Now that all claims to the effect of “about 70% of change management initiatives fail” have been thoroughly debunked – there’s new evidence, and it’s worse than previously “estimated.”






What gear are you in?!

Bain & Company recently released their study of 1,000 companies undergoing change transformation, finding 88% missed their marks.

Bain’s data shows that digital transformations are significantly harder than conventional change management programs. According to the survey, just 5 percent of those companies involved in digital transformation efforts reported that they had achieved or exceeded the expectations they had set for themselves (vs. a success rate of 12 percent for conventional transformations). A full 71 percent of these companies settled for dilution of value and mediocre performance.

Bain & Company Press Release

To be perfectly clear – not all of these companies lost revenue. Bain separates the lot into industry leaders in digital transformation, and “laggards” – stating that 83% of industry leaders improved margins, whereas less than half of the rest saw a gain for their efforts.

And it’s no small potatoes either; industry leaders took home 14% more bacon. To put that figure into perspective, employees are kidding themselves to expect just a 10% raise in pay, come time for their review.

For sure, there’s gains in a successful transformation. But what exactly does success require?

Why Change Initiatives Fail

While it’s worth looking into Bain’s research yourself, the short-short version for the cause of failure is simple and, frankly, pretty common-sense.

The reason, is you.

Now they put it much more fancifully by saying pretty phrases like “executive alignment […] requires critical changes to corporate behaviors” and “great orchestrators assign initiatives to cross-functional teams that use Agile development processes” and “successful orchestration […] recruits important people on the front line to play a leadership role in developing and executing the digital agenda.”

To which I say, hogwash.

There’s still nothing new under the marketing sun, and I am not surprised. If the language didn’t immediately scream “overcomplicated hype for the sake of job security” to you – let me spell it out:

If your principals are in proper alignment and you put people first — you win.

But don’t take it from me. Here’s the Global CIO of data giant Experian, speaking of his recent success in transformation:

“All of the shifts we made were focused on opening up new markets and serving our customers better.”

Barry Libenson via Inc.com

Key phrase there: serving our customers better.

Look around long enough, and you’ll find the common cause of friction is an attachment to “we’ve always done it this way.”

Whether it’s the same old carrot-and-stick mentality where top-down accountability is the only stop-gap, good old fashioned short-sighted cronyism that only enables executives and pads investors’ pride, blatant disregard for customer demand, or the tried-and-true death dance of the ostrich – putting your head in the sand so the next better business model can swiftly kick you in the ass – the clear path to failure is, without a doubt, any path we’ve already walked.

And yet, that’s exactly what our MBAs are taught to do! When Harvard Business School founded the MBA program in 1908, “its faculty members realized that there were no textbooks suitable to a graduate program in business. That was when they decided to use case studies which are detailed accounts of […] methods and practices that managers follow.”

Brilliant. Let’s see what’s been done before, and just talk about it. What could go wrong …in the real world, with real customers, and real consequences – where money talks?!

Of course that might not be so bad if this rhetorical format wasn’t the single most dominant style of business education to-date, and, not a single US-founded business school can be found in the top 100 worldwide.

Make no mistake, the “tried and true business model” was built to be broken – by You.

If you take nothing else from this, please do us all a favor and treat everything B-school teaches, as Bunk. What has worked in the past was driven by the profit motive – in other words, with the wrong principals.

For fear of looking a bit like a hypocrite, Harvard Business Review manages to both expose and obscure this very truth in a recent article:

Successful business models have an exceptionally strong CVP [Customer Value Proposition], and a stable, scalable system in which all the elements mesh together seamlessly while complementing each other. As simple as this framework may seem, its power lies in the complex interdependencies of its parts. Major changes to any one of these elements affect the others and the whole.

Digital Growth Depends More on Business Models than Technology – HBR

In plain terms – you can’t stick feathers up a chicken’s ass and call it a rooster.

If your business is struggling, realize that it is your entire business model which needs to shift toward a holistic people-first modus. Not just your technology. Not just your processes. Not just your marketing. Not just your vision.

All of it. People First.

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