“Beyond Performance 2.0 is the change management manifesto for the modern-day organization. Keller and Schaninger pair evidence-based support, case studies, and insights into human behavior with a clear roadmap to creating sustainable change in any company. This is a must-read for CEOs and any leader that aspires to be a catalyst for change in their organization.”
—Alain Bejjani, Chief Executive Officer,
Majid Al Futtaim Holding
“Even if you have great momentum, you can't stay ahead without acceleration. This is where Keller and Schaninger's Beyond Performance 2.0 comes in—it combines left-brained and right-brained approaches to provide a reliable methodology for accelerating the delivery of results at scale. This isn't just a play book, it's a game changer.”
—Greg Case, CEO, Aon
“At a time where management books are plentiful yet largely vacuous, Beyond Performance 2.0 truly stands out from the pack. Keller and Schaninger have created a user-friendly roadmap to organizational change that is evidence based, profoundly insightful, and practical. I have learned so many of these lessons the hard way! You don't have to, because it is all here.”
—Hussain Dawood, Chairman, Engro Corporation
“A must-read for senior leaders. Even the most skeptical will be won over by the pragmatic, data and research driven approach to improving performance by also giving equal weight to improving organizational health. From my experience, the application of the Five Frames methodology described in this book will give your organization a tailor-made prescription for executing successful large-scale change.”
—Lynn Elsenhans, former CEO, Sunoco
“Scott and Bill's new book provides the framework and proof that investing in and integrating the people, processes, and cultural elements of organizational transformation are essential to achieve enduring and inspiring impact.”
—Michael Fisher, CEO, Cincinnati Children's
Hospital Medical Center
“In our experience, the approach described in Beyond Performance 2.0 is the best one to follow if you want to thrive as a business and as an agent of change for your people and the community around you”
—Carlos Labarthe, Chairman, former CEO,
and Co-founder, Gentera
“Keller and Schaninger offer leaders a clear, effective framework for optimizing organizational performance and health. This work of “where do we want to go” to “how do we continue to improve” is never finished. But the journey is made easier with this insightful guide.”
—Satya Nadella, CEO, Microsoft
“The approach and methods of Beyond Performance 2.0 apply well beyond the business world. Leaders of any large or growing organization will benefit from this thoroughly researched update, and its clear and direct lessons will have near-immediate impact. Scott Keller and Bill Schaninger have crafted a powerful guidebook that ought to be read and implemented on a grand scale. It is for the bold, engaged and tenacious leader, and for those who aspire to be one.”
—Admiral Eric Olson, 8th Commander,
U.S. Special Operations Command (Retired)
“In Beyond Performance 2.0, Keller and Schaninger combine rigorous data analysis and their own extensive experience to provide a step-by-step method for creating major change in any organization. If you're hoping to build a workplace that can nimbly adapt to changing times, this is the ultimate how-to guide.”
—Daniel H. Pink, author of When, To Sell Is Human, and Drive
“Many companies fail to truly change, even when it's essential both to survive and thrive. Keller and Schaninger treat the culture topic with same degree of rigor and discipline as strategic and operational elements. My view: if you're looking for radical change, to make bold moves, and to mobilize leadership and the entire workforce in doing so, Beyond Performance 2.0 is a must-read.”
—Frans van Houten, CEO, Philips
“Both organizational health AND performance need to be measured and managed rigorously. In the VUCA world, enterprises need the continuous reshaping of both business portfolio AND organization transformation. Beyond Performance 2.0 provides inspiring insights and practical guidance to make it happen!”
—Liang Yu, Chairman, China Vanke
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In my 35 years of observing top companies, CEOs, and boards, there's one challenge that I've seen consistently vex leaders: how to make large-scale change happen successfully and sustainably. In far too many cases, what started with bold aspirations ended up delivering little in terms of results. This mattered less in a time when industry structures, physical assets, and privileged relationships enabled leaders to win by being good at “running the company.” In today's volatile, fast-paced, and ever-increasingly competitive marketplace, however, few if any leaders will succeed unless they also know how to “change the company.”
