lesson
to apply to your transorming business.
SPEED BRAKE #3
Initiative GridlockExecutive leaders may lack the insight and courage
to discard eorts that have come up short. A com-
mon ear is that i they admit they’ve chosen a wrong
path or gotten the timing wrong, they will lose their
ability to motivate the team to try other things. So
instead, they pile new initiatives on top o the ones
that are struggling—and the result is gridlock.
Initiative gridlock oten starts simply, innocu-
ously. Suppose that Finance puts new tools in placeto better control overhead costs. And then Human
Resources introduces a new employee perormance
management system to better identiy top contribu-
tors. Marketing initiates a campaign to boost sales o
new products. Manuacturing kicks o a Six Sigma
program that will eventually touch Marketing, Sales,
and Finance. And the top executive team embarks
on a culture-change eort to improve morale and
retention (ironically, the low morale stems rom too
many initiatives overloading the system and the
people). Individually, each project makes sense, but
when launched simultaneously, with no regard orstrategic alignment or prioritization, these multiple
layers o activity easily overwhelm the organization.
Executives who try to stu too much into the or-
ganizational pipeline will clog it. Workers’ capacity
to execute will become a choke point i the programs
are not prioritized and sequenced.
The best response is triage. In the most success-
ul corporate transormations, managers restrict
their action agendas to three, or at most our, well-
articulated companywide initiatives—each one con-
taining only two or three careully selected areas
o ocus tied to clear outcome metrics. When you
QUICK STARTSNothing builds a senseof urgency like visibleprogress and early wins.At the beginning of thelaunch process, target afew high-value initiativesor obvious obstaclesfor immediate action.These “quick starts” willserve as early symbolsof the seriousness of your transformationalintentions. The boost inenergy and momentumwill be palpable.
The NoSlack Launch
Day-to-day processes can get in the way when you’re trying to geta corporate transformation off the ground. The solution? Create acompressed launch process that runs in tandem with established systems.
SPOTLIGHT ON REINVENTION
72 Harvard Business Review JanuaryFebruary 2010
CONFRONTREALITY
FOCUS VISIONAND
BUSINESS MODEL
ALIGN TOTRANSFORMATIONINITIATIVES
–4 MONTHS
ENGAGE EVERYONEFROM TOP TOBOTTOM
ONGOING
QUICKSTARTS
LaunchQUARTERLYLEADERSHIPCHECKPOINTS
Execute
Rapid All-EmployeeHigh-Engagement
Cascade
Prework Assign StrategicIssues Teams
Launch theCompanywideInitiative Teams
Align Subunits MINI-CASCADES
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start multiplying the initiatives by the areas o ocus,
you’ll quickly realize that exceeding this guideline
will gridlock the organization.
For example, a new CEO’s irst order o busi-
ness at a global retailer was to disband 1,000 teams
and work with a largely inherited leadership team
to distill three crucial initiatives rom all the com-
plexity. Having to oversee and guide the work o so
many teams, the previous CEO had led the whole
company into gridlock. When the new leader’s com-
pressed transormation agenda made it possible or
everyone in the organization to ocus time, attention,
and resources on the turnaround, people were able
to contribute much greater value to the eort. As
a result, the retailer dramatically improved share-holder value, customer satisaction, and employee
retention by the end o the frst year. I the transor-
mation agenda hadn’t been tightened, managers and
employees would have been orced to develop their
own ways o coping with directionless and oppres-
sive gridlock.
Focus is not about doing more with less; it’s about
doing more on less. Making choices about what not
to do so that resources will go to the most important
initiatives is not easy, but it must be done to release
this brake on your frm’s transormation.
SPEED BRAKE #4
Recalcitrant ExecutivesProtracted tolerance o recalcitrant team members,
or o those who are incapable o perorming within
the expectations o the transormation agenda, con-
stitutes another inhibitor. Many executives, even
i they acknowledge this problem, choose to avoid
conlict and hope that the clarity and eicacy o
their grand plan will quickly win people over. And
they’re mostly right. Ater the top leader creates sae
passage, establishes a reliable process architecture
geared or speed and high engagement, and bringsperormance and behavior expectations into sharp
ocus, many team members will commit to the new
transormation agenda.
But what do you do with the senior executives
who do not come aboard? More important, how soon
do you need to act? The simple answer is sooner
rather than later, or run the risk that just one or two
people will disrupt the speed o your organization’s
progress rom planning to achieving breakthrough
results.
The best approach: to quickly identiy and con-
ront executives who might undermine transorma-
tion. Even during the frst ew weeks o your launch,
time compression helps to highlight three types o
managers who could cause problems:
• the quick adopters, who jump aboard beore they
ully grasp what is involved and who view mastery
o the new agenda as a springboard to success;
• the deniers, who harbor a deep oreboding about
being on the losing end o the inevitable power and
resource shits in a reinvention; and
• the commitment averse, who may not believe in
your approach but remain on the ence, possibly be-
cause they see that the transormation is beginning
to bear ruit.
