Strategies for Leading through Times of Change

Leading change is difficult. Therefore, much is written on the topic. This article is based on a study that took the unique approach of listening to stories from leaders in a variety of sizes and types of organizations and documenting their recurring, successful solutions to common problems found in change initiatives. Their strategies, or “patterns,” provide a resource for anyone who struggles with introducing a new idea into an organization.

[powerpress http://gsbm-med.pepperdine.edu/gbr/audio/spring2010/change.mp3]

Introduction

ChangeWe are living in a world in which the word “change” defines the new work order. Organizational leaders no longer have the luxury of contemplating if they will make changes, but rather must decide how they can transform their organization in order to survive a rapidly shifting environment. A recent issue of Business Week reports: “… there’s no question that the game has changed for business. The tools managers once used with great success … are being reevaluated.” In this same issue, Cisco CEO John Chambers cautions, “Without exception, all my biggest mistakes occurred because I moved too slowly.”[1]

The process of change can bring stress to even the strongest organization. Leaders will struggle and so will the people they are trying to convince. A recently published book, Change or Die [2] explains why the odds are nine to one that individuals will not alter behavior even when faced with the likelihood of dying prematurely as a result of bad habits. Business leaders who see this statistic might question their chances for success in leading less threatening initiatives in their organization. Surrounded by the pressure to respond to a rapidly shifting world, leaders need tools to address the many challenges in building and maintaining new initiatives, so that they are never caught off-guard. This study provides some of these tools.

The Study

There is much written about organizational change theory and the recommendations it yields. This study took the unique approach of documenting common problems and successful solutions in an array of change initiatives. To do this, numerous stories and experiences of facilitating change were gathered from people leading transformations in their organizations throughout the world. The leaders represented diverse backgrounds, ages, experiences, and job titles and came from a variety of sizes and types of organizations, both large and small, profit and not-for-profit. From their stories, observations were documented and merged with other research findings on the topics of change and influence. Accounts of successful change agents throughout history were also included. During this process, the findings were continually exposed for comment and feedback at conferences and with reviewers experienced in leading change.

When the investigation uncovered a recurring and effective strategy for leading change, it was documented as a “pattern.” Just as the name suggests, a pattern captures a strategy that has occurred more than once. Christopher Alexander used this method of documenting patterns to record successful design practices in the architecture profession. His focus on proven solutions rather than new and unique ones was motivated by his observation that modern-day buildings and towns did not approach the beauty of the historical past. Unlike an idea or well-planned proposal that may or may not work, Alexander showed how a pattern describes a solution that has been applied successfully over the course of time in many different circumstances.[3] While an individual pattern documents a successful solution to one recurring problem, building relationships between them into what is known as a “pattern language” provides a resource to handle truly complex problems, such as leading change in an organization.

To date, this organizational change study has uncovered 58 effective strategies, or patterns, that anyone at any level within an organization can use for leading change. Each one takes its form from Alexander’s work, containing the following sections: opening story, abstract, context, problem, forces, solution, resulting context, and known uses. Because each pattern is named, the collection provides a vocabulary for change agents to have constructive conversations about their problems and solutions. There are 14 patterns introduced in this article. Full descriptions of all the sections in each pattern can be found in Fearless Change: Patterns for Introducing New Ideas by Manns & Rising[4] and short summaries are available in Table I.

Findings

Agents of change, whether the CEO or a young, new employee, often feel like “powerless leaders” because changing people’s minds is rarely easy. As Machiavelli has pointed out, “… 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.” Therefore, some leaders may think it is easier to demand that a change happens””they may drive it from the top without significant across-the-board participation. While this may appear to be faster than a grassroots, emergent effort, it’s likely to result in disgruntled compliance, rather than involvement and satisfaction among the individuals the leader is attempting to change.[5] In contrast, this study shows how leaders who make use of patterns when encountering challenges along the way are more effective in engendering “buy-in,” carrying out a change initiative that intrigues and interests others to the point that they want to change.

