The global transformation market will be worth $2,279.4bn by 2025 with the consulting component alone at $44bn.
Who is really winning from transformation? It’s not necessarily going to be you or your customers.
More than 25 years ago, John Kotter made his now-famous assertion that 70% of corporate transformation efforts are doomed to fail.
New research shows it’s worse than that.
Only 22% of organisations successfully transform.
Using a meta-analysis the authors examined 128 global companies that had undergone transformation between 2016 and 2020. There are a couple of interesting points about their methodology.
First of all they actually defined the word ‘transformation’ as a “fundamental shift in the way that an organization conducts business, resulting in economic or social impact.”
Secondly, they considered factors other than just savings or cost benefit , the position that transformation snake oil enthusiasts always start from. Instead the authors (Paul A. Argenti,Jenifer Berman,Ryan Calsbeek,Andrew Whitehouse) crunched data on corporate reputation including impacts on employee pay, satisfaction, gender pay disparity and engagement. i.e did the transformation actually make the organisation a better and happier place?
The implications of their findings are clear: companies have a better chance at success if they focus on their people during transformation. And this is very important: “the type of employee engagement made the difference between top-tier performance and not. Companies that prioritized attributes that are fundamentally related to employee engagement, such as diversity & inclusion, in addition to traditional benefits, such as compensation or health care, saw stronger reputations and greater financial returns than other organizations”.
There’s a lot to consider in this as – in my experience – this is what most change or transformation programmes completely miss. The hallmarks of these programmes are big, 2-5 year initiatives with a number of technology drops and a greater number of consultants. The first release is usually many months, sometimes years away. Too often organisations deliver a form of ‘change-washing’: introducing reforms that purport to bring about change but fail to result in any substantive shifts in systems, services or culture.
Interestingly, the authors of the report applied the mathematics of evolutionary biology to corporate data sets. Corporations, like biological organisms, also have to adapt to their environments. Just like our natural systems, our organisations are not machines. They are systems — often very large ones — that are run by humans. They are complex and they are adaptive and therefore the path for us to change them will be unpredictable and often counter-intuitive.
If we can recognise that organisations are people and people are complex then we can avoid simplistic transformations – and make real sustainable change.
However, it’s worth noting that not everything needs changing. Many change programmes are a form of corporate narcissism, like folk who continually strive for Instagram Face in the internet’s endless pursuit of physical perfection. Far from pursuing some unrealistic dream, perhaps we’d be much happier if we learned to live with our imperfections, neuroses and human frailties.
This title of this post is partly meant in jest but there is a serious point.
If transformation programmes have a 78% chance of failure why would you ever consider doing one? You certainly wouldn’t get on a flight that only had a 22% chance of a safe landing.
If you’re in the middle or nearing the end of a change programme it’s worth looking at your metrics and seeing how this programme is actually going to benefit your people – outside the day to day impact on their job roles.
It’s never too late to press on the brakes. Many digital transformations are the living embodiment of the Sunk Cost Fallacy: where organizations continue to justify spending additional resources to try to recoup already lost costs.
However if you’re still at the beginning it’s worth looking at why the 70% + who have gone before you have failed.
The default position is that most top down change programmes will fail. Smaller, well focused, spreadable changes, which are introduced on an ongoing basis in an inconspicuous way trump big change almost every time.
What if, instead of trying to change the business you already have, you worked with colleagues to explore, experiment, test and build the company you should have?