I am often asked by executives and project leaders to share the results of the latest research studies on change management. Sometimes they are interested because they want to understand the risks associated with not budgeting to address the human side of change. Other times they know the risks all too well and are looking to make the business case for additional change management resources to support a project.
In all cases, however, the need for statistics and research points to the recurring question about the value of change management. And with project budgets already slim because of the stressed economy, global competition or the need for higher project ROI, most organizations struggle to justify spending money on something that they believe should be a core competency of those asked to lead change.
Unfortunately, this highlights a sad fact: When it comes to managing change, most organizations are operating in a state of denial. And the majority of managers need a little . . . well . . . help.
Let’s look at the facts.
Countless studies examining the change efforts of thousands of companies have concluded unequivocally that 50% of all change efforts fail. Or it might be 80%. Well, sometimes it’s 25%. But it is definitely between 25% and 80% . . . Definitely!
Okay, I know. The research is all over the map depending upon whether they are examining technology or outsourcing implementations, mergers, product launches, customer relationship initiatives, organization restructuring, leadership transitions or less complex forms of change.
It also depends upon how the researchers define failure. Is failure defined as total failure, such as cancellation of the project? Sometimes. More often, it is defined as some degree of budget overrun, project delay, reduced ROI or some other variation of less-than-expected results.
When you strip away the variations in the research, however, study after study suggests that at the very least, change gets derailed with some degree of regularity. Even if you use the best-case data and pick, say, 25% as the likely failure rate, it is still remarkable. A 25% risk of project failure is significant considering how frequently organizations undergo some form of change. And since most of the research suggests that the failure rate is more than 50%, organization leaders should take pause.
The research results also suggest that change failure is not solely the result of a lack of managerial capability. A recent study by the Ken Blancard Companies showed that only 29% of change initiatives are launched without some formal structure or methodology (Those 29% are in complete denial!).
This means that we have many motivated, skilled, and historically successful leaders who apply a proven change methodology and still fall short of their organization or project change objectives. And yet, project leaders and their executive sponsors come to work each day convinced that this time it will be different. You gotta love the optimism! Or the naivete! Or the denial!
It’s time organizations come to accept a few inconvenient truths.
First, leading change is hard. As Niccolo Machiavelli said more than 500 years ago:
There is nothing more difficult to carry out, nor more doubtful of success, nor more dangerous to handle than to initiate a new order of things.
Change requires hard work, focus, and patience. Humans are hard-wired neurologically to resist change. So, there is much work to be done to achieve the results desired from any change initiative, especially those requiring even small measures of transformation.
Announcing change does not mean that employees will embrace change, and taking a hard-line, change-or-leave approach is out of touch and doesn’t recognize the realities of the modern workplace.
The change management effort begins before project launch and continues long after the technical effort is complete. It is an ongoing process that requires an understanding of both the technical and behavioral objectives in order to anticipate human emotional reactions and develop action plans to address them.
Second, effective change management requires budget and resources. There is no way around it. Either you budget for change upfront or you risk paying more throughout the life of the project because of delays, rework and unrealized goals. How much you budget will depend upon a number of factors, but as a rule of thumb, plan to spend 5-15% of your total project cost on resources to support change management-specific activity.
And finally, methodology is not enough.
The difficulty leveraging the value of proven change models may lie less in the construct of any change model itself, and more in the challenge of applying a rational and uniform framework to the irrational and unpredictable elements of human behavior. As Frank Lloyd Wright once said about architecture, “the architect’s most useful tools are an eraser at the drafting board and a wrecking bar at the site.” So, too, with managing change, the most useful tools are those that help you behave adaptively once the project begins.
Successful change leaders apply these tools, like the eraser and the wrecking bar, to adapt the methodology-driven blueprint to the situational realities encountered on change initiatives. They have learned how to go beyond the blueprint to adapt the design and make it more actionable. Their flexibility helps them rapidly assess obstacles to generate workable solutions.
That’s the hard work. That’s the reason why change management requires proper resourcing. It is this adaptive capability when developed, that can help organizations move beyond statistical chance to achieve change management success more consistently.
Oh, and by the way, before I close, here are even more statistics to help you build your business case . . .
- CIO.com cites a Dynamic Markets survey of 800 IT managers, reporting that 62 percent of IT projects fail to meet their schedules.
- 49 percent suffered budget overruns
- 47 percent had higher-than-expected maintenance costs, and
- 41 percent failed to deliver the expected business value and ROI
- Researchers at the Ken Blanchard Companies found that 70% of change initiatives fail or get derailed
- The Standish Group’s Chaos Report reports 44% of projects are challenged (late, over budget, and/or less-than-expected results) and 24% fail (cancelled prior to completion).
- The PricewaterhouseCoopers survey on Current Program and Project Management Practices reports that 50% of all change initiatives fail.
- 20% determine project success based on the satisfaction of their stakeholders, 19% on on-time delivery, 18% on budget, 17% on the delivery of benefits, 15% on quality, 9% on acceptable ROI and 2% on other factors.
- Gartner’s industry analysts report:
- 55-70% of CRM projects fail to meet their objectives
- 70% of ERP project fail
- 70% of Supply Chain Management projects fail
- Fewer than 10% of projects in large corporations are delivered with the functionality specified at the beginning
- Over 30% of web development teams deliver projects late or over-budget, according to a survey commissioned by Ruby development shop, New Bamboo. According to the report:
- 24% of website projects fail to be delivered within budget
- 5% were unable to confirm the final cost of their web development project
- 21% fail to meet stakeholder requirements
- Nearly a third of web based projects (31%) were not delivered within the agreed timescales