The Starting Point

The pattern that describes the person who will lead the change is titled Evangelist because the change agent must have faith in the new idea and passion for the work it will take to convince others to follow. This attitude will carry the leader through the inevitable frustrations along the way. The change leaders who were interviewed revealed that a sincere belief in the value of their idea for their organizations is necessary before the leader will have the ability to convince others.

However, the Evangelist must understand that patterns are not “silver bullets.” Using a pattern wisely means understanding the right context for its use and the consequences of application. All strategies have both positive outcomes as well as negative. The Evangelist pattern guards against being overzealous because, while passion will encourage people to take notice, fanaticism can turn people off.

Widening the Circle

Being an Evangelist for change takes time and energy, but it is even more difficult when the leader attempts to do it alone. Therefore, the pattern named Ask for Help can lighten the workload. In addition, it can build support from people who provide the help and then begin to feel part of the change effort.

When asking for help, it is useful to start by finding people in the organization who get excited about new things. These types of people are described in the pattern Innovator. They can help test the new idea and provide early feedback. However, their strength can also be seen as a downside because their enthusiasm for new ideas often causes them to quickly move from one initiative to another.

The pattern named Early Adopter can help with this. Unlike an Innovator, the Early Adopter will respond to a new idea with more questions and careful consideration. This allows them to be viewed as sensible decision makers and, as a result, they can serve as effective opinion leaders.

The individuals an Evangelist identifies as Innovators and Early Adopters may be interested in helping to apply the Just Do It pattern””integrating the new idea into a current project in order to understand its benefits and limitations. Once there are some success stories, they can share their experiences in an informal, interactive session, or a Hometown Story. This pattern is effective because individuals are often convinced when they hear from others “just like them” who are having success with a new idea.[6]

At the same time, the Evangelist must recognize that people take change personally. Presentations and e-mail messages will arouse curiosity and some interest, but old habits will not die without effort. The Personal Touch pattern recommends that change leaders look for opportunities to talk with individuals one-on-one about how the new idea can be personally useful and valuable to them. Therefore, rather than pushing the solution, Personal Touch allows the Evangelist to build relationships and encourage others to discuss the new idea in the context of their individual roles and problems.

Example: Evangelist, Just Do It, Hometown Story, Personal Touch, Step by Step

Charles, a contractor in a large media research company, is one Evangelist who shared his story for the study. His experience introducing a new programming language into an organization that had concerns about performance and scalability shows how he used the patterns to reach his goal. The vice president said the language choice could be a career-killing decision for Charles, but his passion caused him to believe it was worth the risk. He needed more than faith, so he built a team that was willing to help gather data. They built two similar systems, one in an older language used throughout the organization and one in the new language (Just Do It). They shared their results with others (Hometown Story) and demonstrated that the new language was better able to meet the performance and scalability requirements and could therefore be used in an upcoming two-year development project.

Charles also applied the Just Do It and Hometown Story patterns when introducing software testing tools a short time later. He utilized the tools in his own work and documented the benefits. Once there was something to show, Charles held an information session to explain what he had learned. He also kept his ears open for opportunities to help those who showed an interest in his work and was quick to lend a hand when he found individuals who were having a problem that his testing tools could solve (Personal Touch).

Charles and other change agents reported they had to recognize and accept that change starts slowly and evolves over time. This reality is implicit in the Step by Step pattern. Because life and people are unpredictable, a master plan for change is not going to be as effective as a vision with short-term goals and a willingness to adjust plans along the way. John Kotter, a widely published author on the topic of change leadership, agrees that new developments should spread quietly at first so that leaders can learn from failures and build on successes.[7]

Charles’ use of these and other patterns in a Step by Step manner allowed him to gradually earn credibility. He stressed that this is vital in becoming a good change agent, noting that people may not always agree with you, but if you slowly and deliberately build credibility, most will be willing to listen and consider the merit in what you have to say.

