Government transformation in times of great change

There has been a flurry of activity in recent months about policy agendas and planning for implementation. But change is hard—less than a third of government transformations are successful. How do agency leaders flip the odds to set up their agencies for success? Why is organizational health so important? In this episode of McKinsey on Government, McKinsey senior partner Scott Blackburn and partner Brooke Weddle discuss how the federal government’s leaders can lead an effective transformation. The conversation has been edited for clarity.

Francis Rose: Welcome to McKinsey on Government. Each episode examines one of the hardest problems facing government today and solutions from McKinsey experts and other leaders. I’m the host of McKinsey on Government, Francis Rose. A flurry of activity from the White House is driving conversations around transformation at agencies across government. The pandemic is behind some of that conversation, but not all of it. That’s the subject of today’s episode, “Government transformation in times of great change.”

Brooke Weddle is a partner in McKinsey’s Washington, DC, office, where Scott Blackburn is a senior partner. Welcome to both of you. Scott, I want to start with you. We have so many moving parts right now regarding transformation: the president’s management agenda, vision, and lots of other things out there. How should a leader in government think about all of these pieces and put them into a mosaic rather than just puzzle pieces laying on the table? Welcome, Scott.

Scott Blackburn: Thank you, Francis. It is quite an exciting time right now. You have the Build Back Better agenda, the recently released President’s Management Agenda, and an executive order on customer experience. It’s a lot. It’s an absolute lot. And it’s a lot for an agency when you add sustainability goals, inclusion goals, setting a clear aspiration, a clear performance agenda, a clear cultural agenda for every single organization. I think the first year of an administration, Francis, often involves getting the people in place, getting the policy agenda in place, getting that guidance out there. It really is time for every agency to buckle up, start getting organized, and figure out how they’re actually going to implement everything.

Francis Rose: Brooke, welcome. You were nodding your head quite vigorously. When Scott talked about these cultural issues, why did that resonate with you so much? And how does the culture concept fit into what you’ve seen private-sector organizations do in transformations?

Brooke Weddle: I often agree with Scott. That did resonate hugely with me. In the private sector, we’re seeing very many of the same trends. On culture, specifically, we see a lot of organizations reinventing or at least reexamining what their culture stands for. And we’ve done research, using our Organizational Health Index, to pinpoint some of the management practices or the behaviors that have been the hallmarks of high-performing companies during the pandemic. Not surprisingly, some of those management practices have to do with innovation, driving for creativity, and entrepreneurship because we’ve had to seek out new solutions to new problems.

You also see organizations emphasizing things like process-based capabilities and ensuring that they’re creating a strong execution engine—new ideas and creativity put into the system, if you will. There’s a process by which you can lock in change in more sustainable ways. So many organizations are rethinking how they can do that at scale: what’s the role of leaders, in particular, in role modeling those new behaviors? So, absolutely, it’s been a healthy time for rethinking culture.

Francis Rose: When you look at that research, Brooke—at how organizations have looked at transformation in the pandemic era—how does that benchmark against what you saw before the pandemic? How much has the pandemic changed the way that people think about how they want to structure or restructure their organizations and the way they do business?

Brooke Weddle: Interestingly, in a different research effort, but an adjacent one, we look at transformation rates, the success rates, of transformations every five years. It just so happens that last year was the fifth year in the cycle, so we did the research. It turns out that we still are stuck at a 30 percent success rate for transformations, so the number didn’t move up or down during the pandemic. The thing that we found, though, was that organizations are investing in new techniques to try to drive success.

The thing that really stood out for me and was exciting was the role of influencers—people in the organization who have influence, not by hierarchy, but because of how effective they are at communicating or how trustworthy they are. We saw that organizations that had the higher levels of success in transformations were investing much more in these influencers.

I connect that back to culture because we’ve also seen social networks in the fabric of an organization’s culture change. I’ll just give you one more insight here. In another piece of research, we saw that weak ties are becoming weaker and strong ties are becoming stronger. If you think about that, it has an impact on how work gets done. If I’m interacting less with people who are at arm’s length, and I’m interacting more with people who are close to me, I might not get pieces of information that I would have gotten previously. So the landscape’s changing.

