Why do so many transformation initiatives fail?

Organisations are subject to ever-increasing demands to change and transform. Underscore seek to answer the question of why so many transformation initiatives fail in a series of articles that give practical guidance for success.

But first, what do we mean by failure? Research by the Standish Group¹ found that between 2011 and 2015, 71% of software projects either failed completely or had material issues in delivering on time, on budget, or with a satisfactory result.

Likewise, research from the Project Management Institute² found that while 64% of projects met their original goals, half delivered late, 45% were over budget and 15% were an outright failure.

Both studies found that the failure rate increased as the size and complexity of projects grew. Functional transformation deals with complex, interrelated changes to people, process and technologies, with typical budgets in the multiple millions. If IT functions with their relatively mature project management capabilities see software projects fail 71% of the time, transforming a Finance, HR or Procurement function almost certainly faces more challenging odds.

So what’s driving the high failure rate and what can we do about it?

We’ll break the problem down into the major phases of the programme itself: Scoping, Build, Transition and Sustain.

Today, we’ll deal with some of the underlying issues transformation programmes face during the scoping phase.

First. Programme sponsorship.

Being the sponsor of a transformation programme is one of the most rewarding, challenging and potentially career defining roles of your professional life. But has anyone ever described the role to you, or given you a role description detailing your responsibilities in sponsoring a major transformation? Or explained how the role of sponsor differs between projects, programmes and portfolios?

The majority of us learn the hard way: on the job. This is a major and unnecessary risk when you consider that the most important factor in transformation success is active, visible and effective executive sponsorship³.

Effective sponsors ensure that transformational change is fully aligned to business strategy, and that funding and resources are in place. They actively participate in progress reviews, set clear direction and objectives and hold their teams accountable for delivery. They make timely decisions and help overcome obstacles and resistance to change. They communicate directly with people affected by the change in person wherever possible, and they put themselves out there to answer the difficult questions.

Behind every successful transformation is an executive sponsor who was willing to do the hard yards building coalitions, make tough decisions, constantly champion the reasons for change and articulate their vision of the future.

Leading transformational change is the essence of emotional labour, neatly described here by Seth Godin. If you’re an executive sponsor, be prepared to do a lot of this.

Next. Defining the problem.

A common mistake is confusing the reason a transformation programme starts and the problem it’s trying to solve.

The need to transform can be precipitated by a single event (change of CEO or Finance / HR / Procurement Leader, merger, regulatory change, end of life technology, financial performance, consolidation etc.) but this merely explains ‘why’ we need to change, it doesn’t address the ‘what’ or the ‘how’.

Any successful transformation needs to have a solid understanding of ‘where we are today’, clarity of ‘where we want to be’ in the future, and a plan to get there. You may have a pretty good idea about what needs to change, but if you don’t seek out data to inform your opinions, you risk missing vital information that could add significant value to the organisation or help secure additional investment for your transformation.

Understanding the amount of time, effort and cost required to deliver your business processes today and how this benchmarks against other organisations, gives you a solid fact base to work from and a robust baseline to measure your success.

Input from a broad cross section of stakeholders is also needed when defining the problem. The biggest resistance we see from many Finance, HR and Procurement functions is ‘simply’ asking their internal customers about the service they receive and how it can be improved.

Be honest. You can’t possibly know all the answers, or even all the questions to ask. Successful transformation means asking the audience.

Finally. Preparing for change.

On far too many occasions the first business users hear of internal change initiatives is when they receive an invitation to mandatory training.

Time must be invested during scoping to identify which groups of people will be impacted by your change, how they will be affected and who are the best people to engage with them and how – Hint: it’s not always a group email from the sponsor!

Effective change management is a two way, ongoing conversation that informs and updates the path of transformation, not simply a communications or training plan.

Engaging business users up front during scoping not only helps you properly define the problem, it’s a great way of engaging key stakeholders in the business. Invite the right people into your initial requirements gathering work and, come implementation, you have a ready-made coalition of willing change champions.

Genuinely inviting business users to share their frustrations, wants and needs is vital to securing the permissions you need to make change happen. It makes people feel like the change is being done for them and by them, rather than to them. An approach that actively engages people up front in shaping the change is far more likely to be adopted and ultimately become ‘the way we do things around here’.

We’ve discussed just three out of ten major factors influencing the scoping phase of functional transformation. In our next blog we will discuss the fourth aspect of effective scoping: Requirements Gathering.

Can’t wait to find out more? For your full 10 point Transformation Scoping Checklist click here.

Please leave a comment below or get in touch if you have questions, comments, or would like to know more, we’d love to hear from you.

Jason West, Co-Founder, Underscore

References:
¹Standish Group’s CHAOS Report 2015 – results of 25,000+ software projects FY2011-2015
²PMI’s Pulse of the Profession Survey 2015 – insights from 2,800 project management practitioners
³PROSCI – Executive Sponsor’s Importance and Role

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