Create a Compelling Long-Term Vision

A McKinsey survey of 2,724 change leaders asked the question, “Choosing from 10 options given, what is the most important leadership behavior during a change program?” The answer? Communicating a compelling vision to motivate and inspire (ranked first by 62 percent of respondents). It was also ranked as the number one hardest leadership behavior to build (ranked first by 42 percent of respondents).³

Certainly, in the vast majority of successful large-scale change programs that we have witnessed, there is a compelling long-term aspiration at play. Take, for example, the U.K.-based supermarket chain Tesco, whose turnaround focused on, in the words of former CEO Sir Terry Leahy, “A plan to build Tesco around its customers, to make it number one in the U.K., and to find new long-term growth in nonfood, in services, and in international expansion.” During Leahy’s tenure, Tesco quadrupled in size, to the point of taking £1 in every £7 that consumers spend in Britain. It also became the first British supermarket to transform itself into a global brand.⁴

Other examples abound. On taking over Microsoft, Satya Nadella and his team reset the company’s direction to focus on, “Building best-in-class platforms and productivity services for a mobile-first, cloud-first world.”⁵ When Howard Schultz retook the CEO role at Starbucks, he focused first on creating the aspiration, “To become an enduring, great company with one of the most recognized and respected brands in the world, known for inspiring and nurturing the human spirit.”⁶ Looking back in time, Stanford University’s 1940s vision to become the “Harvard of the west” and Sony’s 1950s drive to overturn the reputation of Japanese electronic goods for poor quality provide iconic examples of compelling long-term change visions.

We acknowledge that the term vision can invoke for some a sense of an airy-fairy statement that amounts to little more than eye-roll-inducing sloganeering. Lou Gerstner, for example, early in his tenure as CEO of a beleaguered IBM, boldly stated, “The last thing IBM needs right now is a vision.”⁷ Make no mistake, we’re talking about something more concrete. In fact, Gerstner did have a long-term vision—keep IBM one company, fix its underlying problems, and then become a broad-based technology integrator. In situations where a vision is essentially nothing more than a feel-good slogan or an impossible stretch, the role of a new leader may be to ramp back aspirations. As Alan G. Lafley explains, when he first became Procter & Gamble’s CEO, “The first thing I did was to set lower, more realistic goals.”⁸

So how do you set a compelling long-term vision that isn’t pie in the sky and yet still inspires and guides the organization to bring its A-game in its pursuit? We advocate that the best vision for any change effort lies at the intersection of three areas: opportunity, capability, and passion, as illustrated in Exhibit 3.1.

Having a strong fact base in each of these areas is vital to decision-making. Our research shows that those programs that do so are 2.4 times more likely to succeed.⁹ Facts you want to gather related to opportunities include understanding the industry forces at work, which areas of the market are growing, where the profit pools are and how they are migrating, how customer preferences and needs are evolving, what your current competitive positioning is and scenarios for how it is likely to evolve, and so on. Facts related to your capabilities include determining what your privileged assets are (e.g., brands, networks, intellectual property), what special relationships you have (e.g., partnerships or affiliations that give you access, influence, or enable complementary offerings), and where it is you’ve built distinctive competencies (e.g., supply-chain excellence, M&A, brand leadership).

The final, and most often neglected, element of deciding on the right long-term vision is understanding what the leaders and employees are passionate about driving forward. Done well, this can ensure the vision taps into the internal motivation of leaders and employees (making execution less dependent on external drivers such as incentives). We’ll talk about various techniques to understand where leader and employee passions lie when we talk at the end of this chapter about the “Master Stroke” for setting an aspiration, but suffice to say here that asking the question of what employees’ passion and purpose are—what winning means for them—is an important input to setting the long-term vision.

To illustrate the power of tapping into employee passions, consider the experience of the head of sales at a retail company who shared with us that he kept telling his team the direction they needed to go in, but progress was slow and he (and they) became increasingly frustrated. At the end of his rope, he asked them what they wanted to do. He didn’t believe their strategy was as good as his plan, but there was nothing particularly wrong with it and they were passionate about making it happen, so he gave them the green light and his full support. The approach paid off: his division moved from lower-quartile to top-quartile sales in a matter of months.