In Beyond Performance 2.0: A Proven Approach to Leading Large-Scale Change, Scott Keller and Bill Schaninger tackle that critical challenge head-on—and do so with great energy and deep insight. I look for three things, in particular, in my reading and my own writing. First, I want to see something different than all the advice already out there, advice that too often hasn't helped leaders improve their odds of success. Second, I want to see ideas that leaders can put into practice on Monday morning. Finally, I look for concepts founded on a deep fact base.
Not surprisingly, given that the authors are senior partners and leading practitioners at McKinsey & Company, Beyond Performance 2.0 is packed with data and richly researched, and to that extent truly delivers on the word “proven” in its title. But as I read Scott and Bill's book, I was delighted to find even more. For one thing, there is a simplicity to their prescription that I find appealing—and in no way simplistic. The core notion is that successful change happens when leaders put as much emphasis on boosting the health of the organization as they do on improving its financial performance. This big idea resonates extremely well with my experience advising CEOs in times of corporate transformation.
What I wasn't necessarily expecting from McKinsey & Company senior partners was to see such full and profound treatment of the human side of the change equation. As Scott and Bill put it in their introduction, “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.” In their five-stage roadmap showing how to put equal emphasis on performance and health, they draw on the best of behavioral psychology and speak to how to capture hearts and minds in practical terms.
This combination of hard science, practical experience, and insight into the human factor is rare and hugely valuable. I can say with confidence that, if you are facing a large-scale change challenge, Beyond Performance 2.0 is an essential read.
Ram Charan
January 2019
Ram Charan is a world-renowned business adviser, author, and speaker. He has authored over 25 books that have sold more than 2 million copies, including numerous Wall Street Journal and New York Times best-sellers.
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!
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.
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.
That the pace of change in business is on an ever-increasing trajectory isn't new, but it is most certainly true. Consider how long an average company from the S&P 500 stays in the index. In 1958, it was estimated to be 61 years; in 1980, 25 years; and in 2011, 17 years.10 A S&P 500 company in this decade is being replaced once every two weeks, which translates to roughly 75 percent of today's firms being superseded by newcomers in the index in the next 10 years.11 There are only 60 companies today that appear on the original list of 500 when it was first compiled just over 60 years ago. Sixty years from now it's unlikely any of the companies that exist today will remain in prominence. Yes, we are saying the likes of Amazon, ExxonMobil, Berkshire Hathaway, and so on are all at risk. Seem hard to believe? No doubt the employees and customers of companies such as Blockbuster, Compaq, Kodak, Circuit City, Enron, General Foods, Pan Am, WorldCom, Digital Equipment Corporation, Lehman Brothers, Arthur Andersen, and British Leyland, during their prime, felt just as invincible.
Need more convincing? Let's go back to Peters and Waterman's In Search of Excellence and Collins and Porras's Built to Last. It's revealing to look at what has become of these “excellent” companies. Ten years after the latter was published, 20 percent of the companies featured in these books no longer existed, 46 percent were struggling, and only 33 percent remained high performers.12 Not all of these changes in standing can be attributed to the companies themselves, of course. As Chris Bradley, Martin Hirt, and Sven Smit point out in their book, Strategy Beyond the Hockey Stick, a portion of business results are driven by macroeconomic forces, industry attractiveness, and sheer luck.13 But they are also driven by what leaders choose to do and not do (in particular, what Bradley, Hirt, and Smit refer to as “big moves,” all of which require exceptional change management to deliver the desired impact) and the way they lead, which are things under every leader's control. While the homage to Charles Darwin's findings that says, “The fittest win out at the expense of their rivals because they succeed in adapting themselves best to their environment” (i.e., they make change happen), may have become something of a cliché in management literature, that's only because of how right it is when it comes to success in the business world.
