70% change failure rate: fact or fiction?

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Summary
The timeline below shows the various sources of the widely-quoted 70% change failure rate, notably John Kotter, who undertook a 10-year study of 100+ companies but provided no evidence in support of his findings, and McKinsey & Company. whose 2006 and 2008 surveys revealed a 30% success level. In the firm’s 2015 survey, “26 percent of respondents said the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time”.

Does this mean the 70% change failure rate myth is itself a myth?

Here at The Bureau, the jury is out. I suggest you read what follows, paying particular attention to Mark Hughes’s assessment, Jen Frahm’s assessment and the nine management research delusions, then reach your own conclusion.

Mark Hughes’s assessment
Jen Frahm’s assessment
Nine management research delusions

Timeline, 1993 – 2017

1993

Where it all began

Reengineering the Corporation: A Manifesto for Business Revolution

A book by Michael Hammer and James Champy.

“Sadly, we must report that despite the success stories described in previous chapters, many companies that begin reengineering don’t succeed at it. Our unscientific estimate is that as many as 50 percent to 70 percent of the organizations that undertake a reengineering effort do not achieve the dramatic results they intended.” (p200)

Reengineering the Corporation — Amazon.co.uk

1995

“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.”

Source: Michael Hammer, cited in It’s Time to Abolish the 70% Change Failure Rate Statistic, by Heather Stagl, Enclaria.

1995

Leading Change: Why Transformation Efforts Fail

A Harvard Business Review article by John P. Kotter.

“Over the past decade, I have watched more than 100 companies try to remake themselves into significantly better competitors. They have included large organizations (Ford) and small ones (Landmark Communications), companies based in the United States (General Motors) and elsewhere (British Airways), corporations that were on their knees (Eastern Airlines), and companies that were earning good money (Bristol-Myers Squibb). These efforts have gone under many banners: total quality management, reengineering, rightsizing, restructuring, cultural change, and turn-around. But, in almost every case, the basic goal has been the same: to make fundamental changes in how business is conducted in order to help cope with a new, more challenging market environment. A few of these corporate change efforts have been very successful. A few have been utter failures. Most fall somewhere in between, with a distinct tilt toward the lower end of the scale.”

HBR republished the article in the January 2007 issue. The following text forms part of the introduction:

“John P. Kotter is renowned for his work on leading organizational change. In 1995, when this article was first published, he had just completed a ten-year study of more than 100 companies that attempted such a transformation. Here he shares the results of his observations, outlining the eight largest errors that can doom these efforts and explaining the general lessons that encourage success.”

1996

Leading Change

A book by John P. Kotter.

“From years of study, I estimate today more than 70 per cent of needed change either fails to be launched, even though some people clearly see the need, fails to be completed even though some people exhaust themselves trying, or finishes over budget, late and with initial aspirations unmet.” (pp12-13)

In this statement, Kotter is admitting that the 70% figure is an estimate.

Leading Change — Google Books

2000

Cracking the Code of Change

A Harvard Business Review article by Nitin Nohria (Richard P. Chapman Professor of Business Administration at Harvard Business School) and Michael Beer (Cahners-Robb Professor of Business Administration at Harvard Business School).

Harvard Business Review, May–June 2000.

“The brutal fact is that about 70% of all change initiatives fail.” (p133).

No evidence provided.

Download pdf document

2002

The Heart of Change: Real-Life Stories of How People Change Their Organizations

A book by John P. Kotter and Dan S. Cohen.

See 2008 — A Sense of Urgency

The Heart of Change — Google Books

The Heart of Change — Amazon.co.uk

2006

McKinsey Global Survey 2006: Organizing for Successful Change Management

1,536 respondents globally.

Report by Joseph Isern and Caroline Pung.

McKinsey Quarterly, June 2006.

