70% of transformations fail, wasting £258bn annually. Our diagnostic shows whether you are in the 70% or the 30% - and what to do about it
65% of organisations report that they are already involved in, or plan to launch a digital transformation (Smart Insights 2019). Yet research consistently shows that most transformations, digital or not, will fail.
As far back as 1996 John Kotter found that 70% of change programmes fail (Leading Change, 1996) and despite years of change management methodologies and research, McKinsey reported in 2013 that 70% of transformations continue to fail, primarily due to employee resistance (39%) or management teams not adapting their behaviour(33%) (McKinsey 2013).
According to a study by management consultants Genpact, businesses spend £258bn annually on failed transformations.
While failure wastes significant investment, more worrying is the impact of ‘change fatigue’ meaning staff are less likely to participate effectively in subsequent transformations and may increase their resistance to change. This self-fulfilling cycle makes future transformations even more likely to fail.
Understanding what makes successful transformations
At WCL we have put together a team of business transformation experts and academic experts led by Professor Merlin Stone and launched a project to identify the factors that increase the chance of transformation success.
We reviewed thousands of pages of research and talked to many senior business leaders and consultants to identify the essential elements for organisational transformation.
We synthesised our findings to produce our Transformation Readiness Assessment (“TRA”) – creating a way of diagnosing transformation strengths and weaknesses against a research-based benchmark and providing a practical set of actionable insights to accelerate successful transformation and reduce risk.
Our assessment methodology measures organisations against these essential elements, and identifies the recommendations and actions that accelerate successful transformation, delivering sustainable improvements in business performance and reducing transformation risk.
Building on the very latest McKinsey research (Beyond Performance 2.0, Scott Keller and Bill Schaninger, July 2019) the tool provides practical, actionable insights that can be put in place to increase transformation success for any organisation and for any transformation, whether a digital transformation, national policy implementation, cultural transformation, new business strategy, merger & acquisition, company integration, efficiency, or shared services programme.
Planning your transformation
The TRA can be used in advance of a transformation to highlight high-risk areas and put plans in place to address these up-front.
For live transformations the TRA will identify current strengths and risk areas and rapidly identify actions to increase success.
Our highly engaging assessment process will benefit the transformation teams and wider staff, working alongside them to highlight and focus attention on the right things.
Eight Critical Elements
Our research shows that eight fundamental building blocks underpin the success of any transformation and these form the eight sections of the assessment tool.
Vision and End-states: The transformation ambition must be understood by the teams that will deliver it, with good alignment and clear ownership from senior leaders, and with clear links to the business strategy. It must describe the changes needed, and be motivational.
Delivery strategy: The vision must be translated into a comprehensive delivery strategy including all essential elements to deliver the vision, linked to delivering outcomes and business value, and with budgets and people-incentives considered.
Plans, management and resources: Leaders must ensure that agile planning and management systems are in-place, with unambiguous accountabilities and the right skills and capacity to deliver.
Outcomes and benefits: Metrics and milestones should be defined to ensure progress, outcomes and business value are delivered frequently and rigorously tracked
Partners and stakeholders: Delivery partners must be collectively accountable, with stakeholders identified, segmented and involved. Success metrics should be shared appropriately.
Culture: Leaders must understand and demonstrate the required cultural behaviours. Systems and processes should be aligned to support the change, with culture change levers identified.
Change management: Similarly, leaders must ensure teams have compelling pressure to change, with behavioural incentives in-place, and actionable first steps identified.
Governance: The right people must be involved, and the right information available at the right time for managers to monitor the transformation’s progress and trouble-shoot where required
An engaging assessment process
The eight sections of the assessment include 48 outcomes that are highly correlated with transformation success. We seek to find evidence that these outcomes are being met and allocate a score for each one based on how well it is achieved. In this way the assessment is a positive experience, seeking to credit good practice wherever possible and making practical recommendations for improvements where identified.
Our assessment methodology is designed to rapidly gather data and feedback to quickly diagnose key delivery risks.
Following our initial discovery sessions we will review available documentation (transformation vision statement, business case, plans, team structures, budgets, etc) and begin to develop hypotheses to test in more detail.
A tailored questionnaire is sent to identified transformation team members and hypotheses are revised in the light of the analysis.
Interviews are then conducted with identified transformation team members – these are typically selected from a cross section of senior leaders, delivery team members and stakeholders. The interviews are conducted in a relaxed ‘conversational’ style, whilst assessing the outcomes required and seeking evidence to support the points made by interviewees. Our consultants will make clear to interviewees that the process is not assessing the team members, but is about understanding the transformation and its place in the organisation.
Our report will identify the strengths and weaknesses of the transformation and will provide a percentage score for each of the eight essential sections. We understand that all transformations are a work in progress and we aim to present our findings with this in mind. The report findings are underpinned by a set of practical recommendations to de-risk and increase the likelihood of success of the transformation.
A road-map session will agree the timing and ownership of priority recommendations.
Results are presented against a sector benchmark with clear recommendations based on a research-led database of best practice for improving transformation success.
Get in touch to receive more information and to receive a copy of our example TRA report.