Home / Lies, damned lies and statistics… Do 70% of business transformations really fail?

Lies, damned lies and statistics... Do 70% of business transformations really fail?

By Steve Deverill. Published on 10 December 2016


Around 42.7% of statistics are made up on the spot. It’s an old joke. But it’s starting to wear thin on a statistic that’s been bandied around for over 20 years: which is that 70% of business transformations fail. Have the experts – who, by now, typically have scores of change projects under their belts – really not learned anything since the mid-90s?

A NEW IDEA

I understand why the failure figure may once have been so high. Business transformation has never been straightforward or comfortable. It takes a team of skilled people to deliver change across a business and all its functions. Business Process Reengineering (BPR), as business transformation was once known, was a new idea in the early 90s. I suspect it didn’t command the experience and respect it required. Too often, organisations didn’t apply sufficient resources or engage closely enough with the process.

LESSONS LEARNED

The discipline has evolved and matured, and its experts have learned their lessons. Experienced change practitioners know the common pitfalls and potential problems, and how to mitigate them before projects begin. They understand why, from the start, it’s essential to get everyone on board and establish the right direction, strategies and measurements.

Every day, I talk with people who have designed, implemented and managed cross-functional transformations in businesses large and small. I speak regularly to change practitioners about their past mistakes, and the message is clear: they’ve learned from them. Businesses I speak to know what change entails and the resources it demands. If the 70% failure figure was true today, a big proportion of the transformations I work on would be shelved. And they’re not.

A BRUTAL ‘FACT’

So where and when did the percentage start spreading and becoming unquestioned conventional wisdom? In 1993, a book entitled ‘Reengineering the Organisation’, by Professor Michael Hammer and James Champy, contained a passage that ricocheted across the corporate world: ‘Our unscientific estimate is that as many as 50 per cent to 70 per cent of the organizations that undertake a reengineering effort do not achieve the dramatic results they intended.’ (Hammer and Champy, 1993).

Fast forward to 2008, in his book ‘A Sense of Urgency’, John Kotter uses the same unsubstantiated figure: ‘I estimate today more than 70 per cent of needed change either fails to be launched…fails to be completed…or finishes over budget.’ (Kotter, 2008).

Without any concrete supporting evidence, the 70% statistic kept spreading online and in print, morphing into a corporate mantra of ineptitude.

SETTING THE RECORD STRAIGHT

Of course, business transformation is difficult and results can be unexpected. Naturally, a change programme will fail if the organisation doesn’t recognise its reasons for changing or appreciate what’s involved. But are seven out of 10 projects doomed to fail? Just ask any experienced business transformation practitioner, and the response will be a resounding no.

I propose it’s time to set the record straight. Put the right experts, plan and business-wide backing in place, and business transformation will deliver.

The final word goes to Michael Hammer, co-author of the book which spawned the figure, who in a follow-up from 1995 said: ‘In Reengineering the Corporation, we estimated that between 50 and 70 percent of reengineering efforts were not successful in achieving the desired breakthrough performance. Unfortunately, this simple descriptive observation has been widely misrepresented and transmogrified and distorted into a normative statement… There is no inherent success or failure rate for reengineering.’

Steve Deverill

PARTNER
HEAD OF BUSINESS TRANSFORMATION AND DIGITAL & TECHNOLOGY LEADERSHIP PRACTICES

Steve is Head of the Business Transformation practice and manages executive level interim appointments. He supports global businesses, FTSE 100s and entrepreneurial SMEs with transformational business change projects.

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