Research Finds Almost Half of Change Initiatives at U.S. Corporations Are Failing to Meet Goals
Study indicates many leaders lack a clear understanding of their investments and how they're paying off
WALNUT CREEK, Calif. — February 5, 2008 — At a time when rapid change is impacting nearly every industry, and the ability to adapt is business-critical, corporate America is still proving weak at turning change efforts into real results. A new study commissioned by Pivotal Resources, a global change leadership consulting firm, reveals that marketplace pressures are driving change projects to be a top priority at most companies, but almost half of the respondents indicate that a significant number of change projects failed to meet their stated goals.
“A business's ability to get the most value out of change investments — whether they're reorganizations, new ventures, process improvements, IT systems, etc. — is absolutely critical to staying ahead in today's competitive, global environment,” said Pete Pande, president and founder of Pivotal Resources. “This study strongly indicates that managers and leaders really don't have a clear idea of what their investments are, or how they're paying off.”
According to the research, more than a third of the respondents (38 percent) undertake a small number of change initiatives per year (1-5 projects). Yet the top reason reported for failed change efforts is having too many “top” priority projects and the inability to coordinate them across the organization.
“We're surprised at the low numbers of change initiatives that many of the respondents say are undertaken each year, especially when they also say that they often have too many high-priority initiatives than they can handle,” explained Pande. “This suggests that there is not enough clear ownership or scrutiny of the ‘change portfolio’ — or the process for deciding what are the most important projects to work on.”
Interestingly, when asked about the success of these projects, C-level executives were twice as likely to judge change projects as “almost always” successful as non-C-level managers.
“We can't say for sure why senior executives are so much more positive about the success of change efforts than their subordinates. Perhaps they're better informed because they have a bigger picture view,” explained Pande. “Or they may instead be more out of touch with what's really going on. I tend to suspect it's the latter, based on my experience as well as how the two groups assess their specific areas of weakness.”
“Caretaker leadership is a thing of the past. Success today is about making change happen, adapting to external forces, and doing both while keeping the organization on an even keel,” added Pande. “This research is one of the ways we're trying to help our clients and businesses at large better understand how they're doing and what they can do to become masters of change and progress.”
Among other key findings of the study:
- On average, companies spend 6-12 months on each initiative; 74 percent of change projects are reportedly completed in under a year
- 34 percent of respondents said they “often” have more “high priority” change/improvement projects than they can reasonably handle; 10 percent said this is standard practice
- More than a third (35 percent) of respondents believe too many independent or disconnected initiatives are launched in different areas of the organization
- Only 19 percent of those surveyed thought change “always succeeded”
The study examined a cross section of American corporations — from different industries and geographic regions — and drew 564 responses from both C-level executives and mid-level managers. Conducted by independent research firm Core Strategies, the survey has a statistical margin of error of plus or minus 3 percent.