However, not everyone will react this way. The study also examined what an Evangelist can do when people don’t react with trust or a willingness to listen. All ideas, no matter how wonderful, will encounter a certain amount of resistance.

Dealing with Resistance

In order to make progress, an Evangelist will often have to put some effort into dealing with skepticism from others. One of the more interesting findings in this study was the realization that it is not efficient to spend a great amount of time trying to convince the resistors, but listening to them is highly advised. It is not easy to hear about potential shortcomings, so one common reaction is to fear the criticism and avoid the person who is delivering it. Although it may seem more comfortable for ideas to be welcomed without examination, there are penalties in this attitude, especially in the beginning when there is still much to learn. The Fear Less pattern suggests that the change leader Ask for Help from the skeptics by listening to them with the intent of learning more about the idea, about how it will fit into the organization and about the change initiative. The aim is not to convert resistors but rather to respect their opinions and bring to light the limitations in the innovation so that these issues can be addressed frankly and honestly.

Another type of resistance can occur when the opposition is not as much against the idea as it is against the Evangelist. In this case, the Bridge-Builder pattern recommends finding someone who has credibility in the eyes of the resistors and can make the case for the innovation. By letting others do the speaking, the skeptic is likely to become more open to change because the message comes from someone who is viewed with more trust.

When the Evangelist encounters a skeptic that is also a strong opinion leader in the organization, the pattern Champion Skeptic describes a special role that allows this person to be the official “finder of faults” and “sounder of warnings.” For example, the Champion Skeptic can be given a few minutes at the end of each appropriate meeting to summarize negative observations and keep others from moving ahead too hastily. This strategy will honor the resistance and give it a proper place in the planning.

The study also found that it is important to anticipate resistance when entering a gathering where a decision will be made about the new idea. If the Evangelist does not anticipate what the resistors are thinking, the meeting can become consumed with questions and conclude with an unfavorable outcome that may be impossible to remedy later. Therefore, the pattern named Corridor Politics recommends that, before everyone gathers for the vote, the Evangelist and other supporters speak privately with the “fence-sitters” to answer questions and address their concerns. As they are won over, their support can be used to convince others who might be more challenging to influence.

Finally, the Whisper in the General’s Ear pattern addresses resistance at the executive level. High-level decision makers are often uncomfortable about admitting they don’t understand something in front of others and are sometimes hard to convince in a group setting. Therefore, it is helpful to arrange a short meeting with an executive to answer questions and address any concerns over the innovation and the effort to introduce it. This will maintain the executive’s dignity while giving the Evangelist a chance to get the case heard.

Students at computerImplications for Leading Change

The interviews with the change leaders in this study support the observation that leading change is not a science. Rather, it is a gradual process of discovery that prompts the leaders to react to problems, setbacks, and small successes along the way. Therefore, it is not possible to prescribe one specific way to apply the patterns introduced in this article. Even though each one captures one valuable strategy, the collection of 58 is a powerful resource to use in the appropriate context of the change initiative. For example, some of the Evangelists began with the Ask for Help pattern while others initially worked alone with Just Do It, followed by a Hometown Story to capture more interest. Still others immediately encountered vocal skeptics and had to begin with Fear Less and other patterns for handling resistance.

Therefore, to make use of the patterns in the most appropriate way for an individual organization, the specific problems within the change initiative must first be identified. The patterns then supply solutions that have been shown to work for other leaders of change.

The prevailing observation is that a leader of change needs at least three things to introduce a new idea into an organization: a belief in the idea, the determination to act on the belief, and some information on how to bring the idea into the organization. The leader must supply the first two, while the patterns uncovered and documented in this study can assist in implementing the third.

