Why Transformation Fails Before It Starts

Summary

Transformations rarely fail on technology. They fail on people: caution, fear, fatigue, lack of focus, and above all no shared view of what success requires. ADKAR, Kotter, and Lewin each help with part of that, and each breaks somewhere. Three horizons thinking gives teams a language to decide how much change they need and where to put it, and the work starts with an honest look at the organisation’s own capacity to change.

Why transformation is hard

Large-scale organisational change was never easy, and today’s environment adds complexity on top. The high failure rate of digital transformations is a risk signal every company should read before it starts.

Before a transformation, three questions are worth asking:

1. What is the digital maturity of our business?
2. How do we stand out from competitors in the new digital landscape?
3. How do we know our digital investments make business sense (Rauser, 2016)?

In theory and in practice, transformations have the best chance when they focus on four actions that change behaviour and mindset (Basford and Schaninger, 2016):

• building understanding and conviction
• reinforcing change through formal mechanisms
• developing talent and skills
• role modelling

Three change models, and where each breaks

ADKAR

Jeff Hiatt, a change manager and former engineer, built ADKAR around goals to reach rather than steps to follow (Hiatt and Trimble, 1998): Awareness, Desire, Knowledge, Ability, and Reinforcement.

Strength. It helps employees understand, take part in, and carry out change. As a goal-focused model it adapts easily to a company’s culture and structure, and its focus on people makes employees feel the employer cares (Hiatt, 2006).

Limit. It was built for incremental change and its focus is narrow. For macro-level change, or when it is unclear how deep the transition goes, it is likely to fail (Warrilow, 2010).

Kotter’s eight steps

John Kotter, professor of leadership at Harvard, derived the model from 100 organisational transitions. He addressed the people affected by change rather than the change itself (Kotter, 2010).

1. Establish a sense of urgency
2. Create the guiding coalition
3. Develop a change vision
4. Communicate the vision for buy-in
5. Empower broad-based action
6. Generate short-term wins
7. Never let up
8. Incorporate the changes into the culture

Strength. It helps bring resistant employees along, prepares people to cope with change, and gives communication its building blocks (Todnem By, 2005).

Limit. It is top-down. Feedback only enters at step four, so frontline employees get little room to respond (Eisenbach, Watson and Pillai, 1999).

Lewin’s three steps

The psychologist Kurt Lewin built his model to help leaders facilitate and understand transitions (Lewin, 1947).

• Unfreeze the status quo with a compelling message that makes people let go of how things have always been done. Emphasise the why.
• Change with clear communication, kill rumours, and involve people.
• Refreeze by anchoring the change in the culture and finding ways to sustain it.

Strength. It is easy to digest, the visual language makes the required actions clear, and it lets us think past quantitative analysis (Burnes, 2004).

Limit. It does not say how to deal with people who resist. It assumes enough encouragement wins everyone over, and gives no guidance for the cases where it does not (Burnes, 2004).

What makes transformations fail

“Every industry and every organisation will have to transform itself in the near future. What is coming at us is bigger than the original internet, and you need to understand it, get on board with it and figure out how to transform your business.” Tim O’Reilly, founder and CEO of O’Reilly Media

Ten factors recur: excessive caution, fear of the unknown, lack of focus, running out of money, lack of talent, lack of discipline, failure to learn, change fatigue, going it alone, and going too slowly. The common thread is the lack of a clear understanding of what matters for the success of the programme (Arora et al., 2017).

Three horizons

Three horizons thinking helps make sense of cultural transformation and supports wise action under uncertainty (Sharpe, 2013). Teams get a shared language, which frees creativity to navigate towards a viable future. It shows how today’s decisions shape tomorrow, and it surfaces the different orientations individuals bring to the horizon. Left unaligned, those orientations quietly hurt decision quality and team cohesion. The model stretches thinking across the short, medium, and long term and makes uncertainty easier to handle (McGrath and Macmillan, 2014).

• Horizon 1: operating in the now. The part of the innovation space closest to existing services. The focus is cost-cutting and efficiency. Innovation is incremental because market knowledge is high and risk is relatively low (Wright, 2017).
• Horizon 2: looking ahead. New capabilities in existing markets, or existing capabilities in new markets. The transition between incremental and disruptive change (Hill, 2017).
• Horizon 3: the future. Where the biggest change happens. New markets are created or existing ones disrupted. Teams here build new capabilities or technologies, new segments or markets, or both.

Who feels the change

Change is constant. The questions that matter are whether the innovator understands the size and scope of the change they are creating, and whether they can shape the change their company needs to sustain itself.

Customers must adjust their behaviour to a new feature or solution. If the change offers more value than existing options, they will find it reasonable (Keeley, 2013). Innovators are not immune either. Any innovation that radically affects customers or an industry sends ripples back to the innovator.

Competitors and the industry meet a new reality when norms or customer behaviour shift. For the innovator that means adapting processes and business models continually, changing while building the new product.

Where to start

Recognition. Assess existing capabilities and expectations. Do we understand how innovation and change interact here? Do we know how to raise the pace of innovation? Does our strategy align with change?

Framing. Use the model to decide which resources and how much time go to each horizon. Talk about the risks you expect and the return you want. Check that you have the skills to win the chosen strategy, and focus innovation on the selected horizon.

Building capabilities. Once you know your current ability for change and the innovation needed across the three horizons, you can see how much change, and how often, is required. That builds the capability to innovate more efficiently and the capacity to change faster.

Ethics

• Employees. Keeping them is a core responsibility when leading change. Assess the impact on them while you plan.
• Disruption. Change disrupts everyone involved. Plan for the outcomes.
• Communication. Keep communication honest and open, internally and with the public. Transparency during change protects the trust that existed before it.
• Teamwork. Give everyone in the process a stake in the outcome. Treating people ethically leads to better results in the long run.

References

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12. McGrath, R. and Macmillan, I. (2014). Discovery-Driven Growth. Boston: Harvard Business Review Press, p.198.
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17. Wright, T. (2017). McKinsey’s Three Horizons of Growth Can Help You to Innovate. Cascade Strategy.