You Might Also Like: Redefiners

Emma Combe (0:08)

Welcome to The Leadership Lounge, a place to kick back and listen as our experts dissect some of the biggest questions leaders face today. I'm Emma Combe, Leadership Advisor in our London office. If there's one challenge that seems to be coming up in almost every leadership conversation right now, it's transformation. The rise of AI is forcing every organization, even the most successful, to rethink how they operate and how they create value. Yet despite billions being invested in transformation each year, success remains stubbornly elusive. What looks like a really strong strategy on paper can quickly run into resistance. So why is change so hard? How can CEOs build real ownership across the leadership, board and wider organization? And when a transformation starts to stall, what can leaders do to get it moving again?

To explore these questions, we have a very special guest today. Constantine Alexandrakis. Constantine is not only our CEO at Russell Reynolds, he's also the author of a new book on this very topic. It's called The Catalyst CEO. Why CEOs can't lead transformation alone, and what the best do instead, and I can't wait to read it.

And joining Constantine are Sean Dineen and David Mills, two of our leadership advisors at Russell Reynolds Associates, who have deep experience advising CEOs through the complex work of business transformation. But before we dive in, remember to share any burning questions you want our experts to answer by emailing redefiners at russellrennels.com. We look forward to hearing from you. And if you enjoy listening to our episodes, leave us a review on Apple or Spotify.

So, let's dive in. Constantine, it's great to have you in the Leadership Lounge today. Thanks so much for joining us. Now, we know that transformation is hardly a new challenge for leaders. But right now, the pressure to change feels particularly intense, especially with the arrival of AI.

Yet we know that many organizations are really struggling with this. There are various statistics on the rates of success, and none of them are particularly encouraging. Our own research, for example, shows that only 29% of executives feel their transformation efforts have been successful. So, why is change so hard?

Constantine Alexandrakis (2:30)

Well, Emma, it's because we keep treating transformation as a strategy problem, and it isn't. It's a human problem at scale, and you're asking hundreds or thousands of people to stop doing things that made them successful and start doing things that are unfamiliar, and sometimes threatening. Strategy tells you where to go.

Transformation succeeds or fails on whether people choose to move.

Emma Combe (2:57)

So, Constantine, what I'm hearing is that the strategy is only really the starting point. The much harder job is getting the organization to live it.

Constantine Alexandrakis (3:07)

Exactly. And quite frankly, the paradox is that some of the instincts that make you a successful CEO can actually make transformation harder.

Emma Combe (3:17)

So, let's dig in to that and explore how CEOs can overcome this resistance. Sean, if transformation is a leadership challenge, what should CEOs be thinking about when trying to overcome resistance?

Sean Dineen (3:30)

Well, first, Emma, leaders need to be cognizant that organizations are human systems, and most people don't like change.

And when dealing with change, there are different types of resistance, which we call inertia, that tend to come up, each requiring a different response. And we typically see three common types. The first, which tends to be the biggest barrier, is what we call insight inertia. And this is where people simply don't see why change is necessary. Over two-thirds of senior leaders told us this has been a key reason why transformation couldn't even get out of the starting gate. The other key barrier is psychological inertia. And this is really about people's built-in preference for the status quo, where creatures of habit and we don't like when our day-to-day has to change. And then there's action inertia. That's where people might genuinely support the transformation, but the organization makes it acting on it difficult. There's friction in the system. Resources are still tied to yesterday's priorities. Decision rights aren't clear.

Or people simply don't have the capabilities they need yet. So these are quite different problems. And CEOs need to understand which one they're dealing with because the response has to be different too.

Emma Combe (4:44)

Thanks, Sean. I love the specifics about these different types of resistance as you've outlined them. And it sounds like the first stumbling block is really getting people to understand the need for change.

I imagine this is particularly hard in businesses that are doing well. Constantine, I'd like to turn back to you. In all the conversations you've had with CEOs on this, what did you learn about how CEOs can help people understand why transformation is necessary even if organizations are performing well?