Additional information about these patterns for leading change can be found at: http://www.fearlesschangepatterns.com

Name Summary
Ask for Help Since the task of introducing a new idea into an organization is a big job, look for people and resources to help your efforts.
Big Jolt To provide more visibility for the change effort, invite a high-profile person into your organization to talk about the new idea.
Bridge-Builder Pair those who have accepted the new idea with those who have not.
Brown Bag Use the time when people normally eat lunch to provide a convenient and relaxed setting for talking about the new idea.
Champion Skeptic When a strong opinion leader is skeptical of your new idea, ask them to play the role of “official skeptic.” Use their comments to improve your effort, even if you don’t change their minds.
Concrete Action Plan To make real progress toward your goal, take the time at each implementation step to say what you will do and where and when you will do it.
Connector To help you spread the word about the innovation, ask for help from people who have connections with many others in the organization.
Corporate Angel To help align the innovation with the goals of the organization, get support from a high-level executive.
Corridor Politics Informally work on decision makers and key influencers before an important vote to ensure they understand the consequences of the decision.
Dedicated Champion To increase your effectiveness in introducing your new idea, make a case for having the work become part of your job description.
Do Food Make an ordinary gathering a special event by including food.
e-Forum Set up an electronic bulletin board, distribution list, listserve, or writeable website for those who want to hear more.
Early Adopter Win the support of the people who can be opinion leaders for the new idea.
Early Majority To create commitment to the new idea in the organization, you must convince the majority.
Elevator Pitch Prepare a couple of sentences that you have ready to introduce others to your new idea.
Emotional Connection Connecting with the emotional needs of your audience is more effective in persuading them than just presenting facts.
Evangelist When beginning to introduce the new idea into your organization, do everything you can to share your passion for it.
External Validation To increase the credibility of the new idea, bring in information from sources external to the organization.
Fear Less Turn resistance to the new idea to your advantage.
Go-To Person Identify key people who can help at critical points in your change initiative.
Group Identity Give the change effort an identity to help people recognize that it exists.
Guru on Your Side Enlist the support of senior-level people who are esteemed by members of the organization.
Guru Review Gather anyone who is a Guru on Your Side and other interested colleagues to evaluate the new idea for managers and other developers.
Hometown Story To help people see the usefulness of the new idea, encourage those who have had success with it to share their stories.
Imagine That! To move your change initiative forward, engage people in an exercise to imagine future possibilities.
In Your Space Keep the new idea visible by placing reminders throughout the organization.
Innovator When you begin the change initiative, ask for help from colleagues who like new ideas.
Involve Everyone For a new idea to be successful across an organization, everyone should have an opportunity to support the innovation and make a unique contribution.
Just Do It Prior to spreading the word about the new idea, work with the new idea on your own to discover what the benefits and limitations are.
Just Enough To ease learners into the more difficult concepts of a new idea, give a brief introduction and make more information available when they are ready.
Just Say Thanks To make people feel appreciated, say “thanks” in the most sincere way you can to everyone who helps you.
Local Sponsor Ask for help from first-line management. When your boss supports the work you are doing to introduce the new idea, you can be more effective.
Location, Location, Location To avoid interruptions that disrupt the flow of an event, try to hold significant events off site.
Mentor When a team wants to get started with the new idea, have someone around who understands it and can help them throughout the project.
Myth Buster There are always myths around every change initiative. Document those and address them in a timely and forthright manner.
Next Steps Take time near the end of an event related to the new idea to identify what participants can do next.
Personal Touch To convince people of the value in a new idea, show how it can be personally useful and valuable to them.
Pick Your Battles Spend your energy in conflict only when it’s important. Fight for the things you believe in, but don’t fight if it’s not worth it.
Piggyback Look for a way to piggyback your change initiative on an existing practice in your organization.
Plant the Seeds To spark interest, carry materials (seeds) and display (plant) them when the opportunity arises.
The Right Time Consider timing when you initiate the change, schedule events, and/or ask others for help.
Royal Audience Arrange for management and members of the organization to spend time with a special “Big Jolt” visitor.
Shoulder to Cry On To avoid becoming too discouraged when the going gets tough, find opportunities to talk with others struggling to introduce a new idea.
Small Concession To address the concerns of someone who is resistant to your cause and making a lot of noise, consider a small concession that will show you acknowledge their point of view and contribution.
Small Successes To avoid becoming overwhelmed by the challenges and all the things you have to do when you’re involved in an organizational change effort, celebrate even small success.
Smell of Success When your efforts produce a visible positive result, people will come out of the woodwork to talk to you. Treat this opportunity as a teaching moment.
Stay in Touch Once you’ve sparked some interest in people, don’t forget about them and make sure they don’t forget about you.
Step by Step Relieve your frustration at the enormous task of changing an organization by taking one small step at a time toward your goal.
Study Group Form a small group of colleagues who are interested in exploring or continuing to learn about a specific topic.
Sustained Momentum Take a proactive approach to the ongoing work of sustaining the interest in the new idea in your organization.
Tailor Made To convince people in the organization of the value they can gain from the new idea, tailor your message to the needs of your audience.
Test the Waters When a new opportunity presents itself, see if there is any interest by using it and then evaluating the result.
Time For Reflection To learn from the past, take time at regular intervals to evaluate what is working well and what should be done differently.
Token To keep a new idea alive in a person’s memory, hand out tokens that can be identified with the topic being introduced.
Town Meeting As early as possible in your change effort and regularly throughout, gather as many participants as possible to solicit feedback, build support, get new ideas, and bring in newcomers.
Trial Run When the organization is not willing to commit to the new idea, suggest that they experiment with it for a short period and study the results.
Wake-up Call To encourage people to pay attention to your idea, point out the problem that you believe has created a pressing need for change.
Whisper in the General’s Ear Managers are sometimes hard to convince in a group setting, so meet with them privately to address any concerns.
Table I: Short summary of 58 patterns

