POV

Do you have the grit, commitment and resources to make change happen?

The perils of poor change management: What we can learn from three of the biggest company change disasters.

A 2021 Fortune study stated 85 percent of companies are accelerating their transformations. That’s a lot of change. Ironically, although change is the only constant, the 80 percent failure rate of change initiatives hasn’t budged for decades. Change failure is a pervasive problem that has been around for my entire career. The reality is, most companies attempting to change end up failing.

Here’s 3 noteworthy change blunders and what we can learn from them:

LESSON 1: The 2000 acquisition of Time Warner by America Online (AOL) for US$165 billion

The merger was hailed as a game changer for the media industry but ended up being one of the most expensive corporate disasters in history. The deal resulted in massive losses for shareholders and the resignation of key executives. The chairman attributed a lack of change management, leading to an irreversible clash of corporate cultures, as the reason for the failure.

LEARNING 1: Culture doesn’t just eat strategy for breakfast, it can kill change too.

Change initiative failure can also, of course, occur in smaller companies. Many businesses have implemented systems that are never used, with their investment in these systems becoming a complete waste of resources. It's important for companies to recognise change is necessary for survival in today's business landscape. Successful change implementation requires a solid change management strategy, change leaders who can role model and advocate for a different way of doing things, and the adoption of new tools and processes.

Real change needs grit. Real change needs commitment. Real change needs actual resources (budget, time, and people).

Here's some more examples we can learn from:

LESSON 2: The complete redesign of the Snapchat interface in 2018

Five years ago the company thought it was time for a refresh. They made changes to simplify the app’s interface, but the new design made it harder for users to find and interact with the content they knew and loved. This led to a significant drop in user engagement, and thus ad revenue.

LEARNING 2: The earlier you involve end users, the better.

Any change should invite user feedback and testing to ensure the change aligns with their preferences and feedback.

And last but not least… an old classic:

LESSON 3: New product launch ‘new coke’ by Coca-Cola in 1985

There was significant data which led Coca-Cola to believe they should introduce a new formula to their famous soft drink. They dubbed it “New Coke” and had high hopes of market penetration around the world.

LEARNING 3: Data only tells one side of the story.

Coca Cola customers had a strong attachment, and thus emotional connection to the original Coke drink. The company didn’t consider the emotive impact of this change on their customer base.

So, why do we keep failing to change? In my experience, one of the biggest reasons for the high failure rate of change is that many organization’s approach change in a haphazard manner: it’s something that’s done “when there’s a business critical project” or “when there’s leftover budget.” They may not have a clear plan nor communicate changes effectively – if at all – to employees. There may be a lack of accountability for those leading the change, leading to a lack of direction and follow-through.

Another reason is the resistance that exists within many organizations. Resistance is normal; it protected us from unknown dangers in the prehistoric era. Change is often difficult and uncomfortable, and employees will naturally resist changes to their routines. The problem is that organizations don't realize that resistance can be turned into resilience – with effort, intention, dedication and commitment. Instead of proactively engaging and managing resistance, most ignore it or try to beat people into submission. And without proper buy-in from employees and stakeholders, change initiatives falter.

I wonder what would have happened to Nokia if its leaders didn’t resist or deny the realities of the burgeoning smartphone market? A lack of internal buy-in caused the company to exit the mobile phone business in 2014, with Microsoft swooping in to buy it out.

Despite recognizing the potential of the smartphone market, Nokia's executives were hesitant to invest in the new technology and believed their feature-phone business would continue to be successful. They failed to anticipate the speed and scale of the digital disruption, and didn’t adapt quickly enough to changing consumer tastes and market conditions.

Change initiatives are often too focused on short-term results and fail to consider the long-term implications. When organizations prioritize short-term gains over long-term planning and strategy, they may fail to anticipate potential roadblocks or obstacles that could arise in the future. This is a major driver of culture change failure. CEOs are usually remunerated against a rising share price and quarterly results, not long-term metrics such as organizational health.

As I’ve said, the rapid pace of technological advancement and increasing complexity of the business world means that organizations must adapt quickly to stay competitive. However, this can also lead to a sense of overwhelming pressure and uncertainty, which can make it difficult for organizations to effectively plan and implement change initiatives in a clear, logical way.

Change management is a complex and challenging process that requires careful planning, communication and execution. Most organizations don’t give change the priority, investment and attention it needs – hence the stubbornly high failure rate. It’s relegated to the “when we have time” bucket. Newsflash: you need to make the time for change, or face battling resistance all the way to the bitter end.

If we want unconventional results, we can’t keep trotting down the conventional path. But unfortunately - most do.