The preceding example, no doubt, sounds fairly straightforward. So why, as reported at the start of this section, do so many leaders report they regret that they didn’t do it well? In our experience, the hardest part of creating a vision is finding the balance between what is bold and transformational and what is realistic and achievable. The phrase many use for this is landing on a vision that is “tough but doable.” If the vision feels too incremental, cautious, or overly tailored to existing capabilities, it will fail to create momentum or pressure for an organization to push the limits of what is possible and therefore won’t lead to breakthroughs. At the same time, if people see goals as simply “pie in the sky” and beyond reach, they will become disillusioned and give up.

Often, examining the “art of the possible” can help find the sweet spot. For example, ask what performance would look like if every area operated at the level of the current best practice within the company? What if all of our processes and systems were operating at the top of their technical limits? What if we achieved best practice in the industry on not one, but all key measures? In the financial services sector, for example, a bank that is in the lowest performance quartile of its industry could manage a six-fold increase in its ratio of operating profits to total revenue if it were able to move to the top quartile. Even a top-quartile bank could boost its performance by 50 percent if it combined the sector’s peak level for income per employee with top-tier labor-cost efficiency. By considering the art of the possible in this way, leaders can aim high without the goal feeling untethered to reality.

Going beyond this type of thinking risks not only “pie in the sky” reactions to your goals, but also unintended consequences. Consider healthcare start-up Theranos. The company promised to create a medical device that could run 70 blood tests on only a 25- to 30-microliter blood sample—a feat that had never been done before. When it turned out that their technology was not producing accurate results, Theranos proceeded to show fake proficiency tests while using commercial machines to complete the blood tests and present false and misleading information to investors, patients, and the media. Within fifteen years of being founded, Theranos closed down and the leaders were facing many lawsuits. Theranos isn’t alone, unfortunately. Consider also the automaker that aspired to create a new model that weighed less than 2,000 pounds, sold for less than US$2,000, and would be in showrooms within two years. The resulting vehicle was rushed out so quickly that safety issues abounded, leaving the bold aspiration’s legacy to be only one of tragedy and lawsuits. Or the retailer who set goals for its auto repair staff that were so high they motivated employees to both overcharge and to complete unnecessary repairs—unethical behaviors for which the company paid a hefty price in the end.¹⁰

The final aspect of setting a long-term vision that we haven’t covered is what we mean by “long-term.” We’ve remained purposefully vague on this point given that the answer is highly context-dependent. For CEOs of public companies, we advocate they think somewhere between 5 and 10 years out. For leaders of businesses or functions, we typically find 3–5 years to be a helpful range. Lower down in an organization, a vision for 2–3 years out may make the most sense. And all of this depends, of course, on the context of whether the change is a turnaround scenario, a good to great effort, or a great to greater-still journey.

Roll Back the Future to Mid-Term Aspirations

While a long-term performance vision is important, our research and experience suggest a vital next step is to “roll back the future” by defining concrete medium-term objectives for the change program. Why is that? Because it makes the aim nearer and clearer. Having this immediacy and tangibility greatly aids in setting a rapid pace for change, creating an action-oriented attitude, and provides more “beginnings, middles, and ends” in the course of the journey to help generate energy and motivation along the way.

When Ravi Kant became managing director of Tata Motors, an India-based vehicle manufacturer, the company was in crisis. After a decade of strong revenue and margin growth, it had been suddenly hit by the collapse of demand for its trucks. At the same time, there were growing threats from overseas competitors, as well as cost pressures resulting from Tata’s entry into the passenger car business and investment in complying with new emissions standards. In a turn of events that shocked the markets, Tata Motors reported a 5-billion-rupee (US$110 million) loss for the fiscal year.