“We asked executives to judge the success of the transformation in two ways. One was to gauge the company’s subsequent performance, such as its profitability, return on capital employed, market value, and the like. The other was to measure the extent to which the process laid a foundation for sustaining corporate health over the longer term—through, for example, upgraded capabilities, closer relationships with customers or suppliers, and a positive shift in organizational culture. Respondents are a little more positive about the first yardstick, with 38 percent saying that the transformation was ‘completely” or ‘mostly” successful at improving performance, compared with 30 percent similarly satisfied that it improved their organization’s health. Around a third declare that their organizations were ‘somewhat” successful on both counts. About one in ten admit to having been involved in a transformation that was ‘completely’ or ‘mostly’ unsuccessful.”

Download Organizing for successful change management: A McKinsey global survey (pdf)

2008

The Inconvenient Truth About Change Management—Why it isn’t working and what to do about it

by Scott Keller and Carolyn Aiken, McKinsey & Company.

References McKinsey Global Survey 2006:

“McKinsey & Company recently surveyed 1,546¹ business executives from around the world, asking them if they consider their change programs “completely/mostly” successful: only 30 percent agreed.”

¹ 1,536 cited in Organizing for Successful Change Management — see previous item.

Download The Inconvenient Truth About Change Management (pdf)

2008

McKinsey Global Survey 2008: Creating organizational transformations

3,199 respondents globally.

Report by Mary Meaney, Caroline Pung et al.

“Organizations need to change constantly, for all kinds of reasons, but achieving a true step change in performance is rare. Indeed, in a recent McKinsey survey of executives from around the world², only a third say that their organizations succeeded in doing so.”

² “The McKinsey Quarterly conducted the survey in July 2008. A total of 3,199 executives from industries and regions around the world responded.”

Download McKinsey Global Survey Results: Creating organizational transformations (pdf)

2008

Leading change management requires sticking to the PLOT

A Bain & Company white paper by Todd Senturia, Lori Flees, and Manny Maceda.

“We have found that when executives master change, they can do it again and again, and they can do it in almost any company or industry. Trouble is, not enough do. People have been writing about change management for decades and still the statistics haven’t improved. With each survey, 70 percent of change initiatives still fail—and the world is getting more complicated.”

Anecdotal.

Download Leading change management requires sticking to the PLOT (pdf)

2008

A Sense of Urgency

A book by John P. Kotter.

Excerpt:

View this excerpt from A Sense of Urgency, by John P. Kotter, on Google Books
John Kotter provides no evidence in support of these assertions.

A Sense of Urgency — Google Books

A Sense of Urgency — Amazon.co.uk

2008

Making Change Work

“The 2008 Making Change Work (pdf) study by IBM shares a survey of more than 1500 change practitioners, in which they found that 41% of projects met their objectives. The remaining 59% missed at least one objective or failed completely. It’s important to point out that this statistic is not 70%! And it also assumes again that anything short of perfect is failure.”

Source: It’s Time to Abolish the 70% Change Failure Rate Statistic, by Heather Stagl, Enclaria.

2009

The irrational side of change management

by Carolyn Aiken and Scott Keller.

McKinsey Quarterly, April 2009.

“In 1996, John Kotter published Leading Change. Considered by many to be the seminal work in the field of change management, Kotter’s research revealed that only 30 percent of change programs succeed. Since the book’s release, literally thousands of books and journal articles have been published on the topic, and courses dedicated to managing change are now part of many major MBA programs. Yet in 2008, a McKinsey survey of 3,199 executives around the world found, as Kotter did, that only one transformation in three succeeds. Other studies over the past ten years reveal remarkably similar results. It seems that, despite prolific output, the field of change management hasn’t led to more successful change programs.”

View The irrational side of change management

2010

What successful transformations share—McKinsey Global Survey results

by Scott Keller, Mary Meaney, Caroline Pung et al, McKinsey & Company.

Exhibit 4: Assessing strengths, opportunities, and problems

What successful transformations share: McKinsey Global Survey results - Exhibit 4

View What successful transformations share

2011

Do 70% of organisational change initiatives really fail?

by Mark Hughes, Reader in Organisational Change, Brighton Business School, University of Brighton, UK

Download Do 70% of organisational change initiatives really fail? (pdf)

See also:

Do 70 Per Cent of All Organizational Change Initiatives Really Fail? by Mark Hughes, Reader in Organisational Change, Brighton Business School, University of Brighton, UK, in Journal of Change Management, Volume 11—Issue 4, 2011

Abstract:

“A 70 per cent failure rate is frequently attributed to organizational change initiatives, raising questions about the origins and supporting evidence for this very specific statistic. This paper critically reviews five separate published instances³ identifying a 70 percent organizational change failure rate. In conclusion, whilst the existence of a popular narrative of 70 percent organizational change failure is acknowledged, there is no valid and reliable empirical evidence to support such a narrative.”

