Why your business transformations fail
05 July 2017 -
It’s time to ask why so many businesses fail to make their plans for development a success. Could it be down to the human factor?
Guest blogger Tom Chapman
All too often in the business world, a grand scheme for expansion or a visionary new innovation has to be given up for a bad job. Leaving behind a gaping financial hole and the tattered careers of the unfortunate fall guys, even the largest and most high profile organisations have had to abandon revolutionary business projects when it became clear they were beyond redemption.
David Hilliard, CEO of strategy execution specialists Mentor, argues that in the vast majority of cases, business transformations fail due to the people in charge of delivering them. He asserts that insubstantial ideas, poor management, miscommunication and fear of ownership are some of the biggest contributing factors to botched business schemes. Here we share his experiences of failed business transformations, along with the after-effects of failure and why effective project planning is so important.
Failing in front of the nation
Although being on the program team of any failed business transformation initiative cannot be easy, we should spare a thought for those who’ve had to admit defeat on a public scale. In recent years, prominent organisations including the NHS and the BBC have suffered widespread humiliation thanks to high profile programs gone wrong.
For the NHS, its National Programme for IT was one such disaster. The House of Commons Public Accounts Committee (PAC) called it one of the ‘worst and most expensive contracting fiascos’ ever, after it spectacularly failed in its aim to digitise all patient records to a central database. The programme cost in excess of £20 billion and was finally terminated in 2011.
In 2013 the BBC had to can its own costly failed endeavour, the Digital Media Initiative. Set up with the similar purpose of digitising video archives, the project was initially a joint enterprise with subcontractor Siemens but was brought back in-house following uncontrolled spending and failed targets. Despite this the bill continued to rise until it topped £100 million, prompting the PAC to comment that the BBC had been ‘far too complacent about the high risks involved in taking it in-house’.
As these disastrous program demonstrate, failure really is universal – making it even more important to understand the reasons why these failures happen.
Pinpointing the sources of failure
With over 20 years helping businesses revive programs on the verge of collapse, Mentor is well placed to identify the factors that doom a business transformation from the very beginning. As David says, in most cases the root of the problem is mismanagement by the programs deliverers, rather than too many obstacles or a reliance on new systems. In fact, the human factor is the single most important aspect of your business transformation and whether or not it is successful.
Most fatal mistakes occur during the all-important planning stage of a complex program, such as the decision to progress with an impractical and underdeveloped concept. Even with a solid idea behind it, a program subject to unrealistic deadlines and objectives from on high can’t hope to make it to fruition.
Choosing existing staff to lead a business transformation at the same time as carrying out their other responsibilities, instead of appointing a dedicated team of managers, also sells a program short. Problems that crop up can be easily missed or misjudged by part-time project leaders trying to juggle a multitude of tasks, and these problems can snowball until it’s too late to do anything about them.
Add to this an uncertain or even non-existent chain of command, and not only does confusion abound as to whose job it is to do what, but there is no one taking responsibility for the program as a whole. When things start to slide, the temptation for each program team member to hide the evidence and go on the defensive may become too great to ignore, and they each take steps to ensure they won’t be left accountable for the disaster waiting to happen.
Inevitably, a program on the path to destruction will attract the attention of its stakeholders, whether through one too many missed deadlines, unsuccessful objectives or a budget stretched to breaking point (or all three). But as they realise it’s also their names at stake, they may try a last-ditch attempt to turn things around by throwing even more money and effort into a project that is already dead in the water.
Paying the price of a failed program
It’s difficult to underestimate the cost to a company of a failed business transformation initiative but what we do know is that for every £1 billion spent on projects in the UK, £138m is wasted due to poor project performance. It can leave a business staggeringly out of pocket, with its reputation in shreds and the people deemed liable out of a job.
Recovering the funds spent on the abandoned project can take months or even years, and can have a negative knock-on effect on every other area of the business. At a time when a cash injection is desperately needed, any potential investors are likely to be deeply put off by a company’s poor performance. If news of a big failure becomes public knowledge, the harm done to the standing of a business can take a very long time to shake off.
In many cases, plans that end in failure originate from a CEO who is beyond reproach, so it usually falls to the senior managers to take the blame. Losing a job in such a way can have long-lasting, or even permanent effects on employability for those that are held responsible.
Learning from these mistakes
Being aware of the crucial role played by people in charge of a business transformation, and of the threat posed by appointing the wrong ones, stands a company in good stead when looking to undertake a new program. The best managers will take time to thoroughly plan and strategise a program in its early stages, so as to mitigate the fallibility of the program deliverers. And don’t forget that there is also a wealth of expert guidance available from the professionals in programme delivery, designed to prevent the costly and far-reaching effects of a failed business transformation.