Under the circumstances, Tata might have been expected to devote all its energies to tackling the immediate problems that beset it. But that’s not what happened. Instead, Kant worked closely with his senior leaders to create a bold long-term vision for the company. They planned not merely to restore it to its former glory as India’s leading truck manufacturer, but to turn it into a diversified automobile giant with global ambitions. Exciting though this vision was, Kant and his team knew that it wasn’t enough. They would be unlikely to mobilize people’s energies unless it was broken down into actionable pieces, as illustrated in Exhibit 3.2.

As Kant explains, “We decided on a recovery strategy that had three distinct phases, each of which was intended to last for around two years. Phase one was intended to stem the bleeding, since we just couldn’t ignore the fact that our sales volumes were still falling with the shrinkage of the overall market. Costs had to be reduced in a big way, and that was going to be a huge challenge for a company that was not only the market leader but had been used to operating in a seller’s market and employing a cost-plus approach to pricing. Phase two was about consolidating our position in India, and phase three was to go outside India and expand our operations internationally.”¹¹

The plan proved remarkably successful. Having slashed 8 billion rupees (US$176 million) from its cost base in the first phase, Tata then made a successful entry into passenger cars in the compact, midsize, and sports-utility vehicle markets. It was able to capture opportunities presented by favorable social and economic trends such as the new affluence and desire for mobility among young Indians and the government’s substantial road-building program. Eight years later, the company had become India’s largest carmaker, and the winner of the coveted title of India’s most valuable brand.¹²

Outside its home market, Tata built a significant presence both through its sales efforts in markets such as the former Soviet republics, Turkey, South Africa, countries in the Middle East and South Asia, and through its acquisitions in the United Kingdom, South Korea, Thailand, and Spain. It had successfully become the world’s fourth-largest truck manufacturer and second-largest bus manufacturer, and it employed 24,000 workers.

Would Tata have been able to achieve its aspirations without breaking down its long-term vision into a series of medium-term aspirations? It’s hard to say, but there is little doubt that the immediacy of medium-term goals makes them more actionable. When managers are planning two or three years ahead, that period is close enough in time to allow them to choose relevant goals and identify specific initiatives to reach them.

On the other hand, what if Tata had simply set objectives in the form of year-on-year targets, without having a longer-term view? Again, we have no way of knowing, but certainly there are advantages in having objectives distant enough to reduce any temptation to rob tomorrow to pay for today—a constant battle for public companies under pressure to achieve quarterly results.

Similar stories can be told for virtually all iconic company-wide change programs. At IBM under Lou Gerstner, the initial phase of performance-related change efforts was similar to that of Tata under Kant: fix the basics. The next focused on growing the IT services and PC businesses. The third enabled its corporate customers to move into a brave new networked world by providing guidance on their technology strategies, helping them build and run their systems, and acting as the architect and repository for their computing.

At Starbucks, when Howard Schultz stepped back into the CEO role to restore the company to a growth trajectory, the first phase of performance-related efforts involved becoming the undisputed coffee authority. Among many actions taken, this involved upgrading coffee-making equipment, creating a customer loyalty program, targeting the at-home coffee market, and extensive barista training. At one point, more than 7,000 stores were closed for 3 hours for “Espresso Excellence Training,” where 135,000 baristas learned how to pour a perfect espresso shot and steam milk properly. The second phase focused on expanding Starbucks’ global presence, which included redesigning store formats, offering culturally reflective products, and supporting local causes. The third targeted becoming a leader in ethical sourcing and environmental impact through partnerships with fair-trade organizations and recycling programs—enabling the company to differentiate itself as being “Responsibly Grown. Ethically Traded. Proudly Served.”¹³

In our view, the idea of defining your desired medium-term aspirations gets less attention than it deserves in management literature. A long-term performance vision isn’t enough; it needs to be rolled back to a desired set of medium-term performance milestones that are granular and actionable, but also ambitious about the scale and pace of change.

