Five Reasons Why 80% of Business Transformation Efforts Fail

Those that implement the plans must make the plans.

Patrick Hagerty, Founder, Texas Instruments

CEOs initiate Business Transformation projects with all the right intentions.  Perhaps the cost structure is too high, the customer finds it difficult to deal with us or we need to standardise our operations for upcoming mergers.  Whatever the reason, business transformation is now acknowledged to be a strategic tool within the CEO’s arsenal.

So why does study after study show that between 60% and 80% of transformations either fail to deliver their objectives or simply fail outright and are cancelled?  Why do extremely complex projects, such as landing a man on the moon or building the Sydney Harbour Tunnel, succeed while the transformation of a company of 500, 1,000 or 2,000 employs fails?  Reasons can include:

Culture. The transformation is at odds with the organisation’s values, norms and behaviours and threatens the status quo.  Resistance to change may be overt or covert.

Lack of Process-Centric Approach. An organisation’s business processes define what it does and delivers.  The McDonaldisation of the enterprise gives certainty that the customer is receiving the right product or service.

Lack of Buy-In From Key Stakeholders. WIIFM – What’s In It For Me?  The needs of the stakeholders must be addressed.  The critical, supervisor level is often insufficiently engaged.

Technology-Led. Technology is a tool, as are a hammer and a forklift.  Tools alone do not improve the bottom line or customer service.  They enable business processes that do.

Insufficient Funding. A lack of rigour in the business case may underestimate the true cost of the transformation.  Underfunded transformations usually cut critical, people change management activities in the latter part of the project.

Activation

How do your current initiatives stack up against these criteria?

Can you picture in your head clearly what your organisation will look like when the transformation is finished?

Review the assumptions in the business case.  Are they realistic?

Resources

“Leading Change”, John P. Kotter, Harvard Business School Press

“Leading the Revolution”, Gary Hamel, Plume

“The Process Edge”, Peter Keen, Harvard Business School Press

culture, Customer, funding, process-centric, stakeholder buy-in, technology