Advertisement
Why Organizational Change Fails
Get articles like this
in your inbox
The longest running and most trusted source of information serving talent acquisition professionals.
Advertisement
Related Articles
An astonishing 75% of organizational change initiatives either fail outright or don’t achieve desired objectives, according to research. The cost of a failed transformation, such as a major restructuring, an expansion into a new geography or the integration of an acquired business often is very high, with the direct costs of external consulting and internal management time paling in comparison to lost opportunities, disruption and change fatigue.
That said, organizations often do need to be transformed in order to survive and thrive. We live in times of change unprecedented in recorded human history, driven by technological, social, political and environmental shifts that likely will continue to accelerate. So, “just saying no” to transformation often isn’t an option.
If you determine that your organization does need to change in fundamental ways, how can you beat the odds and be successful? The starting point is to understand why most transformation efforts fail. In our work with hundreds of senior executives seeking to change their organizations, we’ve seen the following 10 factors increase the likelihood of failure. Individually, they create significant barriers; in combination, they make it virtually inevitable that good intentions and major investments will end in disappointment.
When people don’t understand why change is necessary, anxiety, cynicism and resistance inevitably build. Most major transformations are justified from a financial returns standpoint (e.g., revenues are added through an acquisition; cost reductions result in higher margins, etc.) but the rationale for large-scale change must be clear and compelling for all the key stakeholders who have to be on board for successful implementation. If you don’t help critical groups of people understand why change is necessary, and how it will affect them you will never get to the rest of the story. Even with a solid intellectual rationale for change, people inevitably want to understand the implications for and impact on them. Developing targeted messages for key audiences is crucial to building and sustaining support.
Making the case for transformation is most challenging when there is no built-in sense of urgency. In crisis situations, change is the necessary reaction to urgent problems. People may not know what to do, but they know that something needs to be done. Far harder are situations where change is pursued proactively to prevent emerging problems or to pursue new opportunities. In such situations, many or even most people in the organization don’t see that change is necessary, and the case for change must be based on engaging, educating and inspiring people, combining solid analytics with a clear vision of what the future holds.
Full alignment among senior team members is an elusive goal at any point in time. Even a high-performing team will have all manner of relational and power-related dynamics playing out on a daily basis. Members of executive teams must join forces to both maximize the potential in each of their roles and to manage the built-in organizational tensions among them. This is made all the more difficult in times of major change when ambiguity increases and people jockey (consciously and unconsciously) to ensure that their voice is heard, their vote counts and their seat at the table remains secure.
The requirements of leading a transformation are quite different from those of leading a line of business or function in steady-state or even a smaller, more focused change effort. By definition, transformations are comprehensive, holistic makeovers of the way work is done. Leading such efforts involves making progress on an array of projects or workstreams that need to be managed in a traditional sense, but that also need to be pulled together in ways that require close collaboration and difficult tradeoffs. Only the leadership team can do this work.
It is critical for the CEO to direct this effort, working with the team to surface their assumptions and concerns, make the right trade-offs and manage the inevitable conflicts. Spirited, open debate of the range of options available is crucial to laying out the path forward, led by an aligned team ready to take on the complexity, ambiguity and conflict inherent in transforming an organization.
While necessary, senior team alignment is not sufficient. The team needs to remain fully engaged throughout the transformation process, even as they continue to run the business. Given the significant competitive and operational pressures that senior teams face, it’s all-too-easy for leaders to abdicate their responsibility for actively directing, leading and monitoring the transformation. This often is reinforced by the organization’s reward system, which incentivizes a shorter-term, more operational focus.
For this reason, and because leading transformation requires specific skills and expertise that differ from running business as usual, it is usually advisable to support the leadership team with a dedicated group of people focused exclusively on overseeing planning and implementation. It also often makes sense to augment this group with external resources with deep and specific experience with transformation. But the overall transformation process must be clearly and unequivocally leader-led. The senior team must have an agenda that incorporates both business-as-usual items and oversight of the transformation process.
In addition, teams that operate on behalf of the leadership team must have a mandate that supports leadership in this work. Too often, the most well-intended “supporters” (internal project management experts, HR and communication resources, and external consultants) proceed down paths that become disconnected from the leaders who must make key decisions. These support teams can take on a life of their own and become bureaucratic impediments, for example by setting up multiple work streams with onerous reporting requirements or, worse, creating a shadow governance body that has too much influence on decision-making.
Given the times, organizational transformation consulting unsurprisingly is a thriving business. Armies of consultants contend to win lucrative contracts to advise leaders on how to make large-scale change happen. However, given the high failure rates, it’s clear few actually are delivering the value they promise. This is particularly true for consultants who use what we call the “doctor-patient model”; they diagnose the situation and prescribe solutions without engaging the patient in deciding what is best for them, without giving them choice.
This is not to say that consultants can’t add value, especially for organizations that don’t have a lot of experience with large-scale transformation. But only when they engage the leadership in an in-depth process of co-creation, only when they support implementation and not just design, and only when they seek to build capability and not encourage dependency.