The more ocused and explicit your launch pro-
cess becomes, the easier it will be to identiy theone or two members o the management team who
could undermine the whole eort. Deal with those
individuals frst. That will send a strong signal to
the other members o the team as well as to the
rest o the organization that you mean business.
Then you can coach people to rise to the transor-
mation challenge.
SPEED BRAKE #5
Disengaged EmployeesOnly ater you have dealt with leaders who will not
commit to the transormation can you attend toemployee engagement and motivation. But it is es-
sential to conront the latter issue as quickly as pos-
sible because disengaged employees can really slow
down your progress.
Many transormation eorts stall because the
great ideas and strategies never make it ar enough
down in the organization to have an impact on the
people who relate directly to customers or make the
company’s products. I you can’t rapidly engage all
employees and get them to commit to the agenda ini-
tiatives early on, the top team may move on to new
challenges and strategies beore your initial messagereaches the ull organization.
Most employee programs established to support
a transormation aim to combine training and devel-
opment with employee alignment and engagement
during the launch period. Employee events during
launch—oten held o-site—usually take place over
several days, sometimes a week or two. But such
events won’t do a bit o good i you (a) wait too long
to hold them or (b) ail to engage and align employ-
ees rom the outset.
The CEO o a global semiconductor company un-
dergoing a turnaround spent several months with
PERILS OFHESITATIONReflecting on hissuccessful corporatereinvention severalyears after the fact, ahigh-tech CEO said,
“We had one or twoexecutives who I knewfrom the get-go werenot the right people,and there were two orthree others who overtime basically came to
me and said, ‘What theprocess expects of usis too hard.’ So part of the defining momentfor me was determiningwho was going to stayon the team and whowas going to go. Don’thesitate. Give yourself 90 days in total to doall the assessments andevaluations. But after90 days, make thosechanges. Don’t wait twoyears for people to quiton you.”
THE TWO-DRAWER METHODThe internal duediligence processin a large retailcompany uncovered anunderground survivaltechnique: an unwritten
“two drawer” methodfor keeping up with allthe corporate initiativesfor transformation. Allnew memos aboutinitiatives went into adesk drawer. If anyone
from corporate followedup on a memo, it waspulled out and taggedfor action. At the endof the month, if nobodycalled about the rest of the memos, that stackwas moved to a seconddrawer. And after twomonths, anything left inthe second drawer wasthrown away.
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the top three levels o management building the
basic constructs o the transormation beore decid-
ing it was time to bring all 50,000 globally dispersed
employees aboard. The CEO decided to assemble a
team o HR proessionals to lead the global rollout
o a ive-day communications and competency-
development program, but securing employees’ en-
gagement, alignment, and commitment in achieving
the new initiatives was let or a ollow-on program.
By the time the second program reached all employ-
ees, almost two years had passed, and the company
was shiting to the next phase in its ongoing transor-
mation. Because employees had received extensive
training beore they were properly indoctrinated,
many were not sure what specifcally to do in their jobs to contribute to the frst phase o the company’s
transormation.
A much better response is to deploy a rapid, high-
engagement, all-employee cascade. Contrast the
approach described above with the experience o a
major retailer that took only a ew weeks to engage
and align its 40,000 employees around the world
with its transormation plans and initiatives. On the
frst day o the cascade, the regional vice presidents
(executives three levels below the CEO who had
been part o the intensive, three-month, no-slack
launch) gathered in a room with their district man-agers. The major initiatives were presented, one at
a time—and then the regional VPs, sitting at tables
with their teams, shared the commitments they had
made to drive each initiative beore acilitating a dis-
cussion about how their district managers could con-
tribute. At the end o the day, all participants turned
in their preliminary commitments to action in their
immediate areas o responsibility. Within one week,
the district managers met with their regional VPs to
fnalize their commitments; a couple o weeks ater
that, they gathered or a day with all the store man-
agers in their districts and went through the sameprocess, which the store managers repeated with
their teams. The cascade concluded with a three-
hour companywide event early on a Sunday morn-
ing, right beore doors opened to customers at all
800-plus stores.
Discussions were entirely devoted to rapidly
engaging all levels o employees in the launch and
establishing clear line-o-sight accountability or the
major transormation initiatives rom top to bottom
in the organization. A conscious decision had been
made to deer essential training and development
until managers and employees were engaged and
committed, because then people would be better mo-
tivated to learn. The entire global high-engagement
cascade took less than two months to complete.
SPEED BRAKE #6
Loss of Focus During ExecutionOnce you have executives and employees on the
road to reinvention, it is important to keep them
ocused on the journey by setting concrete and vis-
ible intermediate goals. The last thing you need is an
early chorus o “Are we there yet?” rom the people
who led the planning and launch phases. This is
critical, because the more intensive and engaging
the transormation launch, the harder it can be to
sustain the heightened levels o energy, ocus, andperormance.
Ater working on alignment and commitment in
the cascade sessions, people really do need to get
down to the business o delivering on their commit-
ments. Sometimes, the shit rom planning to doing
is mistaken as a departure rom the big ideas that
were the grist o the launch phase. As the day-to-day
grind retakes center stage during the frst quarter in
the execution phase, old habits can gradually sneak
up on the system. Leaders who had begun working
in a more open and engaging way might switch back
to command-and-control mode or turn their atten-tion to other important activities. Priorities set in the
launch phase will be challenged as people respond
to more-immediate pressures to meet tactical goals.
