Many organizations are implementing significant overhauls of their IT systems. But many of these projects are poorly implemented. This leads to sizeable cost overruns, missed deadlines, disrupted operations, unhappy customers, and stressed out employees.
This month’s issue of Harvard Business Review carries an article entitled Why Your IT Project May Be Riskier Than You Think. Reporting on the largest global study of IT change ever conducted (1,471 projects), an Oxford University Said Business School professor and McKinsey & Co. consultant provides examples of entire companies that have failed because of badly implemented IT system changes. Bent Flyvbjerg and Alexander Budzier found that one in six had a cost overrun of 200% and schedule overrun of almost 70%.
This adds to the long list of studies showing that organizational change initiatives have a 50 – 70% failure rate. There’s a variety of reasons for that. We’ve found that one core cause is “Partial and Piecemeal Plans and Programs” where change initiatives like new IT systems are bolted-on versus built-in.
The major contributor to failed change efforts center around failing to shift the organization’s culture. The largest study ever done on organizational transformation was conducted by McKinsey & Co. Here’s a conclusion reached by senior McKinsey leaders, Scott Keller and Colin Price, in their new book Beyond Performance:
“What we might think of as the usual suspects — inadequate resources, poor planning, bad ideas, unpredictable external events — turn out to account for less than a third of change program failures. In fact, more than 70 percent of failures are driven by what we would categorize as poor organizational health, as manifested in such symptoms as negative employee attitudes and unproductive management behavior.”
McKinsey’s research shows that getting frontline employees to feel ownership of the change and engaging them through communication and involvement increases the chances of success by four times! When employees are empowered to take initiative (Leading not Following or Wallowing) in the change effort, it’s five times more successful! The authors state, “taking deliberate steps to move the needle on the soft stuff is a vital element in organizational transformations, though it’s often overlooked.” Click here for more quotes and findings from their book.
IT projects are too often prime examples of internal/external experts working with a small group of senior managers to impose significant change on the organization. Most of their “change management” efforts are top-down “do-to” plans rather than inclusive “do-with” change efforts. Doing change to the organization puts the organization at serious risk and causes lots of pain, suffering, and unnecessary cost.
Successful change efforts do a much better job of balancing management systems, processes, and planning with emotionally intelligent “soft skills” leadership. During my November 4 complimentary (no-charge) 60 minute webcast on Leading a Peak Performance Culture I give a highly condensed summary of what integrated and strategic culture change looks like. Click here to view.