More than a third of large organizations have some type of transformation program underway at any given time, and many launch one major change initiative after another. Though they kick off with a lot of fanfare, most of these efforts fail to deliver. Only 12% produce lasting results, and that figure hasn't budged in the past two decades, despite everything we've learned over the years about how to lead change. Clearly, businesses need a new model for transformation. In this article the authors present one based on research with dozens of leading companies that have defied the odds, such as Ford, Dell, Amgen, T-Mobile, Adobe, and Virgin Australia. The successful programs, the authors found, employed six critical practices: treating transformation as a continuous process; building it into the company's operating rhythm; explicitly managing organizational energy; using aspirations, not benchmarks, to set goals; driving change from the middle of the organization out; and tapping significant external capital to fund the effort from the start.

In the traditional strategic-planning model, managers attempt to forecast how markets will evolve and competitors will respond, and then define a multiyear plan to position their company to win in this future state. That worked well when markets were more stable and the primary factors influencing future growth and profitability were easier to forecast. But the world is now changing so quickly that no business can plan for every eventuality. And fewer than a quarter of large organizations employ the most notable tools and frameworks for strategy development under uncertainty: scenario planning, Monte Carlo simulation, and real options analysis. Executives say that those tools require data that is impractical to gather and analysis that is too expensive to execute routinely and that their output can be counterintuitive and complicated to explain to senior leadership and the board. In this article the authors offer a new approach and mindset for making strategic decisions, along with a new model for managing strategy development and performance monitoring. They describe what it takes to produce great results in uncertain times and propose a practical model for strategy development that they have seen succeed at several leading companies.

For much of the past five decades, financial capital was considered a scarce resource. Today, however, capital is abundant and cheap, and the authors expect that to be the case for another 20 years or more. They point out that global financial assets have been growing faster than global GDP, and they explain why that trend is likely to continue. They note, too, that as the supply of capital has increased, the cost has plunged, making it possible for many large firms to borrow funds for next to nothing. What all this means is that companies can no longer sustain competitive advantage simply by allocating capital skillfully. In this new climate, the authors argue, business leaders need to lower hurdle rates and change their investment strategy, moving away from a few big bets and instead pursuing numerous small, varied growth opportunities. Not all will pan out, but embracing the risk of failure is necessary for success. Executives must also recognize that human capital is the truly scarce resource today. Organizations need to manage their workforces as carefully and rigorously as they manage their financial assets, unleashing and supporting the talent within their organizations.

Most companies have elaborate procedures for managing capital. They require a compelling business case for any new capital investment. They set hurdle rates. They delegate authority carefully, prescribing spending limits for each level. An organization's time, by contrast, goes largely unmanaged. Bain & Company, with which all three authors are associated, used innovative people analytics tools to examine the time budgets of 17 large corporations. It discovered that companies are awash in e-communications; meeting time has skyrocketed; real collaboration is limited; dysfunctional meeting behavior is on the rise; formal controls are rare; and the consequences of all this are few. The authors outline eight practices for managing organizational time. Among them are: Make meeting agendas clear and exclusive; create a zero-based time budget; require business cases for all initiatives; and standardize the decision process. Some forward-thinking companies bring as much discipline to their time budgets as to their capital budgets. As a result, they have liberated countless hours of previously unproductive time for executives and employees, fueling innovation and accelerating profitable growth.

Top talent is an invaluable asset: In highly specialized or creative work, for instance, "A" players are likely to be six times as productive as "B" players. So when your company has a crucial strategic project, why not multiply all that firepower and have a team of your best performers tackle it? Yet many companies hesitate to do this, believing that all-star teams don't work: Big egos will get in the way. The stars won't be able to work with one another. They'll drive the team leader crazy. Mankins, Bird, and Root of Bain & Company believe it's time to set aside that thinking. They have seen all-star teams do extraordinary work. But there is a right way and a wrong way to organize them. Before you can even begin to assemble such a team, you need to have the right talent management practices, so you hire and develop the best people and know what they're capable of. You have to give the team appropriate incentives and leaders and support staffers who are stars in their own right. And projects that are ill-defined or small scale are not for all-star teams. Use them only for critical missions, and make sure their objectives are clear. Even with the right setup, things can still go wrong. The wise executive will take steps to manage egos, prune non-team-players, and prevent average coworkers from feeling completely undervalued. She will also invest a lot of time in choosing the right team leader and will ask members for lots of feedback to monitor how that leader is doing.