You may begin to eel that you’ve done your part
and that it is now time or the team to execute—but
you must continue to actively champion the trans-
ormation initiatives by modeling the new desired
behaviors. In addition, you must resist the tempta-
tion to constantly add new ideas to the mix to pro-
voke or stimulate employees.
The transition rom launch to execution is vul-
nerable to three predictable slumps. They cannot becompletely avoided, but they are recognizable, and
executive leaders and general managers can mini-
mize their drag on the transormation eort. The
moment you hear the words “Hey, we’re over the
hump,” you are about to hit the frst one. Here are
some ways to work through them.
Postlaunch blues. It can be tough or a leader
to switch rom playing a visionary role to serving
as “ballast and keel,” but that is just what is needed
ater a strong launch, because a real transormation
is about execution. The top leader has to make sure
managers at all levels receive and relay a consistent
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74 Harvard Business Review January–February 2010
RAPID EMPLOYEEBUY-INA year after a verysuccessful turnaround,the retail CEO whooversaw it remarked ina magazine article, “Thebiggest surprise washow quickly people said,
‘Count me in. Let’s go!’ Iknew it would happen.I just didn’t think we’dget there this fast.”
LAUNCH REDUXAs you move outof the first year of execution and into thesecond, you’ll need toreprise a streamlinedversion of the no-slacklaunch: Refine themajor transformationinitiatives, close anygaps that emergedduring the performanceyear, and recommiteveryone to the
transformation effort.
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message about the need to drive the key transorma-
tion initiatives in the agreed-upon manner. One way
to signal your shit into execution mode is to start
weekly staf meetings with a review o progress on
transormation initiatives, calling attention to peo-
ple and plans that have drited out o alignment and
noting early lessons that need to be quickly shared.
Observable leadership behaviors such as this will
renew aith that management is ollowing through,
build condence that everyone is headed down the
right path, and reinorce accountability to the com-
mitments made during the planning. These behav-
iors will keep the transormation energy high and
everyone’s ocus where it needs to be.
Midcourse overconfidence. The next major
slump typically comes ater two quarterly check-
points have passed. The transormation initiatives
are now well understood, and results have begun toregister. A eeling o smooth sailing can set in.
You should not, however, turn on the autopilot.
You will encounter unexpected execution challenges.
The business model will need rening, and you will
need to tweak initiatives based on lessons rom early
execution. As the excitement o the launch wears of,
some executives may lobby or old, amiliar meth-
ods that are more to their liking and better aligned
with their existing skills. I you do not step up to a-
rm the commitments to transormation that have
been so careully put in place, other leaders may try
to undo all the hard work that got everyone ocusedand moving down the new path.
One o your biggest midcourse challenges is to
keep the transormation process ocused, energized,
and resh. Beyond conducting a rigorous midcourse
assessment o the transormation process itsel, an
efective way to increase both speed and traction is
to hold quarterly checkpoint meetings that involve
the top three levels o leaders and immediately ol-
low each o them with mini-cascades, interventions
that take place throughout the company.
Mini-cascades don’t have to be expensive, time-
consuming, overly produced events. In act, it’s
better i they take only an hour or two each quar-
ter and are olded right into regular operations. For
instance, eld supervisors on a construction site
can chat with employees over cofee and donuts
on the tailgate o a pickup truck beore people start
working. The important thing is to keep everyone,
not just top executives, engaged and inormed so
they can make timely adjustments to accelerate
progress.
Presumed perpetual motion. As the rst peror-
mance year comes to a close, many executives will
succumb to the presumption o perpetual motion—
the idea that things will continue to progress i the
company simply sticks with the year-one game plan.
You’ll even hear a ew executives say, “Let’s not go
through that again!” But the act is, a resh look at
everything is necessary.
You’ll need a “launch redux” to boldly kick of thesecond year o execution. Now that the organization
has given the transormation initiatives an extended
test drive, the leadership team should reexamine
them and the thinking behind them, drawing on ev-
eryone’s experience to make inormed changes. Hav-
ing been through all this beore, the leadership team
should be able to accomplish the launch redux in a
rigorous but streamlined manner.
EVEN ONE o the speed brakes can bring an entire cor-
porate transormation and all related breakthrough-
perormance aspirations to a sudden halt. Someo the methods or releasing the brakes may seem
counterintuitive. For instance, it might not be obvi-
ous at rst how you can accelerate change by paus-
ing to establish sae passage or setting time aside
or structured dialogue, or how you can accomplish
sweeping transormation by restricting your ocus to
a very ew important initiatives. But the tactics dis-
cussed in this article will help you plan and execute a
rapid corporate reinvention that actually sticks. This
is a discipline that all CEOs and general managers
will have to master to be successul in the twenty-
rst century. HBR Reprint R1001C
As the excitement o the launch wears of,some executives may lobby or old, amiliarmethods that are more to their liking.
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