The conventional wisdom tells us that change is complicated, hard, takes and long time and usually fails. The bigger the change, the more complicated and harder it is, the longer it takes, and the more likely it is to fail. Everybody knows that. But is it really true? There’s probably one statistic that we all know about change, and that’s that around 70% of major change projects fail. It’s surprising how often that statistic is rolled out. But guess what. It’s not true. It’s an urban myth.
It’s supposed to come from John Kotter’s famous Harvard Business Review article on change, although when you look at his article you will see that what he actually said was
“I have watched more than 100 companies…make fundamental changes in how business is conducted. A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct tilt toward the lower end of the scale.” His point is not that most fail, but that most fail to deliver the benefits that the company sought. They’re a disappointment, and you might have been better off not bothering.
The plain facts are that most change disappoints. But it’s also equally plain that these projects fail to deliver the desired outcomes, not because the change was too hard to achieve, but because we do change badly. Specifically we fail to set the change initiatives on foundations that will support the relentless, focused activity necessary to reach those outcomes. It’s change that’s done badly that fails to deliver results.
Now that’s an easy thing to say. The obvious next question is “what are we getting wrong?” The Principals at Legato have spent many years operating in change projects of many different types and in different contexts and countries. It’s our experience that many projects that go wrong, do so in almost their first act – initiation. If this is done badly, the project will fail.
At the heart of successful initiation is making sure that you understand the answer to some fundamental questions before setting out on the journey of change. And I mean really understanding. Not giving lip service to the process of defining the change that you’re looking for, but being utterly clear on the reasons and the rationale for the change and your approach. You do this by asking simple questions – at least they sound so – but they need to be pursued them relentlessly to their logical conclusion to ensure that we really understand what we’re trying to achieve and why. Our experience of trying to turn failing projects around is that 9 times out of 10, the organisation has failed to do the critical (boring?…) foundational work properly.
Now this article is focused on specific change initiatives as opposed to, say continuous improvement initiatives, but the principles are the same. As you will see below if you can’t identify a problem clearly, and if you are not targeting specific measurable outcomes for rational, evidence-based reasons, you’re unlikely to achieve much.
- What’s the problem?
What’s the problem we’re experiencing? How are we seeing the performance of the business declining? What’s the measure of that decline and what are its financial implications, either now or in the future? If something has changed for the worse, then we must be able to see it, measure it, track it and count it, and unless we address the problem, we’re in big trouble. If we can’t identify that threat then we should not be embarking upon change.
It’s critical that we are brutally honest about the shortcomings of our own organisation before we can address them. It’s not a blame game. Organisations exist in dynamic competitive environments, and it’s important to retain a cutting competitive edge to remain successful, However it’s a complete myth that change is good and valuable for its own sake. In fact the opposite is true. If a business is performing well and management are succeeding with no contra-indications, then change is not rational. “If it ain’t broke…” and all that. For change to have lasting beneficial results, there must be a real sense of urgency, and if there’s nothing really wrong then there can be no real motivating force to get change underway. We have to be completely clear about the problem and why it’s important.
- Why is it happening?
The critical aim of this question is to identify the real and proximate cause of the performance issue. Again we regularly find projects that are targeting something which turns out not to be the real reason for the under-performance. Sometimes the case is very persuasive with supporting data, but we regularly find that insufficient challenge and review has led to a project focused on an issue that correlates to the problem but is not its real cause. In those cases – guess what? Making the change fails to resolve the problem – although that’s often not spotted until quite a lot of money has been spent. And then no-one wants to admit to the mistake. It’s important to note that people focus in on what they believe to be the cause for many reasons other than the purely rational. We should beware scenarios where, for example, we identify Operations as the problem because “I always knew the ops manager was an idiot”. The key here is rigorous, rational analysis, backed by evidence.
A brief example. An organisation has a customer loyalty problem It needs fixing. Valuable customers are leaking away. Why is it happening? Service performance is poor. In fact service performance has declined in the period during which customer retention has declined. Therefore the answer is clear. We need to fix customer service. As it happens, customer retention is low for reasons of price competitiveness, and this as a result of changes to the features and benefits of a competitors product. This is much harder to spot or monitor, given that it’s the action of competitors. In fact by improving service, we’re spending more money than we otherwise would, putting further pressure on prices, and making the problem worse. Remember, the obvious reason is not always, in fact not usually, the fundamental reason for the problem.
