Business case study

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Draft: 3/18/10

1. Why Most Changes Fail

Progress is impossible without change, and those who cannot change their minds cannot change anything.

—George Bernard Shaw Playwright and Essayist

When I wrote Beyond the Wall of Resistance in 1995 about 70 percent of all major changes in organizations failed. According to recent studies the failure rate is still around 70 percent.1

Those are sobering statistics. Since the early 90s there has been a veritable flood of articles and books on how to lead and manage change. I just did an Amazon search on “change management” and came up with 1,318 hits. Over the part fifteen years, most of the large consulting firms created change management practices. Boutique firms were created just to address the challenges of change. And it is hard to imagine a manager in any organization who has not taken part in some change management training or been given a copy of one of the books on leading change. That’s a lot of information. You’d think we’d be pretty good at making change work by now, but we’re not. So, what is going on? There is a dilemma. I advise executives on how to lead change. And I find that most know what it takes to plan and lead big projects well. But something gets in the way of turning all of that knowledge into action. Jeffrey Pfeffer and Robert Sutton coined the term “the knowing-doing gap”2

to describe the large gap between what leaders know and what they actually do on the job.

This is a costly gap. And things may be getting worse. CEOs say that there is a growing disparity between expecting change and being able to manage it.3

Groups that must work together to plan and implement major new initiatives often are located on different continents and are many time zones away from each other. It’s harder to lead change today.

Comment [H1]: I CHANGED THE NUMBER

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With each failed project cynicism builds, making the next project an even harder sell. And each failure means missed opportunities, false starts, with time and limited resources going into trying to manage resistance and indifference. Many organizations cannot afford the luxury of so many failures. [A head] Four of the Biggest Mistakes Leaders Make [B head] Mistake 1: Assume that understanding equals support and commitment

It is common to introduce change by making a PowerPoint presentation to a large group. Leaders may schedule time for Q&A, but the questions they get from their audiences tend to be very polite. After all, who wants to tell the boss they don’t think this is a good idea? People learn to limit their comments to questions about timelines and budgets. They know those are safe questions. Any reservations or fears go underground and only get spoken about in hallways and carpools. Since these leaders get so many questions, they may believe that people are interested and ready to work to make this change a success. But the real issues that can kill or damage this project never get on the leaders’ screen. I conducted a study a few years ago and was surprised to learn that the failure to make a compelling case for change was the biggest reason why major new initiatives failed or went off track. TOOLKIT ICON: For results of this study visit www.tipsforleadingchange.com and search for “change survey” Making a compelling case for change seems to be the biggest thing you can do to build support and commitment for a new initiative, and yet, it is the most overlooked task in the life of most changes. [B head] Mistake 2: Underestimate the potential power of employee (and management) engagement Many changes in organizations get inflicted on people. Managers and staff are told that a crisis is at hand (or a great opportunity that must be seized immediately or it will disappear.) They are told what the organization will do to meet this threat or opportunity. When it will start. Goals and benchmarks. And what’s expected of them. There’s hardly a place for anyone to influence any part of the change, from the idea itself to developing plans.

Comment [H2]: I assume it is ok if sin some chapters my A heads are all in CAPS and in other chapters they are in title case as long as the designer knows what A head means.

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This does work on occasion, but at great cost. The Gallup organization has done extensive research into employee engagement. Here is what they say on their blog: “In average organizations, the ratio of engaged to actively disengaged employees is 1.5:1. In world-class organizations, the ratio of engaged to actively disengaged employees is near 8:1. . . . Actively disengaged employees erode an organization's bottom line while breaking the spirits of colleagues in the process. Within the U.S. workforce, Gallup estimates this cost to be more than $300 billion in lost productivity alone.”4

