Why Change Fails

For organisations which manage change skilfully, it can become the driving force that perpetuates success and growth, with every change presenting a new opportunity to increase efficiency or to build the business. But all too often, change fails, as companies fail to rise to the challenges it brings.For organisations which manage change skilfully, it can become the driving force that perpetuates success and growth, with every change presenting a new opportunity to increase efficiency or to build the business. But all too often, change fails, as companies fail to rise to the challenges it brings.

The enemies within

Change efforts of the past decade have appeared under many banners, including:

• Total Quality Management
• Business Process Re-engineering
• Right-sizing/Restructuring

In most cases, the primary drivers of the proposed change are the demands of an evolving marketplace:

• the emergence of new technologies
• swings in the economic cycle
• the rapid movement to a global economy
• a dramatic increase in the number and quality of new competitors; shifts in the behaviour of existing competitors

Managing change – the traditional approach

For many organisations, a typical change management programme follows a predictable pattern:

• senior management announces a new corporate quality/engineering/ process improvement programme
• company-wide half-day training workshops are arranged to bring everyone up to speed
• cross-functional committees are quickly set up to meet and discuss ‘the way forward’
• resources are re-allocated, desks duly moved, PCs plugged in at a new abode
• and somewhere along the way, the reasons and focus for change get lost

Why change fails

The causes of failure for corporate change efforts are varied, but the vast majority come from within the company:

• misunderstanding of what change is change is a journey, not a destinations; where change is viewed as an event, it will be just a single event lack of planning and preparation management may suffer from tunnel vision, looking only to the end result, oblivious to the steps required to get there
• change programme has no clear vision if you don’t know where you’re going, how can you expect to get there?
• goals are set, but too far in the future employee enthusiasm can hardly be expected for a 7-year change plan with no recognition for short-term wins

The impact of change

• the quick-fix option change means more than a quality poster, T-shirt, coffee mug, half-day seminar, or management message in the company newsletter
• poor communication giving information gradually is risky – the grapevine may get there before you
• the legacy of previous change the result of years of streamlining and right-sizing may well be a sceptical, risk-averse culture which is incompatible with the innovative spirit central to change
• “the way we do things around here”especially where the organisation has enjoyed success in the past, managers may believe it is because of, not in spite of the way they do things; they may fail to realise the success stemmed from, for example, a wide open market place, a new product idea, or favourable exchange rates for exports

Change in perspective

• 75% of all transformation efforts fail
• 50-75% of re-engineering projects fails
• approx 84% of US companies underwent at least 1 major business transformation in 1994; the top 3 change programmes were:
  information technology 84.2%
  business process re-engineering 80.5%
  business strategy development 65.6%
• fear of failure managers may begin to ask themselves: will business suffer short-term? will share price plummet? will workforce morale wane? worst of all, will we be blamed?
• employee resistance for example, inertia from middle managers with 15 years tenure and two ranks to go
• disregarding the domino effect one of the most common TQM mistakes, for instance, is to implement programmes without altering the reward systems to support the new performance-driven, team-oriented environment, leaving staff with no incentive to transform their behaviour
• ill-prepared employees typically organisations raise the standards, but fail to provide the training of skills necessary to reach them; encouraging employees to adjust to change requires more than the physical relocation of their PC and in-tray

The change challenge

Following a few basic principles can at least help ensure that change is not doomed to failure from the start:

• don’t criticise the past it’s what brought your business to the present; instead, try to learn from it and build on it
• be clear on what kind of change is required eg a major shake-up vs moderate process improvement, slow vs rapid roll-out; each involves different implications for the company; decide which is best from a customer, competitive and corporate viewpoint
• plan, plan, plan schedule, don’t skip, steps that must occur throughout the process, setting out clearly defined objectives and responsibility; focus on the detail

Pfizer’s reward scheme

When one Pfizer subsidiary created six cross-functional teams to address critical change issues, the reward scheme for team members was changed to allow them to receive a bonus of up to 15% when their proposals to address the issues were accepted.

• pre-empt resistance just as a sales person who meets customer objections head-on often wins the sale, managers need to respond to resistance; hook into what people have got to gain or lose by changing
• set short-term goals the war will only be won by winning the battles along the way; reward wins, and if goals aren’t met, focus on improvement, not fault-finding
• prepare employees tackle training and development prior to initiating the change programme to give staff the confidence and ability to meet higher performance standards
• communicate ‘walk the talk’; ensure communication is two-way eg establish feedback sessions, anonymous comment or suggestion slips, open dialogue; identify how information should be cascaded
• deal with the domino effect for example, reward systems, organisation structure, and sign-off procedures may require adjustment to facilitate change
• all hands on deck recognise that people are much more inclined to support what they help create, and resist what is forced upon them

GE gets it right

During the 1980s, GE was restructured to build a network of interrelated businesses positioned to capture the number one or two market shares in their respective industries. The steps involved were:

• in 1989 Jack Welch, GE’s chairman and CEO, introduced ‘Work-Out’, a tool designed to help employees participate through teams in the change process to improve dialogue between business leaders and employees GE established a programme of ‘Town Hall Meetings’, which gave staff at all levels information on the change process, new roles and work habits that were required, and elicited open two-way dialogue performance expectations and rewards were realigned; managers previously evaluated solely on their ability to manage in a typical ‘command-and-control’ environment, now had to meet ownership, stewardship and entrepreneurial goals; those failing to adapt received no bonus although the restructuring process led to a 26% reduction in the company’s total work force, GE strengthened its market position in a number of global markets, and dramatically increased its market valuation
• create the need ‘manufacture’ an environment in which people are dissatisfied with the status quo; drive people out of their comfort zones; shock treatment, where rapid change is required, creates urgency and momentum
• set your sights on the specific objective for example, is the aim to be first to market with X product, to gain Y% market share, to cut back on lead times by Z days?; then publicise the objective widely• prepare for the unpredictable continued adaptation is a necessity; an organisation prepared for uncertainty is better placed to optimise the opportunities which change creates

Finally communicate, communicate, communicate…