[1] McGregor, Jena,“Smart Management for Tough Times: Breakthrough Management Ideas for a World in which the Game Will Never be the Same,”BusinessWeek, March 23, 2009. 30-34.

[2] Deutschman, Alan, Change or Die, (New York: HarperCollins Publishers, 2007).

[3] Alexander, Christopher, A Pattern Language:Towns, Buildings, Construction, (New York: Oxford University Press, 1977).

[4] Manns, M.L., L. Rising, Fearless Change: Patterns for Introducing New Ideas. (Boston: Addison-Wesley, 2004).

[5] Green, G.C., A.R. Hevner, “The Successful Diffusion of Innovations: Guidance for Software Development Organizations,” IEEE Software 17, no. 6 (Nov/Dec 2000): 96-103.

[6] Rogers, E.M., Diffusion of Innovations, (New York: Simon & Schuster, Inc., 2003).

[7] Kotter, J.P., “Leading Change: Why Transformation Efforts Fail,” Harvard Business Review (March-April 1995): 1-10.

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A Sense Of Urgency by John P. Kotter

A Sense of Urgency

By John P. Kotter
Harvard Business Press, 2008

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3 stars: Valuable information and a good readIn 2001, BusinessWeek, named John Kotter America’s leading guru on leadership. He is Professor Emeritus at the Harvard Business School and author of 15 books on leadership and change including Leading Change, The Heart of Change, Matsushita Leadership, Power and Influence, and Our Iceberg is Melting. Leading Change outlined a popular eight-step framework for making change efforts successful that paralleled the widely emulated Change Acceleration Program (CAP) at General Electric. The first of these steps was to “raise urgency.”

Kotter’s new book emphasizes the difficulty and importance of urgency “the toughest of the eight steps and the one without which even the most brilliant initiative will sputter and die.” Follow-up research indicated that the biggest error made by people seeking to initiate a significant change effort was a failure to create a high enough sense of urgency among the people affected by that change.

