With the speed of technological advances, organizational change may be more important than it has ever been. However, change can be difficult. Numerous studies demonstrate that most of the time, businesses are unable to implement change effectively, which means they lose time, money, and morale of employees during the process.
Based on his more than 20 years of international experience in finance across various industries, as well as ten years of working as a CFO, Toptal Finance Expert Edwin Petersen shares his insights on how change management can be a disaster and the best way to do it right.
I have seen this dilemma–on the one hand, the importance and necessity of change, and on the other, the difficulty in executing it effectively–firsthand. With more than two decades of expertise working in the finance department of large corporations across various industries and with over a decade of work as CFO, I’ve been faced with the difficulties of change repeatedly. Sometimes, these changes succeeded and pushed the organization to new levels. However, many times, they didn’t, which led to stagnation and discontent. This piece aims to share with readers a few of my deep-rooted thoughts about the reasons why many change management initiatives fail or yield substandard outcomes and also some suggestions regarding what to do differently to increase the value of these efforts.
Why Do Change Management Projects Fail?
If we’re going to talk about how to implement change management initiatives successfully, perhaps the first step should be an examination of the reasons why many projects for managing change are unsuccessful. I’m planning to look over the research on the issue (which is quite vast) as well as my personal experience and opinions.
A study of the studies on change management reveals significant agreement with the causes of failure. The most well-known contribution to the field originates from John P. Kotter, who wrote 1996 one of the most influential publications on the topic. The eight biggest errors discovered by John P. Kotter are listed in the graphic below.
However, in an attempt to provide an exhaustive overview of the research literature available, I analyzed five recent studies and articles in order to list the five most frequently mentioned causes of failure. The results are intriguing (see the chart below). When you look at the data, poor planning and the lack of commitment are frequently mentioned in the majority of articles. This is the primary reason for failure. There is a strong indication that several reasons for failures are linked. For instance, poor planning or insufficient support from the leadership is the most likely cause of inadequate process.
My Thoughts on Why Change Often Fails
In my professional life, I’ve participated in numerous initiatives to change. While I agree with the diverse issues described by the authors, my opinion is that there’s an overall and general reason why the majority of these initiatives do not succeed: poor leadership. The majority of the time, the change management initiatives are well-defined, have specific milestones, and are able to be implemented on a realistic timetable. But what typically hinders these processes is a much more fundamental problem, which is the fact that the company is not well-equipped to embrace changes. Leaders of companies fail to build the right culture, a story, and a consensus in the company about change, and, in spite of the best intentions for plans as well as milestones, the company is unable to accept differences. Consequently, the entire process does not work.
The most obvious illustration of the above in my professional life is the SAP implementation project that I worked on. We initially thought that the most difficult element would be the implementation itself, but we were wrong. The most difficult thing to tackle was having to alter processes and the ways that employees were used to working. At the level of senior management, an initiative to change procedures was also started, with the help of an external consultant for change. But, very early, we realized that the company was not able to establish an unifying vision. Since previous efforts to change the culture had been unsuccessful, we decided to put the project on hold despite the substantial efforts that had been made and revert to scratching the surface. Our first order of business was to concentrate on establishing a culture and workplace that would be prepared for a change.
The case above shows that the main reason for the failure of change initiatives is a result of an underlying problem with the leaders. Actually, the evidence supports this conclusion. The findings of my research above indicate that for two-thirds of the time, the responsibility for failure could be due to leadership rather than the specific project that is at issue. Suppose the administration isn’t prepared for changes or any project involving change management. In that case, that group is almost certain not to succeed, regardless of the methods or tools for managing that were utilized.
N.B. There is a distinction to be made between general management and change leadership. Business leadership is accountable for setting a clear direction and managing the company with respect to the proper resources and personnel. In contrast, change leadership is responsible for the process of change regarding goals, process planning, and execution. According to me, change leadership should be a representative of an organization more than the leadership team of a business. For instance, individuals who are in constant and direct contact with customers contact can know what the customers think about the company. However, the CEO of a company typically gets biased and filtered feedback.
Another reason that is commonly cited for the failure of change initiatives that I’ve observed is something that the article calls battle fatigue from change. Said, the more changes projects are carried out in a given time, the more difficult it is to. This is particularly true if previous change projects were unsuccessful–employees will become increasingly skeptical and be less open and willing to engage in the necessary sacrifices for the change project to succeed.