Guard Against Biases

Consider a cautionary tale. When former CEO Antonio Perez took over an ailing Eastman Kodak Company whose film revenues were nose-diving, he knew it would need to reinvent itself. Perez quickly redirected the strategy and set a long-term vision to win in the digital printer market. Five years later, Kodak shares were worth less than a dollar. With the company filing for bankruptcy, Perez earned the dubious honor of being named one of the worst CEOs of the year by CNBC.

What happened? The answer, at least in part, lies in what psychologists refer to as the confirmation bias. Perez’s career prior to becoming CEO included 25 years working primarily in the inkjet printing and imaging areas of Hewlett-Packard. As he looked at the information available, he put more weight on those that confirmed his beliefs and less on those that refuted them (including the fact that the company had already experimented in the space several times without success and lacked manufacturing expertise or scale to achieve attractive returns in such a commoditized industry).¹⁴

Confirmation bias is just one of a multitude of cognitive biases (check Wikipedia and you’ll find over 120 listed) that cause our decisions to deviate from good judgement. In our experience, however, this and two others—groupthink and the optimism bias—are the most prevalent and dangerous.

Groupthink refers to a phenomenon whereby the desire for consensus and harmony within a group leads to dysfunctional decision-making processes, including self-censorship (not speaking out) and pressuring. Dr. Jerry B. Harvey provides a wonderful example of this bias at work in his landmark book on organizational behavior, The Abilene Paradox, and Other Meditations on Management. He describes the Harvey family sitting around a porch in Coleman, Texas. It’s 104 degrees out, but the porch is shaded, so everyone is reasonably comfortable. Jerry Harvey’s father-in-law says, “Hey, why don’t we drive to Abilene and have dinner at the cafeteria.” Jerry thinks to himself, “This is crazy; I don’t want to drive 53 miles in the heat of summer in a 1958 Buick to have dinner in a lousy cafeteria.” Before he can speak up, his wife interjects, “Sure, that sounds like a good idea.” Jerry then hedges, “Okay, I guess … assuming your mother wants to go.” Jerry’s mother-in-law affirms, “Of course I want to go.”

Four hours and 106 miles later, they return to the porch, covered in sweat and dust from driving in the brutal heat with the windows down (there is no air conditioning in a 1958 Buick!). The food, as per Jerry’s prediction, had been almost unpalatable. As they sit down, Jerry says sarcastically, “Well, that was a great trip, wasn’t it?” Nobody speaks. His mother-in-law then finally says, “To tell the truth, I didn’t enjoy it. I’d have rather stayed home, but you all pressured me into going.” Jerry responds, “I didn’t pressure you. I was happy here; I only went to make the rest of you happy.” His wife then says, “But I was just going to make you all happy.” Jerry’s father-in-law then speaks up, “I never wanted to go to Abilene. I just thought you all might be bored sitting at home!”

Surely this doesn’t happen in organizations? Unfortunately, there are many examples of where it has had catastrophic effects, including the collapse of Swissair, the follies of many banks that led to the economic crisis of 2008, the Space Shuttle Challenger disaster, the stagnation of the U.S. auto industry, the Bay of Pigs invasion, and so on. As a new leader setting an aspiration, be warned that many around you will make themselves more agreeable to an idea, despite not necessarily believing in it. When this becomes the case, not only is the quality of your aspiration in jeopardy, but so is the commitment to deliver against it.

The third bias to be aware of is the optimism bias: the expectation that the best possible outcome will emerge. This accounts for why divorce rates in the western world are around 40 percent, yet when you ask newlyweds to rate their likelihood of divorce they are most likely to put it at 0 percent. It’s also why 90 percent of capital projects have cost overruns (on average, 45 percent over their business plan). It also explains why, as our colleagues Chris Bradley, Martin Hirt, and Sven Smit describe, “One of the most emblematic outputs of the dreaded strategic-planning process is the ‘hockey stick’ forecast—the line that sails upwards on the graph after a brief early dip to account for up-front investment. These hockey sticks, confidently presented by executives pitching their new strategy, are easy to draw but they don’t score many goals. What tends to happen in reality is that the strategy fails to meet the bold aspirations and is replaced by a new one.”¹⁵