- How must we change to stop it happening?
The critical aim here is to be clear about the extent and the nature of the change that is required. And let’s be clear, the less we can change to achieve the outcome, the better. It’s not that fundamental, large scale change is never required, but why would you do that unless you had to? The more moving parts in a programme, the harder it is to manage. We often find that the broader the scope of the change initiative, the shallower the initial problem definition has been leading to a scatter gun approach that seeks to cover as many bases as possible through the change work and hope that we hit the target.
It’s much harder work to define with laser precision the detailed cause of the issue so that you can focus on changing Just that. But it’s more successful. In fact this approach can generate a virtuous circle of small changes tackling specific causes, whose results can be monitored, that engage the staff across the company and which generate an environment of incremental marginal improvements that achieve big results. By comparison, the company that tries to tackle service performance with a vague and poorly directed corporate culture programme is probably doomed to failure. These programmes rarely define with any kind of precision or accuracy the things that need to be changed to remove or mitigate the cause of the clearly defined problem. And without that definition, the change fails.
- Why will this work?
Another critical question that is often not asked. Solutions and ideas are often generated rapidly, using workshops, some data analysis, and models are produced that support, in some cases, quote detailed business cases in favour of the change. Even where these target a clear and specific cause of under-performance, it’s rarely true that the proposed solution has been tested with any kind of rigour.
When we take our body to the doctor, we want to make sure that the course of treatment being recommended has a clear research base and tested, evidence-based results in support of its efficacy. We’re not going to accept something that looks good on a spreadsheet pulled together by the intern. However when it comes to our corporate bodies, its staggering how often we find business cases that simply do not stand up to thorough testing. Outcomes are described, costed, and modelled, but when you look for the evidence that will support the relationship between that outcome and the proposed activity, it’s missing and commitment falls away. In our turn-around work we often see this attributed to changes that have happened since the commencement of the project, however that’s almost never the root cause. The real problem is that the hard work of setting up a programme of activity that we can be sure will tackle the underlying causes of a real business problem has not been done properly. If we cannot understand the direct causal connection between what we plan to do, and how this will affect the clearly identified cause of under-performance, we will not solve the problem through our change programme.
- What do we have to do to deliver that, and how will we know it’s working?
The astute among you will have spotted that this is two questions, but they’re closely linked. A major issue in the failing projects that we encounter, is distraction. Once the project is up and running, scope gets extended, further data is identified, related problems are wrapped in. All this, often in the context of a project where the original goals and objective are themselves poorly understood.
We all know that projects will encounter the unexpected, and this will have implications for what we’re doing and how we do it. But to navigate those decisions successfully requires the kind of clarity and structure that we’ve been discussing here.
If we have followed the path laid out above, the planning of the actual activity required can be completed with much greater certainty, and superfluous activity removed to shorten and simplify the plan for change, and this can be done on an ongoing basis as we encounter problems in project delivery. If this is supported by a ruthless, relentless focus on getting those activities successfully completed, then the chances of success are measurably improved. This focus enables projects to deflect confusion of scope, or objective. These can be resisted. We find that a “parking lot” of future issues is a helpful device to push away these proposed changes and ensure that the goals and objectives in hand can be realised as quickly as possible.
This also means that we have a much clearer view on the success of our initiative. If we are focused on a few rather than many outcomes, then there is little distraction and we can quickly see whether our forecast outcomes are being realised. There’s no dust to settle before we see the outcome. The link is clear and if it’s not working we can see that. This allows for failing initiatives to be terminated or put on hold much quicker, reducing any wasted spend and keeping distraction to a minimum.
So there you have it. The importance of proper change initiation. Sounds simple, but requires discipline, openness, rigour and a real commitment to understanding how the organisation operates. If the time is spent properly here, then projects stand a much better chance of successful benefit realisation.