We found the real reason 70% of transformations fail

Corporate transformations face a high failure rate, hovering around 70%, and this statistic has remained unchanged for decades. Despite significant advancements in various fields since the 1980s, such as digital innovation, genomic mapping, and autonomous vehicle development, we have not seen a corresponding improvement in managing successful organizational change.

The ramifications of these failures are significant. Shareholders experience capital losses, customers are left with subpar services, and employees suffer from the repercussions of wasted time, energy, and confidence. The aftermath of unsuccessful change initiatives leaves lasting scars on organizations, diminishing their capacity for future adaptability.

Why Change Programs Fail

Our extensive research has sought to unpack this enduring issue. Through leading large-scale transformations across diverse sectors and conducting surveys with over six thousand executives and employees from fifteen countries, we have gained substantial insights. Additionally, interviews with more than fifty executives and behavioral scientists, alongside an analysis of fifty years of behavioral science evidence, further enrich our understanding.

Our findings suggest that the failure of change initiatives is not predominantly due to employee resistance but rather a fundamental misunderstanding by leaders regarding the dynamics of human change. When organizations falter in their transformation efforts, it's typically not attributable to flawed strategies or lack of market opportunities, but rather a neglect of the psychological and emotional aspects of human behavior during change.

Real-World Scenarios

To illustrate this, consider a scenario where executives do not deliberately withhold critical information about a planned change from employees. However, they may communicate updates belatedly, assuming employees are inherently supportive. Alternatively, they might postpone announcements until the strategy is fully developed, mistakenly believing that premature disclosure could create distractions.

In another case, after addressing years of dissatisfaction regarding a flawed business process, executives implement a new process but neglect to allocate sufficient resources or time for retraining employees. This oversight stems from an overestimation of employees' existing knowledge and motivation concerning the new procedures, along with an underappreciation of the challenges in altering established habits.

The False Consensus Effect

In both scenarios, leaders are influenced by a cognitive bias known as the false consensus effect, which leads them to mistakenly believe that their views and experiences are more widely shared. Often, executives may feel enthusiastic, urgent, and motivated about proposed changes; our research indicates that nearly 70% of executives express positive sentiments about changes they are not fully informed about. They erroneously assume this positivity is mirrored among employees, when in reality, employees frequently experience anxiety, overwhelm, or frustration. As a result, employees require significantly more attention, communication, and support than leaders typically anticipate.

A Simple Mindset Shift

The encouraging news for leaders is that enhancing the success of change initiatives can commence with a straightforward mindset shift. Successful leaders treat employees as the primary beneficiaries of the change, akin to customers of a product. They demonstrate a keen interest in how employees experience the change, proactively striving to understand and improve that experience. By focusing on making the change process more efficient and manageable, they counteract the false consensus effect.

Applying Behavioral Science

In the most effective transformation efforts, leaders leverage principles from behavioral science. Research indicates that individuals tend to place higher value on products or outcomes they have contributed to—a phenomenon known as the IKEA effect. In the context of change, employees who actively participate in shaping the transformation exhibit greater commitment to its successful implementation.

Another relevant concept is the endowed progress effect, which highlights that individuals are more motivated to pursue goals when they perceive that initial progress has been made. Thus, leaders who consistently recognize and communicate early successes can cultivate a sense of momentum among employees, significantly enhancing their likelihood of achieving further successes.

The Behavioral Root

Ultimately, the root issue of transformation failures is not primarily strategic, financial, or operational; it is behavioral. For future change initiatives to be more successful, leaders need to deeply engage with the behavioral tendencies of those involved. While this endeavor is inherently challenging, the emergence of a science of change offers valuable insights. Leaders who are willing to embrace and apply this knowledge will find themselves better equipped to overcome the odds stacked against successful transformations.