Being aware of such biases doesn’t help one avoid them. As Dan Ariely, one of the foremost thinkers in the field, declares, “I am just as bad myself at making decisions as everyone else I write about.”¹⁶ Fortunately, however, there are a number of proven and practical tools to minimize biases in decision-making. These include, among others, the following: the “pre-mortem” (generating a list of potential causes for failure of a recommendation and working backward to rectify them before they happen); “red team–blue team” (assigning one person/group to argue for, and one to argue against, a decision); “clean-sheet redesign” (developing a system from only a set of requirements, free from considerations related to current investments or path); and “vanishing options” (taking the preferred option off the table and asking, “What would we do now?”). Importantly, simply ensuring you are engaging a diverse team in decision-making will reap significant rewards—which research reveals can improve decision-making quality by more than 50 percent.¹⁷

Note that though we advocate leaders use the tools available to them to de-bias decisions, we aren’t saying leaders shouldn’t also “gut check” their decisions. We agree with T. Gary Rogers, former chairman and CEO of Dreyer’s Grand Ice Cream, when he says, “If it doesn’t feel right in your gut, don’t do it.”¹⁸

Check Your Health

In Chapter 1, we introduced the idea of organizational health, defining it as how effectively an organization works together in pursuit of a common goal. Health-related actions are those that improve how an organization aligns itself, executes with excellence, and renews itself to achieve its performance aspirations sustainably in its ever-changing external environment. In Chapter 2, we identified the nine elements of organizational health, namely direction, leadership, work environment, accountability, coordination and control, capabilities, motivation, external orientation, and innovation and learning. We also broke down these nine elements into the 37 management practices that feed into them. Then we described how our survey-based tool, the organizational health index (OHI), can provide organizations with a comprehensive and rigorous understanding of their health.

For the purposes of this chapter, we’ve developed a high-level overview of the OHI to remind readers what organizational health involves. This is illustrated in Exhibit 3.3. You can use it to conduct a rough assessment of how healthy your organization is. Where does it belong in each element—is it ailing, able, or elite? Which elements are most important to you in achieving your medium-term performance aspirations? Where would you like to be on each element? How much faster and better would your change efforts proceed if you were elite?

Most leaders, even when looking at health using this simple assessment, see how health improvements can be a massive change accelerant. A robust health check, however, requires a much more in-depth analysis. It starts with doing the OHI, which we’ve already described. The OHI is then augmented with a set of analytics to confirm that perceptions reported in the survey reflect reality. If they prove not to do so, the solution may lie in improving transparency and communication rather than fundamentally changing management practices. One financial services organization, for example, discovered that its staff didn’t find monetary incentives motivating because they perceived that pay didn’t vary with performance. Analysis showed, however, that this was a misapprehension. Instead of recommending a revamp of the compensation system, the firm quickly concluded that what was needed was a communications program to make the link between pay and performance clearer.

The types of analyses that are often helpful include analyzing data that comes from customer loyalty scores (customer focus), hiring rates from target talent pools (talent acquisition), compensation benchmarking (financial incentives), executive calendar analyses (various leadership practices), and linkages between performance scorecards (strategic clarity). In the vast majority of cases, the additional facts reinforce the survey findings and act primarily to inoculate any skeptics who speculate perception may not match reality (often out of defensiveness, because they don’t like the health report they are seeing—much like many people’s tendency when they get back less than pleasant diagnostic results from a physical health check!).

Taken together, the OHI and related analyses are the most robust way available to measure your organization’s health. They are, in many ways, the equivalent of getting a physical at the Mayo Clinic (widely regarded as one of the best hospitals in the world) versus going to your local physician. It’s important to note that, like a human being getting a physical, your health will be whatever it is. You may find some wonderful surprises that give you even more optimism about the future and may even make you return to your strategic objectives and be even bolder. You may find some early warnings and, while they are not currently a big concern, by addressing them you ensure they never will become one. Or you may find something more sinister that requires a significant intervention to ensure it doesn’t become terminal.

