During the past year, many global companies—for example, China Petroleum and Coca-Cola—have named new CEOs. In many cases, this was because shareholders or the board felt that the previous leaders did not understand the massive disruptions facing their industries. These are not isolated events. Churn within many industries, due to incessant technological change, now means that leaders are being overtaken by their competitors at an unprecedented pace.^[1]See Martin Reeves and Knut Haanæs, Your Strategy Needs a Strategy, Harvard Business Review Press, 2015.

At any one time, about one-third of large US companies are experiencing a severe, two-year decline in their ability to create shareholder value. Within that group, one-third fail to recover within the following five years. Even companies that are current industry leaders are vulnerable to disruption. And even the new leader of a top-performing company needs to watch over her shoulder for—and transform the company in anticipation of—the next disruption, for it is surely coming. In other words, if the company ain’t broke, fix it preemptively anyway.

Many new CEOs come in with a mandate to transform the company—including its strategy, business model, organization, operations, and culture. A transformation is not a series of incremental changes. Rather, it is a fundamental reboot that enables a business to achieve a dramatic, sustainable improvement in performance and alter the trajectory of its future. Because they are comprehensive by nature, transformations are complex endeavors, and the majority fall short of expectations for achieving their target value, coming in on time, or doing both. (See Transformation: Delivering and Sustaining Breakthrough Performance, BCG e-book, November 2016.)

BCG has helped companies execute more than 750 transformations, and currently, we are working with more than 150 companies on large-scale transformation programs. (Among that group, two-thirds have a new CEO in place.) We also recently conducted an extensive quantitative analysis of transformation performance among large US companies. The good news is that changing CEOs increases the odds of success. The bad news is that new CEOs—particularly those hired from outside the company—also show a wide range of success in leading transformations. This report summarizes the best practices from our direct experience and analysis and offers new CEOs an evidence-based approach for developing and implementing successful transformations.