Francis Rose: Scott, government leaders would kill for a 30 percent success rate on transformation. What’s different about the work that Brooke does, and what she sees in the private sector, and what you both see in the public sector now that you’re on the outside working with public-sector leaders?

Scott Blackburn: Francis, we actually did a government cut, a separate piece of research. In government, it’s closer to 20 percent that are successful versus 30 percent. Even that might be a bit charitable. It is tough in government. You have all the challenges that you have in the private sector. But if you think about it, you also have leadership rotating in and out when political administrations change or whatever it might be. They are larger organizations, typically. There is a lot of bureaucracy. You have a lot of different stakeholders.

You don’t necessarily have the same incentives that you have in the private sector, where people are very focused on stock price and bottom line and quarterly targets et cetera. That is typically a forcing mechanism. What I would say, though, is that in the public sector you have a mission. You have people who deeply, deeply care. I think that’s the secret weapon. And I think that’s actually something that people in the private sector can learn from the public sector. This was my experience in the VA,¹The US Department of Veterans Affairs. where we set as a North Star the idea that we’re going to improve veterans’ trust in the VA so that it can fulfill the nation’s commitment to veterans.

That became a galvanizing force that all of the VA’s employees believed in. At the end of the day, they might have had some differences on how to actually get there. But if you use that as the North Star, you appeal to people’s mission in government. I think that’s a tool that could be used more in the private sector.

Francis Rose: What moves the ball, Scott? And Brooke, I want to ask you this, too. But that 30 percent doesn’t sound great, and it doesn’t sound like a success. And I wonder what moves the ball? We can talk about theory and ideas and all of that. That’s great. But in actual execution—Scott, I’ll start with you—what moves the ball? How do we get that to a better number? How do we get the outcomes to be better?

Scott Blackburn: It can be a lot better. I think having a compelling aspiration that people believe in and is crystal clear is step number one. Step number two is actually doing the work and understanding where you are, the challenges in the organization. Step three is developing a plan to overcome those barriers. That’s what we need to do to get to the aspirational goals we set forth.

What is the performance agenda? What are the organizational-health goals? What are the cultural changes? We have to be very, very deliberate about that. Then, as Brooke just mentioned, you must set up the execution engine to actually get there. You have to be very disciplined—hold your people accountable but also overcome barriers when they’re inevitably thrown your way.

What we found is that you can flip the odds. You can get from 30 percent to, say, 70 percent if you follow a structured approach and you do everything the way it should be done.

Francis Rose: Define the term, Scott, that you just used: organizational health. What does that mean, and how does one go about assessing it, measuring it?

Scott Blackburn: I think the best analogy that I have is with an athlete. You think about going and winning a race, winning a championship in a certain year. That is your performance. But what are you doing to sustain that over a long period of time? You’re taking care of your body. You’re taking care of you mind. If it’s a team sport, you’re replenishing your talent. You’re creating that culture to compete for the championship over and over again. It’s the best analogy that I could use. Brooke, I’ve heard you explain this many times.

Brooke Weddle: That analogy is really helpful for understanding the concept. We’ve been doing research on this concept—organizational health—for 20-plus years. The impetus behind the research was trying to determine what set apart organizations that performed well for long periods of time from those that were a blip on the radar, if you will. The big insight from this research was that organizations that place equal emphasis on organizational health and performance are the ones that actually have long-term sustainable performance.

Just to build on what Scott said in terms of the definition, we think of organizational health as three things. One is how well an organization aligns around a strategy and its vision and translates that into the work environment all the way down to the front line. Two, how well it executes that strategy and vision. Here you’re taking into account things like do you have the right skills, talent, capabilities? Do you have the right accountability mechanisms? Are you motivating your people? All that is part of execution. The third element is renewal. Do you have capacity to look outside to capture new ideas and competitive insights? Do you have an internal innovation engine to take in new ideas from inside your organization through knowledge sharing, through bottom-up innovation? That’s how we think about organizational health.

