What evidence is there this is actually true?
This week’s ‘Caveat Emptor’ investigation probes the murky world of research into organisational transformation. Is it really true that ‘70% of organisational transformation efforts fail’?
The claim initially attracted the attention of our investigators because this tripped three separate alarms we apply when assessing ‘suspicious’ statistics.
Firstly, the research evidence behind this particular claim is rarely stated nor is essential contextual information provided. For example – what does ‘fail’ actually mean in organisational terms. Organisational collapse? Mass redundancies? Financial disaster? Mild inconvenience for users? A poor return on the investment originally projected? The claim is meaningless without understanding what criteria were applied.
Secondly, it seemed very unlikely that any genuinely evidence-based research study would result in a statistic that rounds precisely to 70 per cent, applicable in all conceivable circumstances!
Finally, this particular claim is made most vocally and insistently by vendors offering advice, products and services to organisations engaged in, or contemplating digital transformation. These vendors arguably have a compelling economic motive to promote such a claim. If transformation is demonstrably very challenging, then the need for third party support becomes more pressing and the budgets for mitigating risk correspondingly large!
The phrase in bold above leaps off the page and will probably be familiar to many working in the field of organisational transformation.
Similar claims have been made by a wide range of commentators. Take a look at this Google Search and you will see what we mean! This statistic certainly looks like a well-established fact, so why would anyone ever dream of questioning this?
On September 30th 2019 a ‘Customer Experience Futurist, Author and Keynote Speaker’ made a typically bold statement in the opening line of her Forbes article: ‘Companies That Failed At Digital Transformation And What We Can Learn From Them’:
As in other cases we explored, Morgan broadly attributes the evidence for this statistic with a link to a generic McKinsey webpage, but this does not contain any content of value to our investigators in substantiating the claim.
However we had a breakthrough when we unearthed a 2011 study in the Journal of Change Management, led by the University of Brighton researcher Mark Hughes.
The abstract explains that Hughes critically investigated five separate published instances identifying a 70 per cent organizational-change failure rate. In each instance, his review highlighted the absence of valid and reliable empirical evidence to support the espoused 70 per cent failure rate. Whilst the existence of this popular narrative was acknowledged, he found absolutely no valid and reliable empirical evidence to support the claim.
Please download the full report and read this for yourself!
As you will see, Hughes traces the mythical 70% failure rate back to the 1993 book ‘Reengineering the Corporation‘, in which authors Michael Hammer and James Champy stated:
From that point on, Hammer and Champy’s “unscientific estimate” took on a ‘wildfire’ life of its own.
A 1994 article in the peer-reviewed journal Information Systems Management presents Hammer and Champy’s estimate as a fact and changes “50 percent to 70 percent” to just “70 percent.”
In Hammer’s 1995 book, The Reengineering Revolution, he valiantly attempts to set the record straight:
There is no inherent success or failure rate for re-engineering.”
Sadly, despite Michael Hammer’s belated attempts at clarification, the 70 percent estimate has continued to be cited as fact right up to the present day. – It proved impossible to get the toothpaste back into the tube!
So where does McKinsey come back into this tangled story?
Well – according to this HBR article by Nick Tasler, back in 2008 McKinsey surveyed 1,546 executives. 38% of their respondents said “the transformation was ‘completely’ or ‘mostly’ successful at improving performance, compared with 30 percent similarly satisfied that it improved their organization’s health.”
It was clearly tempting for those wedded to the 70% narrative to claim that since only 30-38% of change initiatives are “completely/mostly successful,” then 62-70% must be failures.
However, we understand the McKinsey authors added that “around a third [of executives] declare that their organizations were ‘somewhat’ successful on both counts.”
In other words, a third of executives believed that their change initiatives were total successes and another third believed that their change initiatives were more successful than unsuccessful. Under a third therefore admitted to having been involved in a transformation that was ‘completely’ or ‘mostly’ unsuccessful.”
This clearly does not sustain the 70% failure narrative!
In summary, this weeks ‘Caveat Emptor’ investigation reveals no evidence to support the notion even half of organisational change efforts fail. If you see statements to the contrary being made please ask to see the supporting evidence. If none is provided please set the record straight. We are unlikely to get the toothpaste back into the tube but at least we can try to clean up the mess!