"It is not necessary to change..."

I have stated over and over again in this blog that leading and managing change is perhaps one of the most difficult, but also the important jobs for leaders.  To this end, W. Edwards Deming said that "It is not necessary to change.  Survival is not mandatory."  Winston Churchill said, "To improve is to change; to be perfect is to change often."  Unfortunately, most organization-wide change initiatives fail.  Countless numbers of books, articles, white papers, and blogs have been written on how to effectively lead and manage change.  Perhaps the volume of literature on change management is a reflection of the fact that nobody really knows how to do it effectively and successfully.

The management consulting firm Bain & Company surveyed transformation initiatives of 300 large companies worldwide in 2013 and 2023.  They defined "failure" as achieving less than half of what the leaders of the transformation initiative were targeting.  While just over 1/3 (38%) of all transformation initiatives failed in 2013, the percentage of organizational transformation initiatives that failed in 2023 improved to thirteen percent.  While this is certainly an improvement, Bain & Company also noted that the percentage of transformation initiatives with only marginal outcomes (defined as achieving more than 50% but less than 100% of the results that were targeted) increased from 50% in 2013 to 75% in 2023.  As Michael Mankins and Patrick Litre write in their Harvard Business Review article "Transformations That Work", "Instead of pushing their organizations to deliver more, many senior leaders seem to settle for improved but still unexceptional performance."  

Mediocre results tend to signal to employees that the latest organizational change initiative is just the "flavor of the month" and that if they just wait long enough, the status quo will be restored.  Bain & Company found that only 12% of change initiatives produce lasting results!  And, settling for less only breeds the kind of cynicism that will undermine future efforts at organizational transformation.

So how can organizations do better?  What is the "secret sauce" for successful organizational transformation initiatives?  Bain & Company found six practices that are common to organizations that seemed to have figured this all out:

1. Treating transformation as a continuous process.  While most transformation initiatives are structured as a discrete project with a defined beginning and end, the successful organizations are in a constant state of transformation.  Rather than the "flavor of the month", these organizations focus on continuous improvement and perpetual change!  These organizations are in it for the long haul.

2. Building transformation into the company's operating rhythm.  Building on the first practice, the most successful organizations recognize that transformational change is an important part of everyone's normal workflow.  Improvement is embedded in the daily work.  

3. Explicitly managing organizational energy.  The leaders of successful transformation initiatives recognize that organization-wide change tends to fizzle out when it consumes more energy than it creates.  They identify which group(s) of stakeholders will be most impacted by the change and sequence the change so that no one group is expected to alter multiple routines or workflows at the same time.  These leaders also use rewards and recognition to help build energy and enthusiasm for the transformation initiative along the way.

4. Using aspirations, not just targets, to stretch management's thinking.  As Mankins and Litre write, "Relying on benchmarks tends to confine the art of the possible to what others have already achieved, effectively setting the bar too low.  True transformation calls for breakthrough thinking and pushing beyond current practices."  

5. Driving change from the middle out.  Most transformation initiatives are top-down.  The most successful ones utilize a "middle out" approach emphasizing leadership by the mid-level leaders.

6. Accessing substantial external capital from the start.  Transforming an organization can be expensive, and unfortunately in the Bain & Company study, nearly all of the failed transformations were underfunded and under-resourced.  While most health care organizations won't have access to capital markets, it's important that they provide adequate funding and resources to the transformation efforts.  Relying upon the potential cost savings from the transformation to fund itself is neither realistic nor likely to be successful.  

While this article was likely written for large, multinational, for profit corporations, I do think that the six key practices to success may be applied to all organizations.  We've learned a lot about transformation initiatives in the last 10 years, and it will be interesting to see where we are 10 years from now.