Thirty percent is a terrible number, so let’s not be content with that. This approach is designed to flip those odds. Every step along that journey, you need to be concerned with what you’re doing on the performance side and setting an aspiration for performance, measuring your starting point, coming up with the portfolio of initiatives, and then doing the same exact thing on the health side. It’s got to be balanced between health and performance throughout those different steps.

The other thing I’d mention as part of that journey is the role of talent. Talent’s on everyone’s minds these days with the Great Resignation, the Great Attrition. One thing that we’ve found critical in flipping the odds is ensuring that you are matching the best talent to the critical roles in the transformation in a strategic way. You need to think strategically about the jobs to be done per role—the attributes, the experience, the skills that the role requires. Then think through, in a fact-based way, what’s the best talent. We see more organizations doing this, but it’s still not the majority, in my view.

Francis Rose: Brooke, did your research give you any indication why that 30 percent number doesn’t move over time?

Brooke Weddle: I think transformations are hard. That would be my starting point. The other thing I’d say is that transformations require you to do a lot of things at the same time, which is why you need to follow a structured approach that is comprehensive. This is why you need to seek out ways to get leverage from the broader organization. The role of influencers. Matching talent to the right roles. The change story, which is about clarity of focus and about building the narrative organization-wide so it’s not only the small collection of leaders who know what you’re doing. There’s a lot that needs to happen, and in some cases leaders underestimate that. Or they overestimate their ability to do it themselves, without the broader change network.

Francis Rose: Scott, is there such a thing as a transformational playbook or framework that leaders can apply to the peculiarities of their organizations to fill in the meat on the bones? Or does each one of these issues require the basics that you and Brooke have both talked about today, but starting on a fresh sheet of paper for each organization?

Scott Blackburn: It’s a great question. I think there are frameworks. There’s been a lot written about transformations in the past, going all the way back to John Kotter’s famous book.²John P. Kotter, Leading Change, first edition, Boston, MA: Harvard Business School Press, 1996. We, of course, have our own framework. There is a benefit from getting it on paper, getting the clarity of mission, getting that structure in place: for instance, here are five themes for the aspiration, here’s the 20 initiatives, here are the metrics that we need to put in place. There’s tremendous benefit from that. It also takes a lot of energy, typically over periods of years.

This isn’t something that happens in months. It happens over years. In government it often happens across administrations. I think the difference, sometimes, between the transformations that are successful across administrations, versus the ones that aren’t, is that in successful ones you win over the people. People get excited about the change that is going on, the vision that is laid out. You create more positive energy than negative energy through the hard work that everybody has to put in.

I’ll take the customer experience journey as a good example of something that has happened during several administrations. We started planting the seeds of that under Veterans Affairs secretary Robert A. McDonald in 2015, 2016 with the VA transformation. Now, two administrations later, you have incredible momentum through the last administration and the executive order that was just signed. That was because the people bought into the transformation. People have kept with it. As a result of that, a lot of positive change is actually happening in government.

Francis Rose: I want to get Brooke’s input on this question, but I think it’s something that’s more peculiar to public-sector organizations, so, Scott, I’ll ask you first. Is there a way to make the transitions that happen so often in government—changes of administration, changes of political leadership, and so on—into a feature for a transformation and not a bug, because it seems like it’s a bug almost all the time?

Scott Blackburn: I think there is. There have been some great examples of that in the past. The Federal Bureau of Investigation’s transformation, post 9/11, was a great example. The Internal Revenue Service’s transformation with Charles Rossotti, I think, was another famous success story. There are lessons learned in going back and understanding what went right in other situations. What are the traits of successful transformations, which are pretty well documented, just to make sure that you’re not repeating the mistakes of the past? We’re constantly creating that leadership engine, that execution engine, that renewal engine. We’re creating successes and building off successes and then handing programs over to the next teams as people rotate out or as career employees get promoted and move on to other jobs or leave agencies. I do think that we can have tremendous success in government if we do that.

Francis Rose: Brooke, I think there’s a perception that the private sector doesn’t deal with the kind of leadership changes or handoffs that the public sector does. Is that the case? And whether it is or isn’t, how does the private sector manage those leadership changes, handoffs, and so on when they do occur?

