Why do most transformation initiatives fail? Setting out on a change program without clear business outcomes is like setting out on a journey of 1,000 miles without a map.
I recently heard a gifted speaker cite an article in Harvard Business Review that found 70 percent of transformational initiatives fail. I, for one, am not surprised. Back in the '90’s, I worked for a research and consulting firm that conducted a similar study on the success rates of large initiatives (many were ERP implementations, but we didn’t limit the scope to that) and found that two-thirds failed. I guess not much has changed in 20 years.
Back then, we found the most common characteristic of failed change programs was the lack of clearly defined business outcomes. Poor organizational change management came in a close second; it had a nearly 1:1 correlation with the first. Though most change programs had goals, they were not stated as clear business outcomes.
Over the course of 20 years in consulting, I have found almost nothing scares buyers and service providers more than clear outcomes. The cynic in me believes this is because clarity necessarily leads to accountability, turning squishiness into a job preservation strategy.
What is a clear business outcome? It’s an outcome that is valuable, has purpose, is measurable, and can be time-boxed. Here are some examples of good ones:
- We will increase profitability by 15 percent by the end of 2017, by launching a new product every 11 days.
- We will become the best management consulting employer in the world by 2020, as measured by retention, peer recommendation and employer brand score.
- 100 percent of our clients will be willing references by 2018.
Weak business outcomes are nebulous, apple-pie statements:
- We will become extraordinarily profitable by launching new products people want.
- Our employees will love working here and will tell people about it.
- We will be relentlessly driven by customer satisfaction.
See the difference? Among the most powerful things you can do for your transformation is to be clear about when you can declare victory. The reasons are obvious.
Transformation—if nothing else—is a rallying cry for change, and organizations hate change, so they will default to resistance without a finish line in sight. Clear business outcomes allow you to set checkpoints along the way to make sure you are moving toward achievement, and they let you clear obstacles because the destination is understood by all and sanctioned by management.
These principles have been proven again and again over the past 20 years, but most organizations fail to apply them even when the consequences easily reach the hundreds of millions of dollars on a single initiative! Setting clear business outcomes is not a silver bullet, but without them, achieving your big honking change, whether it involves cloud, digital, ERP or HR, is almost certainly doomed to fail.
Why have I chosen this topic for an outsourcing blog? The technology environment in most large enterprises today blurs the lines between managed services and big, audacious change programs. And we all know outsourcing can be a big audacious program itself. Ultimately, I want organizations and their service providers to spend less and get farther. This is one lesson they shouldn’t have to learn over and over again!
This post originally appeared on CIO.com.
About the author
Esteban is a published outsourcing thought leader passionate about the opportunities of globalization and specialization in the industry. A recognized speaker and author, Esteban advises organizations on issues of business process and IT outsourcing on- and offshore. He has leveraged a deep understanding of business strategy to help clients align their sourcing initiatives with their vision. Through his involvement in hundreds of enterprise-size outsourcing initiatives, he has developed unique insight and the ability to ask the right questions to set an organization on the correct outsourcing path. Esteban brings deep international experience to his clients, having lived and worked in four continents. He is the author of the CIO.com blog Informed Outsourcing.