Using powerful stories, Kotter describes a distinctive view of the kind of urgency needed in every organization and explains the critical difference between true urgency, and the frantic churning that sometimes passes for urgency. The stories’ antagonists range from a 62-year-old CEO to a 27-year-old recent university graduate. Their failures are warnings, and their successes are instructive and inspirational.

Kotter provides techniques for increasing urgency with chapters on:

  • Bringing the Outside in: There is a natural tendency for organizations to become too internally focused. Kotter recommends that organizations listen to their customer-interfacing employees and share external data that will challenge the parochial thinking of internal managers. He also recommends sending internal people out for exposure to customers or their counterparts in other organizations as well as inviting external perspectives in to the organization to stimulate different points of view.
  • Behaving with Urgency Every Day: Kotter stresses the importance of keeping urgency in the forefront of everyone’s thinking. Even annual objectives can allow enough time for people to slip into a false sense of complacency.
  • Finding Opportunities in Crises: While it is important to avoid or control crises, unexpected events frequently provide new opportunities for creative thinking and action. These crises can be used to create a greater sense of urgency.
  • Dealing with No-Nos: The negativity that always looks for the barriers or reasons that an idea will not succeed must be addressed by getting rid of these reservations or by immobilizing them with social pressures.

Kotter closes his book with an admonition that “the future begins today.” A variety of problems, both organizationally and throughout our world, require our best thinking and our most urgent action. “Alertness, movement, and leadership, now …are the signs of true urgency.”

While Kotter recycles some of his previous work in this new title, he also provides important new insights and reminds the reader of the importance of addressing challenges with a sense of urgency.

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The Business Impact of Change Management

If your company is considering a major change project, anything from a software implementation to a merger/acquisition, this article may help you as it focuses on the results of studies (over the last ten years) on organizational change management (OCM) and its impact on obtaining a high project return on investment (ROI.)

What advice would you give a friend or business associate if they said to you, “I just heard about this great investment and I am really excited about it because it has so much potential. In order to get involved, I have to put a lot of money down. And the only negative seems to be that the return on investment (ROI) is zero.”

Seeing the absurdity of this potential opportunity, you would probably tell them not to invest. This scenario, as preposterous as it might seem at first, actually illustrates a common phenomenon or trend that is happening to companies worldwide.

What is this trend? Companies are spending millions for business improvement projects whose costs will far out weigh their realized benefits. At first glance this might even seem difficult to believe much less be accurate. That is, until you begin to look at the evidence. In this article the authors look at over ten years of independent studies that show the average rate of return on all large project implementations is negative. The review of the studies begins with the McKinsey study, in which the projects of over 40 companies were investigated. From the results of this and the other studies, this article will begin an inquiry that will help to answer the following questions:

  1. Why are so many companies making the same mistake?
  2. What could companies who do not want to fall into this trap do differently?

The Common Project Success Denominator

The McKinsey study examined many project variables and in particular, the effect of an Organizational Change Management (OCM) program on a project’s ROI. The study showed the ROI was:

  • 143 percent when an excellent OCM program was part of the initiative;
  • 35 percent when there was a poor OCM program or no program.

What do those these results mean? A 143 percent ROI means that for every dollar spent on the project the company is gaining 43 cents. On the other hand, a 35 percent ROI means that for every dollar spent they are losing 65 cents.

The 11 most unsuccessful companies in the McKinsey study had poor change management, which showed up as the following:

  • Lack of commitment and follow through by senior executives;
  • Defective project management skills among middle managers;
  • Lack of training of and confusion among frontline employees.

The 11 most successful companies in the study had excellent OCM programs:

  • Senior and middle managers and frontline employees were all involved;
  • Everyone’s responsibilities were clear;
  • Reasons for the project were understood and accepted throughout the organization.

Measuring A Project’s Return on Investment

For a project to get approved, there has to be a compelling business case. A business case looks at the cost of improvement project and weighs that against the benefits the company will gain. If the benefits outweigh the costs, the ROI is positive and thus the project is approved.

