Organizational Change Management Once More!

by

Peter Mark Adams

Organizational Change Management Consultant & Trainer
petermarkadams@gmail.com

One of the great puzzles of modern business life is that, whilst globalization is driving a greater need for continuous business change and adaptation, the capacity to successfully manage that change has not improved in last 30 years! Despite 50 years of academic study and 30 years of business publishing, consulting support and training the failure rates of every single type of organizational change program remain unchanged at 2 failures for every 3 programs! This is true with one significant exception mergers and acquisitions (M&A). The failure rates for M&A are in the region of 80 90%! Why is this? What is going on? What exactly do we mean by success and failure in this context? Recent surveys indicate that the breakdown of actual performance is far more complex. Given the direct and opportunity costs of a major change program, and given the potential business lost due to its failure, we can say that unless a program achieves some 60-70% of its expected business benefits then it should be considered a failure. From this perspective only the 6% of projects described as completely successful and the 32% of projects described as mostly successful should be classed as successful. The rest 62% should be thought of as business failures. So the 2:3 failure ratio stated earlier can be accepted as a fairly accurate summary of the failure rates of organizational change programs. Believe it or not this actually represents something of an improvement! For many years a failure rate of 75% was commonly quoted, we can now say that a more accurate figure is 62%!
6% Completely Successful

29% 33%

6% 32%

32% Mostly Successful 33% Somewhat Successful 29% Unsuccessful

Average Failure Rates of Change Programs

The main reasons for failure can be classified as: organizational, process or people related. The main organizational cause of failure is thought to be employee resistance. The main process related cause of failure communication weaknesses. And the main people related cause of failure people issues amongst which resistance and lack of trust are often cited. In other words the major cause of organizational change program failure is people. The human factor in change is the most problematic aspect for management to deal with. Why is this?

Recent research in neuroscience has demonstrated that the same areas of the brain that react to physical pain are also triggered by major change! Change hurts! Neuroscience also demonstrates that as we master how to do something the information moves away from the areas of the brain that handle new information acquisition which are energy intensive and have limited capacity to the less energy intensive parts that deal with the routine application of that information. This is the reason that too much new information can quickly overwhelm us. Information acquisition has limited capacity. Information gets shifted to less energy intensive, larger capacity regions through repetition. As most of us know, the most common emotion associated with major change is fear and anxiety. When these feelings are reinforced through a combination of poor communication, lack of participation, and uncertainty, isnt natural for people to resist change? After all, we all have a lot to lose and as far as we can see, very little to gain from supporting it. At least 38% of companies are able to manage change successfully. What is it that they are doing right? Again recent surveys show that the emotional climate of change amongst successful companies is quite different from the unsuccessful ones. Amongst the successful companies: Focus, enthusiasm & momentum is 2 times greater Ability to mobilize & sustain energy is 3 times greater

Confusion & frustration are 2 times more characteristic of unsuccessful companies! What does the presence of focus, enthusiasm & momentum and the ability to mobilize & sustain energy tell us about how people experience successful change programs?: Focus means that people know where they are headed Enthusiasm means that they agree with the destination, it makes sense to them Momentum means that they understand what is going to happen, when, how it will affect them and what they need to do

These conditions represent the optimal climate for achieving mission critical organizational change and transformation. We need to ask ourselves why so few companies are capable of achieving this. In particular management needs to look at how it leads and manages. As the mastery of organizational change and transformation increasingly becomes an essential core competence for future survival, you can be sure of one thing in these uncertain times, this is one issue that will not be going away anytime soon!