³ The five instances:
1. Reengineering the Corporation: A Manifesto for Business Revolution, Hammer and Champy, 1993
2. Cracking the code of change, Harvard Business Review, Beer and Nohria, 2000
3. Sense of Urgency, Kotter, 2008
4. Leading change management requires sticking to the plot, Bain and Company, Senturia et al, 2008
5. The inconvenient truth about change management, McKinsey and Company, Keller and Aiken, 2009

View source

2011

How do I implement complex change at scale? (pdf)

by Simon Blackburn, Sarah Ryerson, Leigh Weiss, Sarah Wilson, and Carter Wood.

McKinsey & Company, May 2011.

“Any organization embarking on a major transformation will be hoping to achieve a step-change in business results. Unfortunately, the odds are not good. Research by John Kotter in 1995 revealed that only 30 percent of change programs succeed4. Sixteen years on, nothing has changed; according to McKinsey research, the same success rate still holds true today.

So why do so many programs fail? The main reasons are not to do with resources or budgets, but behavior: specifically, employee resistance and management behaviors that do not support the intended changes. Between them, these two factors account for more than 70 percent of failures.”

4 See Scott Keller and Colin Price, Performance and Health: An evidence-based approach to transforming your organization, McKinsey & Company, 2010, and Beyond Performance: How organizational health delivers ultimate competitive advantage, John Wiley, forthcoming.

2013

“In March 2013, The Economist’s Intelligence Unit, sponsored by The Project Management Institute, initiated a survey of 587 senior executives globally and then undertook a series of in-depth interviews with additional executives and academics.

The result was a current and objective (non-commercial) touch-point on what executives believe. As noted on the PMI website:

‘Key findings include:

• 61% of survey respondents acknowledge that their firms struggle to bridge the gap between strategy formulation and day-to-day implementation.
• 44% of strategic initiatives did not succeed in the last three years.
• 51% percent of survey respondents say the leading reason for the success of strategic initiatives is leadership buy-in and support.
• Rather than micro-managing, C-suite executives should identify and focus on the key initiatives that are strategically relevant.’

So there it is. These executives believe the failure rate on ‘strategic initiatives’ is 44%.

So while that’s a fair distance from 70%, it is still a very high risk.”

Source: Time to Kill the Phantom 70% Failure Rate Quoted on Transformational Strategy by Gail Severini, Symphini Change Management

2015

How to beat the transformation odds

by David Jacquemont et al.

McKinsey Global Survey 2015.

“After years of McKinsey research on organizational transformations, the results from our latest McKinsey Global Survey on the topic confirm a long-standing trend: few executives say their companies’ transformations succeed. Today, just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time. In our 2012 survey, 20 percent of executives said the same.”

View How to beat the transformation odds

I suppose my primary issue with the report is that it treats transformation as an exercise in “tell–sell” with the primary focus on lean efficiency. And that’s my big caveat; it comes across as very internally focused. The survey makes an assumption that transformation is about “doing things right” rather than “doing the right things.” And when you look through the report, you find the word “customer” used just once in the body of the report, and even then it flips it into the efficiency side of the equation.

“… deliver value more efficiently to customers …”

So that’s efficiency for the organisation rather than value as perceived by customers.

Source: McKinsey’s Report Misses A Key Point, by Derek Miers, Structure Talent.

2015

Changing change management

by Boris Ewenstein, Wesley Smith, and Ashvin Sologar, McKinsey & Company.

“Change management as it is traditionally applied is outdated. We know, for example, that 70 percent of change programs fail to achieve their goals, largely due to employee resistance5 and lack of management support.”