If we look beyond the world of commerce to society at large, the ability to make change happen at scale has never been more important. In the political process, for instance, leaders committed to change continue to attract unprecedented levels of public engagement. When we wrote the introduction to our first edition, we noted how leaders around the world had run on platforms such as “Change we need,” promising massive overhauls of public sector practices and outcomes. Almost a decade later, little has changed. In the United States, the winning election narrative promised to “make America great again” in as sharp and acerbic a tone as the country had ever seen.14 In France, Sarkozy's successors, François Hollande in 2012, and Emmanuel Macron in 2017, both focused on large-scale change in their respective campaigns: “le changement,” or the change and “en marche” or moving forward.15 In Malaysia, the new prime minister Mahathir Mohammed vowed to make changes that will fight corruption and unite the country.16 Virtually everywhere you turn, you'll see similar messages. In Canada, Prime Minister Justin Trudeau ran on the promise of bringing “real change” to the country.17 In New Zealand, Jacinda Arden promised “a government of change.”18 In Mexico, President Andrés Manuel López Obrador won in a landslide victory with promises of great reform.19
Outside politics, nongovernmental and not-for-profit organizations continue to tackle key cross-border challenges such as sustaining the environment and helping the developing world break the cycles of poverty, corruption, and inadequate education. Meanwhile, numerous factors continue to drive widespread change globally: the historic shift in economic and labor force growth from the developed to the developing world, the rise of global energy demands with an uncertain supply source, the rapid expansion of the global consumer class, changes in global demographics with an aging world population, the rise of new networks of hitherto unimaginable complexity for communication and trade, the increasingly urgent challenge to balance economic growth with environmental sustainability, and the race to increase productivity through accelerated technology and the knowledge economy.20
The way we respond to these business and societal challenges will have a profound effect on all our futures. What are the odds of their being successful? And what will be the consequences if they aren't? What will be the social costs? And who will bear them?
If this book helps you lead a more successful change program, our writing it has been worth it. If it goes further, and helps you create an organization whose capacity to continuously change enables it to thrive long into the future, we'll be delighted. If this book helps people make faster progress in tackling the major social and political issues of our time, it will have achieved more than we could have hoped for.
The reason why we wrote it, however, goes much deeper. According to Gallup, roughly 1.3 billion people work for a full-time employer (i.e., they are part of an organization of some sort).21 These people spend half or more of their waking hours at work. In their remaining time outside of work, they are spending fewer and fewer hours pursuing traditional activities involving family, community, or religious institutions than ever before (in political scientist Robert Putnam's parlance, they are “Bowling Alone”).22 Taken together, this means the workplace is taking on an increasing role as a source of identity, belonging, and meaning for us as a human race.
Workplaces that are characterized by any or all of competing agendas and conflict (no alignment on direction), politics and bureaucracy (low quality of execution), and where work is “just a job” (low sense of renewal), aren't just unhealthy for sustainably delivering bottom-line results—they are unhealthy for the human soul. As the Japanese proverb goes, “Vision without action is a daydream. Action without vision is a nightmare.”
Healthy organizations, however, unleash human potential and uplift the human spirit. They inspire (aligning on a big, important goal), they create a sense of belonging (executing as one team), and they foster creativity and innovation (through a sense of renewal). Paraphrasing motivational speaker Joel Barker's riff on the aforementioned Japanese proverb, healthy organizations “connect vision with action to change the world.”
If this book's contents make their way into management practice at a scale that meaningfully reduces the frictional cost of human progress—that'd be our dream come true!
We don't claim to have all the answers, but at this point in our research efforts, we're more confident than ever that we do have insightful (beyond common sense) and pragmatic (readily applicable) advice, methodologies, and tools that work. They are battle tested and proven in practice. They will help you lead more successful change programs and simultaneously create a healthy organization that is able to continuously adapt and therefore thrive long into the future. With the benefit of another decade of research and practice under our belts, we have observed so many successes in so many industries and from so many different starting points that we have no question change program success and sustained excellence are within reach for virtually any organization.