The “70% failure rate” has been exploited enough already. It’s time to stop beating this dead horse and give it a decent burial.
I get why it resonates with most of us. Strategy execution is hard. Some falls short of objectives and some fails outright. The more transformational the change the more likely that it will fail in some way. We all abhor failure. Any failure feels like too much. It feels like 70%.
And I get why it is used—fear is a standard sales technique (I am recovering from this nasty habit myself). You know the drill: convince the leaders there is a high risk of failure unless they follow a different prescription. This is used internally to expand execution budgets as well as externally to tout execution services and solutions. Notwithstanding the intentions of either internals or externals, the origin of this legend was never a real statistic. Yes, you read that right. Where did the “70%” come from then? More on this below.
Furthermore, there is better data. In August 2013, The Economist published the first third-party (can anyone say “objective”) survey, “Why good strategies fail: Lessons for the C-suite.” (http://www.pmi.org/~/media/PDF/Publications/WhyGoodStrategiesFail_Report_EIU_PMI.ashx) How about we all do a three-point turn? What are the right questions to ask or conversations to have around success/failure?
First, how did we get here?
As I said above, as far as I can tell, the legendary failure rate is not an actual statistic.
Since I last wrote about this topic I was referred to an excellent article that attempts to track the source of this so-called data. The abstract of “Do 70 Per Cent of All Organizational Change Initiatives Really Fail?” (http://www.tandfonline.com/doi/abs/10.1080/14697017.2011.630506#.UoE8F_lJOHc) (Journal of Change Management, Mark Hughes, 2011) hits it hard: “This article critically reviews five separate published instances identifying a 70 per cent organizational-change failure rate. In each instance, the review highlights the absence of valid and reliable empirical evidence in support of the espoused 70 per cent failure rate.”
Let’s review that: “the absence of valid and reliable empirical evidence.” Wow. That’s pretty amazing, don’t you think?
Hughes reviews each of the five instances—you will probably recognize some of them:
- “Reengineering the Corporation: A Manifesto for Business Revolution,” Hammer and Champy 1993
- “Cracking the code of change,” Harvard Business Review, Beer and Nohria, 2000
- “Sense of Urgency,” Kotter, 2008
- “Leading change management requires sticking to the plot,” Bain and Company, Senturia et al, 2008
- “The inconvenient truth about change management,” McKinsey and Company, Keller and Aiken, 2009
For each instance, Hughes provides the original reference verbatim and also provides some context. I highly recommend this article.
The bottom line is that we don’t know, from the sources cited, what the real failure rate was at that time. We only know what a handful of pretty smart and experienced consultants / academics estimated it was based on their limited exposure.
To be fair, many academics and consulting firms have run surveys. Some consulting firms even run them annually. Their data comes pretty close to 70%. The one that comes to mind is “Success Rates for Different Types of Organizational Change,” (http://onlinelibrary.wiley.com/doi/10.1002/pfi.4140410107/abstract) Martin E. Smith, Performance Improvement Journal, International Society for Performance Improvement, 2002.
This is a “meta survey.” In other words, Smith analyses 49 surveys and drives out median success rates (the median failure rate being, obviously, the rest). What is also useful about this survey is that it identifies by type of change (e.g., restructuring has a 54% failure rate, culture change has an 81% failure rate). With that, one can arrive at a median 70% failure rate. So, maybe one can argue that there is a real 70% failure rate, or there was sometime before 2002 (11 years ago).
What’s new?
In March 2013, The Economist’s Intelligence Unit, sponsored by The Project Management Institute, initiated a survey of 587 senior executives globally and then undertook a series of in-depth interviews with additional executives and academics.
The result was a current and objective (non-commercial) touch-point on what executives believe. As noted on the PMI website:
“Key findings include:
- 61% of survey respondents acknowledge that their firms struggle to bridge the gap between strategy formulation and day-to-day implementation
- 44% of strategic initiatives did not succeed in the last three years
- 51% percent of survey respondents say the leading reason for the success of strategic initiatives is leadership buy-in and support
- Rather than micro-managing, C-suite executives should identify and focus on the key initiatives that are strategically relevant”
So there it is. These executives believe the failure rate on “strategic initiatives” is 44%.
So while that’s a fair distance from 70%, it is still a very high risk.
The reality
So let’s review: we have looked at five original references that turned out to be opinions of thought leaders, a meta survey of 49 sources, and a survey of 587+ executives.
It seems odd, in this light, to realize that this is actually not primary research (i.e., real-time tracking of actual change initiatives on their performance against stated objectives).
This would be the real test, wouldn’t it? One hopes that inside of organizations there might be an appreciation for tracking success/failure and for improving strategy execution over time. Project management protocol calls for a Post Implementation Review and Lessons Learned, but this is rarely converted into organizational learning or harvested into enterprise best practices.
Proposal
Strategy execution is hard, damn hard. It often fails or falls short.
We may disagree on the degree of risk but no one can predict the probability of success or failure for a particular initiative/organization based on a general survey.
What if we all at least started this conversation from more relevant space? For example, “What is this organization’s experience with strategy execution? Let’s have a look at the data and see how we can help you improve your results.”
Maybe organizations would begin to think about establishing strategy execution as an organizational competency and managing it across the organization, and in working to improve their performance would drive better results to the bottom line. Now, that would be good for all of us.
Credits
Earlier this Fall, I facilitated a discussion entitled “What if it’s not true that “70% of change initiatives fail”?” in the Organizational Change Practitioners Group in LinkedIn and many experienced and insightful practitioners chimed in—some agreeing and some disagreeing. Around the same time Jennifer Frahm published an excellent post entitled “70% of change projects fail: Bollocks!” (http://conversationsofchange.com.au/2013/09/02/70-of-change-projects-fail-bollocks1/#!). Much of my thinking above has been informed by their contributions.