Brooke Weddle: I think the cycles are probably different, but the problem or the challenge still exists. It is really critical, as Scott is saying, to create hardwiring that is persistent, so that you’re not starting from scratch. There’s another element to this as well, which is the narrative. Even when there’s a leadership change, and a new leader comes in and wants to make her mark or his mark, I think it’s helpful to have some continuity in that narrative.

Organizations that do this really well—having continuity—have a really strong sense of values and purpose because they’re not making it up wholesale with each transition. We’ve seen very much of an uptick in the private sector on the importance of purpose and meaning. I think we’re going to see more of this. I do think it will help with transitions and transformations as we go forward. One piece of research we saw in the Great Attrition was that there’s this complete disconnect between what employers think is the reason for employees leaving and what employees are stating as their reason. It comes down to meaning and belonging. So I hope we see more of that in the private sector. That will help with the continuity around leadership transitions.

Francis Rose: Final thought: what does meaning and belonging look like in a hybrid work environment moving forward? All of these transformations are going to happen, in the public sector and private sector, in some form of hybrid work environment. Nobody knows exactly what; it’ll be different from organization to organization. Brooke, what do you see right now? Or is there even a way to see right now what that looks like?

Brooke Weddle: I love that question. I was just on with a group of chief diversity officers last night. This was the question: How do you create meaning and belonging in a hybrid workplace? I think, first and foremost, one thing that is happening is that leaders are doing a lot of reflection on ways they need to change and show up differently, because so much of meaning and belonging is cultivated in micromoments, micromoments that matter. Without resorting to default preferences—whether or not you want to be in the office, whether you want to work synchronously versus asynchronously—we all have to start understanding our own biases and preferences and how that might impact others.

The other thing I see organizations doing to cultivate more meaning and belonging in hybrid workplaces is investing in building the capabilities of managers. It’s a whole new world when you ask a manager to structure work in a way that, first of all, is hybrid and that, second, helps to create more of a sense of belonging so that we can start to decrease some of these record levels of burnout that we’re seeing.

We shouldn’t assume that managers know how to do that. In some cases, organizations are creating new roles: the future of work, the future of the workplace. That might not be for everyone, but it underscores the importance that organizations are placing on investing in the workplace strategy of the future and, specifically, the manager level, the middle-manager ranks.

Francis Rose: Scott, I think the challenge for public-sector leaders, when it comes to meaning and belonging, is how do you create that in an environment where there are so many people eligible to retire. If they don’t feel there’s meaning and belonging, they’re able to say, “See ya,” and move on to something else. That strikes me as the biggest issue public-sector leaders have to deal with.

Scott Blackburn: It is a big issue, Francis. This is where it is important to create that compelling vision of where are you going, and why people should actually stick with it. This might involve pushing out their retirement or thinking about the things we could give the next generation or some of the up-and-comers weighing between staying in government or moving to the private sector.

This meaning and belonging is critical and the government has the advantage. A lot of these agencies have the advantage—whether it’s strengthening the economy, preserving the environment, defense and security, healthcare, or serving our citizens—in laying out that compelling vision and energizing people. “Hey, this is where you want to be, where you can actually make a difference for your families, for your loved ones, for the world overall. And here is what we’re gonna do over the next two, three, five years.” Get concrete. Excite people to want to be part of it, to put in the extra energy so that when their careers are over, they can look back and say, “This was a highlight. I was part of something special. Back in 2022, when we were coming out of the COVID-19 crisis, this is what I did.”

It gets back to the George Patton quote during World War II that I probably can’t say on air, but was something like “Where were you during that time when the world needed you the most?” I do think we are at an inflection point where there are going to be people that should want to be part of it.

Francis Rose: Scott Blackburn, Brooke Weddle, a terrific conversation. Thanks very much for joining me today. I appreciate your time.

Brooke Weddle: Thanks, Francis.

Scott Blackburn: Thank you.

Francis Rose: You’ve been listening to McKinsey on Government, a presentation of McKinsey & Company. Our next episode’s in a couple of weeks. You can subscribe to McKinsey on Government everywhere you get your shows. I’m the host of McKinsey on Government, Francis Rose. Thanks very much for listening.