Exploring trends and developments
in project management today.
Change Management: The Horror of it All
2010
The failure rate of all significant change initiatives is approximately 70%. A recent reader of an article on my website challenged me regarding the source of that often quoted statistic. Here is a brief summary of a cross section of sources that I sent her and that reveal the horror of it all.
A global survey conducted in 2008 by McKinsey and Company offered the insight that organisations could only hope to survive by constantly changing, but approximately two thirds of all change initiatives fail.
In a recent "Call for Papers" for the Journal of Change Management,for a special issue entitled, "Why Does Change Fail and What Can We Do About It?", Professor Bernard Burnes of Manchester Business School makes the observation that whilst this does seem to be an astonishingly high rate of failure, it is in line with most of the literature on change, which consistently quotes failure rates of between 60% and 90% (Burnes, 2009). For example, consultants Bain and Co claim the general failure rate is 70%, but they indicate that it rises to 90% for culture change programmes. And in relation to the failure rate of BPR initiatives, prevalent in the 1990s, Hammer and Champy (1993) claimed a failure rate of 70%.
According to "Research Findings on Program Failure and Success" by Patrick Morley, Ph.D. Chairman and CEO of Man in the Mirror, "Two thirds of Total Quality Management (TQM) programmes fail, and re-engineering initiatives fail 70% of the time" (Senge, 1999). "Change initiatives crucial to organisational success fail 70% of the time" (Miller, 2002).
A Computer Weekly study in 2003 of 421 IT projects revealed the following:
- 16% of all projects successfully completed (that is they were delivered in scope on-time and on-budget).
- 75% of all projects were "challenged" in the following ways:
- 35% behind schedule.
- 59% over budget.
- 54% under-delivered on planned scope.
A survey conducted by the Standish Group in 2003 showed that 66% of IT projects are either totally abandoned or fail against a measure of budget, scope, time or quality, i.e. "challenged."
It has been estimated that the cost to US business of failing or abandoned IT projects runs into hundreds of billions of dollars.
Closer to home, the UK Labour government have wasted 26 billion pounds on failed projects. An investigation by The Independent newspaper has found that the total cost of Labour's 10 most notorious IT failures is equivalent to more than half of the budget for Britain's schools in 2009.
The world of mergers and acquisitions fares little better. The value enhancement trend for 10 years of KPMG International's Manda survey shows that on average only 28% of mergers have resulted in enhanced shareholder value, whilst an average of 36% have led to a reduction in shareholder value. This value assessment is based on company share price movements relative to average industry sector movement during a two-year period.
In the film Apocalypse Now, the anti-hero Colonel Kurtz mumbles through the closing sequences:
"...the horror...horror has a face...and you must make a friend of horror..."
Any impartial assessment of all of the main types of significant change initiatives reveals the sheer horror of the colossal human and financial wastage perpetrated by organisational and political leaders.
The knowledge of how to successfully lead and manage change is out there in the public domain in a growing body of easily accessible work.
So it must be an appalling combination of ignorance and arrogance that causes the organisational and political leaders who preside over this litany of costly failures to be so desperately under-prepared as they embark on further change initiatives without facing (let alone making a friend of) the horror of change failure.
Or, god help us, has the marginal rate of increase in change now largely overtaken many organisations' capacity to deal with it? 
Stephen Warrilow, based in Bristol, works with companies across the UK providing specialist support to directors delivery significant change initiatives. Stephen has 25 years cross sector experience with 100+ companies in mid-range corporate, larger SME and corporate environments. Stephen invites you to equip yourself to avoid the 70% failure rate of all change initiatives with the "Practitioners' Masterclass" 
leading your people through change, putting it all together and managing the whole messy business.
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The Curious Case of the CHAOS Report 2009
The Standish Group collects information on project failures in the IT industry and environments with the objective of making the industry more successful and to show ways to improve its success rates and increase the value of the IT investments. The latest results have been compiled into the CHAOS Report 2009 published by the organisation in April.
Change Management: 3 Key Reasons for the Catastrophic 70% Failure Rate
Failure reasons in change management are many and varied. But one thing is painfully clear. Any organisational initiative that creates change, or has a significant change element to it, has a 70% chance of not achieving what was originally envisaged. There are 3 main reasons for this catastrophic failure rate.
Three Myths About Organisational Change
Our beliefs about what change is and how it works can influence our willingness to take on the challenge appropriately. Change agents who believe these three myths might find their initiatives stuck in a rut. If you feel like your change initiative is getting stuck, challenge these myths and look at change from a new perspective.
Understanding Change in a Quality Culture
In any improvement process, managing the influence of change and the anti-change culture that will continually try to raise its head will be one of the most ardent tasks. Learn to deal with this as effectively as you do the project management itself. There are many well-written books on the subject of change in every category of change that you could imagine.
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The popular project management e-book now fully updated and available as a website for the first time.
Being a tool vendor, like George, there is a part of me that likes these types of posts, as they provide great fodder to feed the fear of prospects and drives them to look to technology to help mitigate the horror you so aptly describe.
That said, the real truth is, no tool can do that without first the people using it, and their leadership, embracing change as a friend rather than enemy. Egos, arrogances, politics, prejudices, and even just plain laziness need to be put aside in order for this to happen. That is certainly way easier written than done, and thus why the metrics that make up your survey results are so eye-popping.
Still, even if companies were able to control all that, some initiatives would fail just because they were bad ideas to begin with, but then hindsight is always 20-20. As George points out, we should learn from our mistakes. However, it is our ability to take risks and work towards change that drives growth.
Come to think of it, one could even argue that given the costs of failure are so high, that it is really these failures that drives the economy, so cutting that rate would in fact cause harm.... ;>)
I think that a big part of the "horror" is that business don't capture their projects' history and data in a useful way, including the initial basis or justification for cost, time, and resource estimates. Where and when the risks associated with individual project tasks are estimated at the beginning of a project, there are usually no real quantitative basis for those estimates, nor are the basis for those estimates revisited in a "lessons learned" exercise at the end of the project.
So when managers say that a project failed because it went over estimated budget, time, and/or resource requirements, it is useful to ask on what basis those estimates were drawn in the first place. It may be that the project was doomed to fail because of overly-optimistic estimates, not because of poor execution. I suspect that the real reason for the "failure" of many projects is because the requirements for success in the initial scope were overly optimistic to begin with.
I wrote a blog post called "Learning to predict project success the same way meteorologists predict rain" that talks about a better approach to estimating and understanding project risk. You can read it here: http://bit.ly/dCX3qJ