Choose Where to Be Exceptional

Whatever your health, once you’ve had it checked, the next step is to determine what your health goals should be to best enable your performance aspiration. For most organizations who get a health check, there will be opportunities to get healthier. The first indicator of this will be how you stack up against peer organizations not only on your health outcomes, but also on the 37 management practices that create those outcomes.

It’s worth noting that the 37 management practices that drive organizational health outcomes are all happening in your organization, whether proactively managed or not. Employees have a perception of what the strategy is, they are working toward targets regardless of whether these have been set implicitly or explicitly, budgets are being allocated rightly or wrongly, people are being hired and fired, performance is being monitored in some way, shape, or form, compensation is being provided, risks are managed (well or not well), stakeholders are being interfaced with, and so on.

So, when it comes to health goals, does it then follow that every company should aspire to be exceptional in all management practices? No. Emphatically, no! We’ve yet to find a company who is top-quartile in all its management practices, and yet we’ve worked with many companies who have achieved excellent health outcomes.

To revisit the analogy with human health, what it means for individuals to be healthy, beyond the basics, will depend to some extent on their performance aspirations—what they want to do with their lives. A healthy weight for a body-builder is different from that of a jockey; a pilot requires a higher standard of eyesight than an academic; a ballet dancer needs more flexible joints than a lawyer. When we dug more deeply into the 37 practices, we found that healthy companies aren’t great at everything—far from it, in fact. More specifically, analysis shows that being top quartile in just six management practices gives you an 80 percent likelihood of being in the top quartile for overall health, which, in turn, drives superior business performance (Exhibit 3.4).

This is a liberating finding for leaders. But if an organization only needs to be exceptional at six management practices (if not broken in others) to have a high likelihood of being healthy, can it just choose any six? Unfortunately, it’s not that easy. To understand why requires an understanding of the concept of complementarity, defined by John Roberts in his book The Modern Firm as: “Two variables are complements when doing (more of) one of them increases the returns to doing (more of) the other.”²⁰

To see how this works, let’s look at the example illustrated in Exhibit 3.5. If a company wants to increase motivation, it has various management practices at its disposal. If it decides to offer incentives to its staff, it has a 48 percent probability of increasing its motivation to the top-quartile level (perhaps surprisingly, the lowest probability for any motivation practice). However, if the company offers incentives and modifies its work environment to create performance transparency, the probability goes up to 95 percent. Adopting two complementary management practices instead of relying on just one greatly increases the chance of success—almost doubling it, in this case.

The concept of complementarity is easier to grasp if we think about cooking. Flour, yeast, and water are hardly exciting ingredients by themselves, but when they are used in the right proportions and prepared in the right way, they can turn into fresh, hot bread that tastes sensational. Or take peanut butter and jelly: combined in a sandwich, they have a salty-sweet taste that many people far prefer to either filling alone (yes, for our international readers, we realize this last one is a very American analogy!).

The food analogy also illuminates that complementarity has a flipside, as well. Take chocolate cookie dough. Delicious. Take a fresh seafood salad. Wonderful. Now mix the two together, bake, and serve. Yuck! The same is true of management practices. If an organization wants to increase its innovation and learning, for example, it has various practices at its disposal: if it uses top-down innovation as a lever, it has a 58 percent probability of increasing its innovation and learning to the top-quartile level. However, if it emphasizes incentives, performance transparency, and talent-acquisition practices in addition to top-down innovation, the likelihood of achieving a top-quartile innovation and learning level drops to 44 percent.

It turns out that large-scale innovation is by nature a collaborative effort. This particular combination of ingredients overemphasizes human capital (people’s intellectual contributions and functional skills) at the expense of social capital (networking, collaboration, and information sharing). A far better recipe would combine top-down innovation with a shared vision, knowledge sharing, and customer focus, which yields a 78 percent likelihood of achieving a top-quartile level of innovation and learning.