Organizations give lip service to engagement, but few know what it takes to get the 8:1 ratio that world-class organizations achieve. [B head] Mistake 3: Fail to appreciate the power of fear Fear of change is deeply personal. The thought of a big change can evoke pictures of relocations or downsizing. People worry that they may be fired. They worry about their families and their careers. Personal fear trumps the organization’s need to change. When fears are triggered, humans’ ability to take in information goes down. In other words, people can’t hear what we’re talking about even if they try. Fear does that to people. Some organizations trot out research done that suggests that a certain percentage of people are early adopters of new things and others are late adopters. They announce this as if there were no way to influence the number of people who get excited about helping a change be successful. Or leaders apply the stages of death and dying to organizational change. They assume that people will go into denial, get angry, start to bargain, slip into depression, and then accept the change. All the leader has to do is wait for people to get done feeling bad. (By the way, there seems to be precious little to indicate that these stages of grieving even fit most people when it is an actual death we’re talking about.) This notion makes a deadly assumption that all changes are good, the leaders know best, and that once employees realize their cheese has moved, all will be right with the world. This view of employees is paternalistic, condescending, and arrogant. These leaders might as well wear t-shirts that read Trust Me, I Know Best — Now Get Back to Work. [B head] Mistake 4: Fail to acknowledge how even a slight lack of trust and confidence in leaders can kill an otherwise fine idea Trust can make or break a change. But sadly, many who lead change seem to ignore this critically important ingredient. They seem to believe that a good idea will win the day. It won’t.

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If people don’t trust us, why would they follow us? The answer is that most of them won’t. On the other hand, if they trust us they tend to give us the benefit of the doubt. If we make a mistake, people tend to understand that we are only human, after all. But if trust is low, they listen intently for any word or phrase that could signal that we are about to take them on a dangerous ride. [A head] There Is Good News You may have found yourself nodding (privately, of course, so no one else could see you) as you read through that list of big mistakes. If that’s so, don’t feel bad. You’ve got lots of company. The good news is: you can avoid those mistakes without a lot of additional cost or effort. And you’ll be reaching for the aspirin bottle far less often. Even though most changes fail, we can learn from those who consistently do it well. I take the subtitle of this book seriously: Why 70 Percent of Changes Still Fail – And What to Do About It. In the first part of this book, I will give you a way to look at change that may be quite different from how you’ve looked at it in the past. You will see yourself in these pages. At times you may shudder with the recognition of, “Oh, that’s me he’s talking about,” and at other times see why something you did was so wildly successful. You can learn from your mistakes and successes if you keep an open mind. The second part of the book covers ways to plan and implement change. I will give you opportunities to look at your own leadership practices. Do you and your organization have hidden beliefs that actually block your ability to change? Does your mindset or intention contribute to the success of change or does it get in the way? How effectively do you engage employees? And, finally what’s the gap between what you know and what you do — and how you can bridge that gap. In the final section, I will cover a range of ways you can apply what you are learning in this book. Think of chapter 10 as a recipe book, offering ideas for working with your team, sizing up outside consultants, and other ways to expand the reach of what you have learned. Chapter 11 shows how to continually deepen your ability to lead change. But when you read chapters 2 through 9, I think you will find things you can apply today with a reasonable degree of competence. But, to develop mastery leading change is no different than being able to perform a Beethoven sonata or play on center court at Wimbledon. It takes work. Oh, and those four big mistakes, you’ll begin to learn ways to avoid those common blunders in the very next chapter. Let’s get started.

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Comment [H3]: I removed previous sence that included the phrase immunity to change. It is trademarked and since I use it later I didn’t want to have to highlight it here

Comment [H4]: Should this last sentence be phrased as a question so that it matches previous sentences. I don’t care, I just don’t want t upset the boys in chicago

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1 Scott Keller and Carolyn Aiken, The Inconvenient Truth About Change (New York: McKinsey & Company, 2008). 2 Jeffrey Pfeffer and Robert Sutton, The Knowing-Doing Gap (Boston: Harvard Business School Press, 2000). This compelling book is well worth your time. 3 Han Henrik Jorgensen, Lawrence Owen, Andreas Neus Somers, Making Change Work. NY: IBM, 2008) 7 4 <www.gallup.com>