The formula for calculating Return on Investment (ROI)[2] is:

The Benefit Of Project is based on the project’s purpose. The purpose could range from increasing sales to reducing the cost of handling customers. One generally estimates that making certain changes to the business, installing new software, making processes more efficient, etc., will yield a particular project benefit that has a dollar amount associated with it.

The Project Cost includes hard costs, such as hardware and software, as well as what is sometimes termed soft costs. While the paradigm for many accounting systems has not shifted, the research also shows that these so-called soft costs are actually as or more important to a project’s success than the hard costs. As a result, these costs should no longer be termed soft costs because they have a defined, bottom-line effect.

Soft costs, for example, can include items such as the salaries for the time period people are on the improvement project. Salaries are important to include because the time employees spend on the improvement project should be seen as a cost to the organization. The longer the project takes, the longer employees will be away from their primary job whether it is sales, marketing or manufacturing. If they are working on an improvement project, they cannot spend the same amount of time they normally would on their regular job.

If a project experiences delays due to politics, lack of planning, unforeseen issues, or other reasons, as is often the case, the overall cost of the project increases because the time to implement the project has gone beyond the original estimate. As the costs increase, any potential benefit starts to be chipped away and in some cases more money is spent on the improvement than the improvement ends up providing. An organization that does not consider soft costs as hard costs is putting the organization at a huge financial risk because the project’s scope, timeline and therefore budget increase (Figure 1). Within this context of project ROI, the following section will examine more studies that have evaluated the success or failure of project implementations and their ROIs. Again, in this context ROI is taken to mean that the project provides more financial benefit than it costs the organization in a reasonable time period.


Figure 1: Increased scope, timeline, and budget put an organization at risk because they erode the project’s potential benefits.

The Survey Says: No Change Management Means Poor Project Results

Over the past 20 years of implementing projects, the authors have collected our own data and case studies as well as collected research from independent groups. Disappointing implementation results are being reported in all kinds of projects: Customer Relationship Management (CRM), Contact Centers, Enterprise Resource Planning (ERP), Share Services, Supply Chain, mergers and acquisitions, new pricing strategies, cost reduction initiatives, and including changes in a university’s method of recording hourly wages. The following examples show the trend that no project is immune to ROI failure, regardless of who conducts the study.

Results of a study by Boston Consulting Group that examined 100 large companies found the following:

  • 52 percent reported achieving their business goals
  • 37 percent could point to a tangible financial impact for their projects[3]

A study entitled Six Ways IT Projects Fail[4] published in Darwin (2001) revealed the reasons were due to the following:

  1. Lack of executive sponsorship
  2. Lack of early stakeholder input
  3. Poorly defined or changing specs
  4. Unrealistic expectations
  5. Uncooperative business partners
  6. Poor or dishonest communication

A study published in DestinationCRM.com (August 2003) entitled Six Barriers to CRM Project Success[5] showed that the failure of CRM projects was due to the following:

  • Lack of guidance
  • Integration woes
  • No long-term strategy
  • Dirty data
  • Lack of employee buy-in
  • No accountability

In 2004, a study entitled Software Disasters Are Often People Problems[6] was published on CNN.com. This study showed that at that time serious, preventable errors were related to poor management of the people part of the project. For example:

  • Passengers wait at McCarran International Airport in Las Vegas on September 14 for flights delayed by a communications system failure.
  • New software at Hewlett-Packard Co. was supposed to get orders in and out the door faster at the computer giant. Instead, a botched deployment cut into earnings in a big way in August and executives got fired.
  • Retailer Ross Stores Inc.’s profits plummeted 40 percent after a merchandise-tracking system failed.

The study’s conclusion was that even as systems grow more complicated, failures are related less to technical malfunctions and more due to bad management, communication, or training during project implementation.

Gartner’s industry analysts report a staggering 55 to 70 percent of CRM projects fail to meet their objectives. In Bain and Company’s survey of 400 executives, 20 percent of respondents felt their CRM initiatives actually damaged customer relationships.[7] When the objective is to build strong relationships with customers, why is this goal eluding so many companies especially when they are spending millions and sometimes billions to reach it?