5 Go to The Bureau’s exposition of Resistance to change.

2017

Do 70% of Organizational Change Projects Really Fail?

Dr. David Wilkinson, Editor-in-chief, The Oxford Review.

View video (Runtime 18:02)

View slideshow (57 slides)

2017

Jack Martin Leith launches The Bureau of Management Theory and Practice, and examines the widely-held belief that 70% of all organizational change initiatives fail, publishing his findings here.


Six Questions to ask if a client or colleague claims that “70% of change projects fail”

Structure Talent survey: main findings

Structure Talent conducted three surveys in conjunction with IQPC and the PEX Network to explore the maturity of organizational change programmes. Some 670 programmes were analysed, with detailed responses coming from 150 organisations in 2015.

The survey revealed that change programmes within more mature firms almost always succeed.

Understanding Organizational Maturity

In firms with an average maturity above level 3:

  • The chance of outright failure drops to just 3%
  • 84% of their change programmes met or exceeded their goals.

Even in low maturity firms:

  • Outright failure rates peak at just 40%
  • A further 32% said their program failed to meet upfront stated goals, but was considered a success because of unexpected benefits.
Source: Structure Talent (view the key pillars for programme success).

Download the full report with registration

More quotes

Although [Kurt Lewin] is often attributed to this wide-spread model there are new indications that it has posthumously been built into much (much) more than its original intentions. He did indeed describe the steps of 1. unfreeze, 2. change and 3. freeze. However, it was in the one writing in 1947, almost more of a theory at the time than a full-blown data-driven work like his others (Cummings [pdf] et al 2016). If the refreezing step ever existed it is not nearly as relevant now in today’s world of continuous change. Plus, as originally conceptualized, Lewin saw the model as applied to levels of group performance as opposed to overall organizational change (Bartunek et al 2015).

Source: 3 Strengths and 3 Weaknesses of OD, by Paul Thoresen, on Medium.

Looking at all of these reasons it is arguable that the two consistent factors across all of them is that of Communication plus Stakeholder Management (both factors that underpin my Practical Framework Approach to Change) as if we didn’t know that already!!! Good grief haven’t there been enough studies by renowned organisations that have told us that over the years. So please tell me why is it that individuals that purport to be Change Manager’s so often do not give these critical factors the importance they deserve? Perhaps they become too engrossed in trying to deliver something within the constraints of an ill thought through plan and the pressures that go with that scenario.

So please let’s stop talking about this mythical 70% failure rate because it has no substance and no facts that support it. The longer we in the change community continue to talk about and write articles on the subject (like this one … LOL) it will continue to damage the reputation of Change Management and the people that practice the profession.

Source: 70% of Change Management initiatives fail – REALLY? by Ron Leeman, on LinkedIn.

If the 70% failure rate is a myth, it explains why:

  • The number never changes, even as change management becomes more prevalent in business.
  • Despite the authors and consultants that tout the failure rate statistic, none of them claim that their methodology has a better success rate.
  • It is only ever used to sell the importance of change management or to get people’s attention in an article. The statistic is not used to help us get better, because there is no data to show us what’s really going on.
Source: It’s Time to Abolish the 70% Change Failure Rate Statistic, by Heather Stagl, Enclaria.

Additional reading

70% of Change Projects Fail: Bollocks!, by Jen Frahm, Conversations of Change

Debunking the 70% Failure Rate of Change Initiatives, podcast featuring Heather Stagl, founder of Enclaria, and Jen Frahm, director of Conversations of Change (2014)

Is the 70% Failure Rate a Myth? by Jason Little (2013)

It’s Time to Abolish the 70% Change Failure Rate Statistic, by Heather Stagl, founder of Enclaria (2014)

Making Change Work (pdf), results of IBM global study, 2008

Stop Using the Excuse “Organizational Change Is Hard”, by Nick Tasler, on Harvard Business Review

Success rates for different types of organizational change, by Martin E. Smith, in Performance Improvement, January 2002 | View abstract

Time to Kill the Phantom 70% Failure Rate Quoted on Transformational Strategy by Gail Severini, Symphini Change Management

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