Co-creation means building maximum alignment through the process by:
It’s not enough for senior leaders to put substantial time and attention into articulating and communicating the business case for transformation. They have to do it ways that truly enlist employees in the transformation process. Too often, however, they fail to get them really onboard, even when there is a burning platform providing a clear and compelling rationale for change.
This is because one-way communication, even with the best of presentation materials and most extensive FAQs designed to educate people, is not enough to win employees over to being willing change agents. To enlist employees, leadership has to be willing to let things get somewhat messy, through intensive, authentic engagement and involvement of employees in making the transformation work – in asking them for their reactions, opinions and ideas, and then by transparently sharing what was learned and what will be done with the input provided.
Well designed and executed engagement processes will ensure deeper understanding of the changes required as people learn by assimilating and applying information, not just by absorbing concepts intellectually. And in the end, people will more willingly embrace and drive change when they feel they are, to some degree, in control of their own fate.
Culture change is an essential element of transformation. Culture is “how we do things around here” – the norms and ways of operating that underpin getting work done. If that doesn’t change in necessary ways, then all the work to change strategy, structure and systems is likely to come to naught.
Culture change efforts should alter the way work is done by people (individuals and teams), starting in places where the transformation must take hold. For example, if the transformation is one of getting sales people to stop selling products to customers and start engaging them in finding solutions to their needs (which still require them to buy products, but in a different way), then the behavior of the sales force needs to shift from pushing their wares to engaging with customers more as consultants or trusted advisors. This is a major culture change for product-oriented sales people.
Culture is, however, hard to work on directly. It can only be changed by altering peoples’ behaviors. The first step is to clearly define what behaviors are necessary for driving the transformation. This is an ideal area in which to engage employees (see #5): Identifying behaviors that will be key to success going forward is an optimal topic to put to small groups throughout the organization, as a way for them to connect their day-to-day life with the larger ambitions of the transformation and to participate in co-creating a vital part of the new organization.
Once the definitional phase is over, it may be tempting to believe that the new culture will be implemented through distribution of “posters and coasters” that lay out the desired attributes in compelling and meaningful ways. But to truly achieve culture change, you need to leverage the organizational systems that possess the most powerful tools for reshaping behavior:
In the end, if well managed, culture change can be one of the most powerful drivers of a successful transformation.
It’s essential to figure out early if key initiatives are not progressing as planned and, if not, rapidly to take corrective action. It’s like a sailboat that is off course; the longer it continues, the harder it is to correct. This means you must be able to “sense and respond” to emerging developments as things progress by building a system that includes these elements:
Pick your metaphor of choice: A transformation is a journey, not a trip; a marathon not a sprint; a passage to a new way of life, not a modified way of doing business. However you choose to characterize it, all transformations share a handful of common denominators: They take long periods of time (years, not months), they are “epic” in their scope, they are grueling in their intensity and they are punishing in their relentless need for consistency, consistency, consistency on the part of leadership. Without understanding the underlying nature of a true transformation, it can be easy to fall into the following traps:
Organizational transformation efforts rarely fail because of bad design, but rather from lack of sufficient attention to the transition from the old organization to the new one. There is a tendency to treat “Day One” of the new organization as the end of the journey, and not the start of a critical new phase of activity devoted to “breathing life” into the new organization.
A 2010 study by the Corporate Leadership Council (now Gartner for HR) highlighted three major failure modes associated with managing this critical transition:
Based on our experience we would add a fourth; the new organization is “left in limbo” until direction is driven downward from senior leadership to the front lines.
Avoiding these problems requires attention and investment in rapidly “rewiring” the organization during the transition phase. Typically, this is best done through a cascading series of team interventions focused on ensuring that the new organization is fully aligned on mission, vision, goals, and strategies, as well as building relationships and enhancing team cohesion at all levels. Done well these processes can dramatically accelerate the transition from the old organization to the new.
Finally, too many transformation initiatives fail to focus on development of the capabilities required for people to be successful in the new organization. This is a mistake for two reasons. First, organizational transformation always alters the nature of “the work” that must be done. A move from a more hierarchical structure to a matrix, for example, requires people to be more effective in influencing, negotiating and managing conflict. Second, one of the biggest reasons people resist change is fear that they won’t be able to be successful in the new organization, that “what got them here won’t get them there.” So an upfront commitment to invest in helping people be successful reduces resistance.
Capability development, focused on the critical new competencies and behaviors required for success, therefore is an essential driver of effective transformation. It typically is best done by focusing first on the leadership team, in a visible way, so that people further down don’t feel like they are being held to standards that leaders are not, and then working deeper into the organization. Once you’ve defined the behaviors and culture needed to drive execution of the new direction, the next step is to identify the changes in competencies required to move forward, and then to design development initiatives focusing on the biggest deficiencies.
Avoiding these 10 pitfalls doesn’t guarantee success, but it will vastly increase its likelihood. In fact, a corresponding focus on doing the opposite is a recipe for success, starting with the clearly defining the case for change and ending with an effective effort to build the new competencies the organization needs to be successful.