3 reasons for failure: change, participation, and risk

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An organization builds a culture of success when it can take a strategy, identify and prioritize the most important projects within the strategy, and consistently deliver projects on time, on budget, and within identified quality standards.

  • John Kotter, author of iconic Leading Change, believes 70% of all major change efforts in organizations fail.
  • A McKinsey study found that in 70% of the deals studied, the buyer failed to achieve the expected levels of revenue synergies.
  • McKinsey 61% of all acquisition programs were failures because the acquisition strategies did not earn a sufficient return on the funds invested.
  • 2009, Standish Group, CHAOS reports 68% of all projects fail to deliver on time, on budget, or required features and functions.
  • The same Standish report 44% were late, over budget, and/or with less than the required features and functions and 24% were cancelled prior to completion.
  • 1997 research conducted by Carleton indicate between 55% to 70% of mergers and acquisitions fail to meet their anticipated purpose.
  • Magnet (1984) and Gilkey (1991) found that between 60% and 67% of mergers and acquisitions fail to meet expectations.
  • 2007 study by the Hay Group and the Sorbonne found 91% of European business leaders thought their deal did not fully achieved its original objectives.
  • US sources place merger failure rates as high as 80% and evidence indicates that around half of mergers fail to meet financial expectations.
  • General Electric states 95% of its acquisitions over the past decade yielded “disappointing results”.

Charting success is not easy and 70% of all projects fail.  Here are 3 consistent, but by no means the only, reasons projects succeed only about 30% of the time.

70% of projects fail because of change, reason 1:

Change renders strategies and plans irrelevant:

  • Technology advances,
  • New regulations,
  • Stress on process and performance from growth,
  • Nimble and hungry competition eroding your market share,
  • Quality-control issues,
  • Flight of key talent,
  • Competition for new talent, and
  • Organization arrogance

These are just a few shifting conditions change presents to knock your plan into irrelevance before the ink is dry. All you need is one change to knock you off course.

70% of all projects fail because they lack participation, reason 2:

The over whelming habit of many executives and managers is to huddle with select insiders to debate the future of their organization from their view. Once these select agree, they descend Mount Sinai with a plan and expect complete buy-in. The plan delivered, they soon move on to operational needs and are only awakened after goals or targets are again missed.

Project success starts with participation of the executive (the leadership), the operational (the managers), and the functional level (the doers). We are decades into the knowledge worker and the knowledge economy, but still continue with pre-World War II methods of planning by leaders who discount employee participation and motivation as too much effort. Leadership, the verb, not the adjective or adverb, is the ability to get things accomplished through others. Plans that don’t account for participation rely on hope to deliver results.

70% of all projects fail because of risk, reason 3:

Risk is not only a financial tool. Risk is anything that can positively (known as opportunity) or negatively affect a project; this sounds strangely close to change. Risk is crucial to understand for executives, managers, and functional talent. To avoid plans that are dead on arrival you need everyone’s participation to identify risk and that takes flexibility, proper resource alignment, and motivated talent to participate.

It takes knowledge and ability to create and deliver a plan, but only your talent’s participation and motivation can identify change and risk and then provide a rational business case to alter or modify a plan.

Risk management is a continuous process throughout the entire life cycle of every plan and involves an effort to:

  1. Identify industry and market risk;
  2. Facilitate an organization strategy – what should be;
  3. Assess your company’s current capability to deliver your plan – to include human capital/talent management;
  4. Diagnose your company’s capability need – to include human capital/talent management;
  5. Assess your organization’s culture to identify gaps to achieve the strategy;
  6. Diagnose organization capability to achieve goals;
  7. Diagnose talent, money, and time resources needed to achieve goals;
  8. Prioritize strategic options from new information;
  9. Adjust plans with well-articulated business case – as necessary;
  10. Design a plan to close resource gap;
  11. Design a marketing plan to inspire stakeholders and align resources;
  12. Identify risks to achieve goals;
  13. Implement a marketing communications plan for customers and employees with milestones and performance targets;
  14. Track progress to performance targets; and
  15. Assess new risk

In financial management the greater the risk, the greater the expected reward or potential payoff. As we hit project and plan failures of 80% it looks like we have grown to expect project failure as acceptable risk. People don’t want to be involved with failure, perhaps that is why you have little participation. People don’t want to be involved with unnecessary risk, it is a losing game, perhaps this is why change is resisted.

More Reason For Success

How can you increase likelihood of success:  manage change with more people involved in risk.  Try crowdsourcing your organization strategy.  Involve more people in the developing and testing concepts.  Strategies fail because too many times we do not account for more in the planning stages:

  1. More participation,
  2. More dialogue, and
  3. More reality

If you have no tolerance for more, if you feel it takes too long, involves too effort, than you are delusional hoping it to work.  Hope is not much of a strategy and if you came to me for a budget based on hope, I would hope to replace you, quickly.  Hope is risk.

If you have any examples of integrated plans or other comments, I look forward to your thoughts and comments.