August 19, 2009

Why do 80% of organizational change initiatives fail? Or do they?

Have you ever heard someone claim that research shows that 70 or 80% of all change initiatives fail? Have you noticed that usually such a claim is not backed up by a specific reference to one or more studies or publications? I argue the claim is too general to be valid and useful and can even be counterproductive. Here is why. In 2002, Martin Smith systematically studied Success rates for different types of organizational change by comparing 49 published reports of success of organizational change, representing over 40,000 organizations. Based on his study the following conclusions can be drawn:
  1. Published success rates vary rather widely per type of change. As an example, Smith found that culture change programs fail much more often than strategy implementations and redesign projects.
  2. Published success rates vary rather widely over time. Older findings on success rates for certain types of change may differ from more current findings (due to contextual factors and or improved state of art).
  3. Success rates depend on the success criteria used. In general, the study shows that more broad criteria (financial performance, shareholder value) tend to show higher success rates than more behavioral measures (client satisfaction, management behavior).
  4. Vested interests of people reporting the research may downplay actual success rates. Reported low success rates may be used to sell different change methodologies.
Thinking and talking in terms of general high fail rates of change initiatives is not only unjustified, it also can have some negative consequences.
  1. Unjustified pessimism: thinking that organizational change is nearly doomed to fail creates a negative expectation of success which is likely to become a self-fulfilling prophecy. Even it is true that a certain type of change is associated with lower success rates this says little about your current project. Moreover it deemphasizes the fact that there are still many projects which succeed.
  2. Paralysis: as a consequence of (1) a feeling of helplessness may emerge which may result in paralysis. If you think change is doomed to fail, what else can you do than .. nothing?
  3. Wrong decisions: being convinced by consultants who claim to have a silver bullet approach to making change work may undermine your independence, your uniqueness and your change capacity.
  4. Wrong measures: thinking in these general terms (fail/no fail) may lead you to think too superficially about organizational change. An initiative can be a relative success in one respect (profitability) and a relative failure in another (market share).
It is hard to provide general advice on organizational change because the subject is huge and complex and huge. Still, here are some tentative suggestions.
  1. Don't change more than necessary. Organizations are dynamic systems in which continuous change is inevitable. Constant renewal is essential to keeping the system vital. It seems wise to be careful with the introduction of drastic change, however. If drastic change fails, the consequences can be quite damaging. Think carefully about the message you send to the organization. A message of everything-must-change can be highly demotivating for personnel (apparently we have been failing up till now).
  2. Follow a success perspective. Make explicit why you need the change and define the desired situation in positive terms. Focus your efforts primarily on indentifying what works to make progress in the desired situation.
  3. Be reluctant to rely heavily on external help. Most of the time organizations have the potential of defining their own goals and finding their own solutions to solve their problems and achieve their goals. Outside help can be useful and practical but can also be costly and can undermine your uniqueness and your own capacity to change.
  4. Evaluate thoughtfully. In evaluating the change intiative, refrain from un-nuanced, one-dimensional evaluation approaches. Instead, use a success-oriented evaluation approach (see example here).
Are you involved in organizational change? Are some of these comments and suggestions useful?

4 comments:

  1. Useful and insightful summary. Measuring the performance of companies is "easier" as these are numbers already collected and not specific to any one person. Changing individuals' behavior is hard and takes a lot of work.

    What I miss in the article is that while one should not rely too much on external help, most of the time the external consultants are necessary catalysts for the change to happen. They (should) have experience with changing organizations and individuals and have no ties to the current organization and are thus independent.

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  2. Hi Olav,

    thank you for your comment. I am not all against external consultants, coaches and trainers (I myself am one). They can be useful, of course. So, I agree with you on that.

    I am warning though against over-reliance on external professionals. I'd like to quote Jeffrey Pfeffer and Robert Sutton:

    "Because it's so hard to distinguish good advice from bad, managers are constantly enticed to believe in and implement floawed business practices. A big part of the problem is consultants, who are always rewarded for getting work, only sometimes rewarded for doing good work, and hardly ever rewarded for evaluating whether they have actually improved things. Worst of all, if a client's problems are only partly solved, that leads to more work for the consulting firm! (If you think our charge is too harsh, ask the people at your favorite consulting firm what evidence they have that their advice or techniques actually work - and pay attention to the the evidence they offer)."

    source: http://bit.ly/FKnrK

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  3. Very useful commentary that puts a lot of what I do into perspective. I agree that it is hard to decide black and white if a programme has worked or failed as most initiatives do some good at some level. Individual behaviour change is actually quite rare but group norms are easier to improve.

    I think a lot of the effort is evolutionary over a long time span and that organisations today are, in general, a lot more effective than they were 40 years ago.

    Great website, Coert- thank you

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