“Seventy per cent of change programs fail.” This famous and often quoted percentage of the failure rate for change programs originated back in the early 1990s in two Harvard Business Review articles* but needs to be treated with caution.
In both of these articles, there were no supporting references, no data and no details of any supporting research that backed up the 70% failure rate statement. In both instances, the authors used their consulting experience to substantiate this claim.
There is too much emphasis placed on this statistic. Academics and practitioners do agree and acknowledge a tendency for change initiatives to fail but answering the question as to why is not easy since change is contextual.
Some broad explanations for change failure are:
* Change programs are guided by a theory of change that is fundamentally flawed
* Implementing change methods are not understood
* Lack of support from management
* Deep organisational change (cultural change) is difficult
* Problems encountered with the change processes (psychological)
* Defence of existing power relations, interests and positions
Kotter, the author of one of the above-mentioned articles, himself acknowledged that in that short article there were aspects which needed more attention. Therefore, in 1996, Kotter published a book “Leading Change” which featured the eight-stage model, which is often used by practitioners and consultants**.
In this book, Kotter argued that change is associated with an n-step model, which is favoured by practitioners. However, Kotter’s model was not received as well by academics.
Academics argue that change is highly context dependent (ie. all leaders and contexts are different) and that change in organisations is complex, messy, incremental, long-term, fragmented and very political.
Further, academics pulled apart Kotter (and many other n-step models to change) and discovered that they were not evidence based. Kotter uses many anecdotes and draws many conclusions from superficial case studies. There is also little evidence that these and other n-step models used throughout the industry are successful and too much emphasis on the n-step models of change as a simple one-stop-shop model to successfully change organisations.
Organisations are complex, political arenas with many sub-cultures and contexts. Financial services firms in the process of implementing, or indeed preparing to implement, the raft of regulatory and consumer-driven changes within their businesses, need to account for this when planning and implementing their change programs.
*Articles referred to are: “Why change programs don’t produce change” (Beer, Eisenstat & Spector, 1990) and “Leading change: why transformation efforts fail” (Kotter, 1995)
**Kotter’s eight-stage model
1. Establish a sense of urgency
2. Creating the guiding coalition
3. Developing a vision and strategy
4. Communicating the change strategy
5. Empowering broad-based action
6. Generating short term wins
7. Consolidating gains and producing more change
8. Anchoring new approaches in the culture