Having now established the concept of complementarity, the question becomes whether there is a winning recipe—that set of six or so complementary practices that, if exceptional (top-quartile), creates healthy outcomes across the board. Well, we’ve done the math, and we can tell you that there is no single winning recipe—there are four! To be clear, we didn’t make these up, they are simply the result of analytically mining our database using cluster-analysis techniques, as visually depicted in Exhibit 3.6.

We have labeled the four clusters based on our interpretation of how the practices in each recipe combine and the nature of the companies that share their attributes, but it’s worth emphasizing that the labels shouldn’t be the focus; the recipe of six practices should be. To use our cooking analogy, the label is the description on the menu (e.g., a bourbon bread pudding), but the practices are the ingredients that, when combined carefully, make it delicious (eggs, cream, sugar, day-old brioche, raisins, and a splash of the finest Kentucky bourbon). The labels we’ve chosen are leadership factory, market shaper, execution edge, and talent and knowledge core.²¹ Exhibit 3.7 shows the ingredients of each recipe—the distinctive management practices that contribute—in order of rank. Let’s take a closer look at each recipe in turn.

Target Broken Management Practices

Knowing where you want to be exceptional is important, but that’s not where setting a health aspiration ends. As celebrated sports figure Muhammad Ali said, “It isn’t the mountains ahead to climb that wear you out, it’s the pebble in your shoe.”²⁷ A good health check won’t just help you decide what health recipe to focus on, but it will also give insight into whether any of the 37 management practices are “broken” (fourth quartile). If even one of these is truly broken, it affects the whole system. To draw a human health analogy that many can relate to, consider lower back pain. According to some studies, roughly 80 percent of adults will experience this at some point in their lifetimes. This ailment doesn’t just affect one’s ability to lift objects; it also makes it harder to concentrate, affects mood, and in the end, causes an overall feeling of not being healthy such that it’s the leading contributor to missed work days.²⁸

In light of this, an important part of setting a health aspiration is fixing any broken practices. Organizations who have even one broken practice have less than a 25 percent chance of being healthy, regardless of how exceptional they are in other practices. Further, not all practices are created equal. The data science reveals there are four, what we call “Power Practices,” that have the greatest impact on organizational health. Companies with even one broken Power Practice have a near-zero chance of attaining top-quartile health. The Power Practices are: personal ownership, role clarity, strategic clarity, and competitive insights.²⁹

Knowing this can dramatically alter what a change program focuses on. A financial services company in the Midwest of the United States, for example, undergoing a large-scale customer experience change program, found its efforts stalled. On reading the first edition of Beyond Performance, they realized they had only focused on the performance aspects of the change and therefore decided to get their health checked. Even before receiving the results, they had decided they would need to pursue the market shaper recipe. To their surprise, they found the company was broken on all four Power Practices (even though other practices were significantly healthier). Given this, for the next nine months of their change efforts, they didn’t worry about recipes and instead focused on “fixing what was broken.” Only once they had improved these did they reorient their efforts on achieving distinctiveness in the practices related to the market shaper recipe.

We realize we’ve covered a lot of ground, and that some of our readers may be wishing that the process for setting a health aspiration was as simple as “Be great at 37 things.” We are encouraged by our clients’ reactions to doing this work, however, which is that while the analytics behind the curtain are complex, the ultimate answer the process provides is clear, easy to understand, tightly focused, and data-backed. It reflects what psychologist William Schutz described when he said, “Understanding evolves through three phases: simplistic, complex, and profoundly simple.”³⁰

Ultimately, a robust health aspiration for a change program involves choosing a recipe of practices that will be driven to excellence (sometimes referred to as “signature practices”) as well as “fixing what’s broken” (to ensure there are no “pebbles in their shoes” on the journey). For example, let’s go back to GNP. At the end of the Aspire phase, the answer to, “What are the health goals for our change efforts?” was (profoundly) simple: step-change improvement in strategic clarity, performance transparency, employee involvement, and consequence management .