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Businesses & Consultants Get an F

Retailers know it’s Back-to-School time. Shelves are packed with supplies. But clearly businesses and consultants like Accenture, McKinsey, Booz, BCG, Deloitte, etc., need to head back to school too. They’re getting an F in implementing major strategic initiatives. Check out the report card.

  • 70% of change initiatives fail (Kotter, 1995)
  • 67% of transformation efforts fail (McKinsey survey of 3199 executives)
  • 88% of IT projects fail to deliver on time and budget (The Standish Group, 2009)
  • 60% of projects involving business change fail to meet objectives (IBM survey of more than 1500 change management executives from 15 countries)
  • 30% of 1546 execs rate their change initiative as successful (Keller & Aiken, 2008)
  • 70% of mergers and acquisitions fail to achieve outcomes (Weber & Camerer, 2003)
  • 70% of reengineering efforts fail (Champy, 1990)

Major consultancy Accenture, on whom businesses depend to the tune of $27.9B in 2012, particularly for IT initiatives where the failure rate is 88%, even admits it. “Statistics show that the vast majority of organizational change initiatives underperform, or even fail to produce their intended value. And the situation is getting more challenging all the time…”

There are a few reasons for this abysmal grade. First, major consultants standardize their approach to virtually everything they do including how they implement major initiatives and do change management. For them, this keeps costs down, facilitates knowledge transfer both internally and to clients, makes go-to-market more effective, and their business model much easier to operate profitably. But a one-size-fits-all approach doesn’t work on the client side of the equation where each business has its own unique issues, people and culture.

Second, most implementers, businesses and consultants alike, lack a fundamental understanding of the ABC’s of human behavior and are training focused (which clearly is insufficient) instead of consequence-focused. I heard it from a senior executive at a client not long ago. “If they don’t change, we’ll step up the training”. They’re using a big consultant and their major IT initiative is behind schedule and off budget. Most people do not easily change. Doctors know heart attack survivors rarely change their diet and exercise habits even though their life depends on it. Yet we expect an employee who’s been doing things a particular way to quickly adopt a new approach just because we train them. Clearly, it’s not working.

And third, …ok, I admit this is a pet-peeve from my Kraft days… the staffing model for major initiatives is screwed up. The vast majority of consultants helping on these major initiatives have very little experience on the business side of the fence. Most major consultants assign very bright, promising recent graduates and experienced project leaders to the project. Businesses also pay for and get a portion of more senior partners who’ve been around the block a few times. But think about it. What does a recent MBA graduate really know about your business and the dynamics of organizational change? Combine that lack of experience with project managers that use the same approach to the project every place they go and you have a recipe for failure.

People who read this may disagree with the reasons I’ve given for implementation failures. They may give other reasons. That’s okay. There are other reasons for failure. I can list many. But the point is, what businesses and consultants are doing isn’t working. Projects are failing. The data shows it. Consultants admit it. And businesses can prove it. They feel the ultimate pain in this problem. It’s time to head back to school and get the grade up.

 

(Note: I have a lot to say about how to get the grade up but I didn’t include it here. My first challenge is to get people to open up this post, so I tried to give it an interesting, provocative title. Second challenge is to get people to read the entire article, so I have to keep it reasonably short. If you want to chat more about the solutions, contact me.)

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