What Is Failing?

In contrast to these studies about the people part of business, a Forrester Research study showed that companies implementing, for instance, a new technology like CRM, are satisfied with the actual software application’s functionality and capability.[8]

So, if the technology is not failing, what is? A study done by ProSci, a recognized leader in change management research, again pointed to the ability of the organization to efficiently and effectively manage the changes the project was bringing about in the organization.[9] The ProSci results showed that a project’s greatest success factors are the following:

  1. Effective and strong executive sponsorship
  2. Buy-in from front line managers and employees
  3. Exceptional teams
  4. Continuous and targeted communication
  5. Planned and organized approach

The ProSci study results also showed that a project’s greatest obstacle factors are:

  1. Employee resistance at all levels (Surprisingly, the effectiveness or correctness of the actual business solution, process, or system changes was cited only 5 times in over 200 responses.)
  2. Middle-management resistance
  3. Poor executive sponsorship
  4. Limited time, budget, and resources
  5. Corporate inertia and politics

Another study by AMR Research, a firm whose analysts focus on independent, leading-edge research that bridges the gap between business and their technology solutions, found companies that had successful software implementations spent 10 to 15 percent of their project budget on OCM.[10] All of the success criteria found in each of these studies is what comprises an OCM program that increases a project’s ROI.

Organizational Change Management (OCM)

These studies show that many different analysts and research companies have found very similar results. Clearly, continuing to deploy projects without change management is not a profitable way to do business. The purpose of OCM is to mitigate the risks of a project, including costs, scheduling, and performance. OCM does this by facilitating greater economic value faster by effectively developing, deploying, and aligning the company’s assets for a given project.

As businesses face shrinking margins, global competition, and the need to deliver on loyalty-creating customer experiences, they will also face the need to change the way they do business. As companies evaluate improvement projects they should consider the financial contribution that OCM makes.

While there has been some skepticism on behalf of the business community to accept OCM as a necessary business discipline, as seen in the McKinsey, ProSci, and AMR studies, as well as from the authors’ collective experiences and research at Hitachi Consulting,[11] clearly some OCM methodologies work. In a future article the authors will address why not all OCM methodologies produce the high rate of return for the money spent on them, and how OCM actually reduces the risk of a project and keeps it on schedule with regard to budget and scope.


[1] “Change Management That Pays,” McKinsey Quarterly, 2002.

[2] Integrating, People, Process and Technology. by Anton, Petouhoff and Schwartz, Santa Maria, CA: The Anton Press, 2003.

[3] Boston Consulting Group. (2003). Research study. In Integrating, People, Process and Technology. by Anton, Petouhoff and Schwartz, Santa Maria, CA: The Anton Press, 2003.

[4] Ulfelder, Steve. (2001). “Six Ways I.T. Projects Fail And How You Can Avoid Them.” Darwin magazine. Retrieved June 2001, http://www.darwinmag.com/read/060101/dirty.html.

[5] Myron, David. (2003). “6 Barriers to CRM Success And How to Overcome Them.” DestinationCRM.com, August. Retrieved from http://www.destinationcrm.com/articles/default.asp?articleid=3316.

[6] “Software Disasters Are Often People Problems.” Retrieved Tuesday, October 5th, 2004, CNN.com.

[7] Research study by Bain Consulting Group. Integrating, People, Process and Technology. by Anton, Petouhoff and Schwartz, Santa Maria, CA: The Anton Press.

[8] Ibid. Research study by Forrester Group.

[9] ProSci. (2003). “Best Practices in Change Management.”

[10] AMR Research Report, 2003.

[11] Change Management Case Studies, Hitachi Consulting, http://www.hitachiconsulting.com/page.cfm?SID=2&ID=searchresults&searchString=change+management.

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