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ack in 1987, when Alcoa CEO Paul O'€™Neill announced that '€œsafety'€ would be the new strategic priority, analysts and investors feared the worst. O'€™Neill'€™s '€œzero-injuries'€ objective sounded like the misplaced focus of a newcomer to the aluminium sector.

But it proved a masterstroke. O'€™Neill'€™s personal commitment to safety won over the troublesome labor unions '€“ the critical constituency in the constellation of stakeholders '€“ and productivity soon started to improve. Over time, the pursuit of safety had a cascade effect on Alcoa'€™s culture '€“ instilling a new appreciation for processes, metrics, transparency, quality, stretch targets and organizational learning. As employees worked to make the environment safer, they also rendered it more efficient in terms of work flow and eventually more profitable. The pursuit of safety created value for the employees (wellbeing) but also for the investors (financial).

By the time O'€™Neill left, in 2000, it was five times safer to work at Alcoa than a decade earlier '€“ and the company'€™s stock had risen seven-fold. It had become the most profitable company in the sector.

Enter the corporate transformation

When O'€™Neill first embarked on the journey, the expression '€œcorporate transformation'€ had yet to enter the business lexicon, but this was precisely what he was attempting. What distinguishes a transformation effort from other large-scale changes is its emphasis on establishing new ways of perceiving, thinking, and acting throughout the organization. The litmus test of a successful transformation effort is whether the organization achieves broad-based behavior change, not just improved results.

Writing on corporate transformations flourished in the 1990s, growing out of previous work on change, corporate turnarounds, restructuring and reengineering in the 1970s and 1980s. The '€œtransformation'€ concept had broader appeal than its forerunners. It was not just about responding to crisis. Transformation was a proactive and uplifting term that could apply to a wide array of corporate situations: it was reinvention for companies that were still healthy and wanted to become more competitive.

Safety became a familiar transformation objective, along with other quests such as quality, customer-centricity, empowerment, lean manufacturing, business process re-engineering, outsourcing and offshoring. The major corporations still prospering have completed those journeys. What were once competitive differentiators are now givens, well integrated into their way of working.

Today'€™s transformation journeys revolve around a new set of issues, notably global reach, value generation, leadership development, solution selling, agility, co-innovation, and sustainability. Our research indicates that these seven journeys currently dominate corporate transformation efforts. But these too will pass, and new pursuits will emerge.

Serial transformers

Corporate transformation is by no means a new phenomenon, just a new label. But the phenomenon has certainly become more pervasive. As the shelf life of business models and strategies grows shorter, success is increasingly tied to change. A company'€™s capacity for change is the only enduring advantage in a chaotic environment. The transformation journeys they embark on yield only temporary advantages '€“ so they have to string these together to achieve more lasting competitive advantage.

Corporations must therefore prepare for ongoing change by developing their transformation capability. And global executives must build up their competencies to lead those transformation efforts. According to Paddy Coyne, Shell'€™s VP of Enterprise Learning and Leadership Development: '€œWith the increasing pace of change in any industry'€¦ leaders throughout the organization really need to be able to stand on their own two feet and have a very strong sense of what they are up to, and see how it fits within their organizational context so that they can then show up in an agile, fast, consistent, congruent way and make decisions when they need to make decisions, and stand by them and take some personal risk with that.'€

Beyond corporate transformation

Transformation has become the essence of executive action. The day-to-day actions of executives precipitate the ongoing process of globalization, and it in turn shapes them. In transforming companies, global executives transform our very world '€“ for better or for worse.

We have a tendency to look upon corporations as problem-generating entities '€“ whether in terms of pollution, resource depletion or public health '€“ but they are also tremendous solution-delivering entities.

According to Peter Bakker, former CEO of TNT and head of the World Business Council for Sustainable Development since 2012: '€œCorporations [compared to public sector or non-governmental organizations] are much more agile, much more able to adapt to changing environments and crisis situations. If you apply the skill, the organization, the alertness of businesses to some of the world'€™s problems, you get whole new solutions, and certainly much more speed in the delivery of them. It is a big responsibility; but it is also a big opportunity.

Narasimhan is Shell Professor of Global Leadership at IMD,

Barsoux is a senior research fellow at IMD.