AT A GLANCE

• Mergers, acquisitions, and reorganizations are a reality of the business world. But two out of three transformation initiatives fail.
• There are three fundamental concepts that determine the success of a change project: purpose, control, and transition.
• By respecting those three criteria, one could ensure that the reorganization project would be successful.

Mergers, acquisitions, and reorganizations are a reality of the business world. That said, the majority of such projects fail to yield the intended results. Studies show that in most organizations, two out of three transformation initiatives fail. 

“Studies show that in most organizations, two out of three transformation initiatives fail.”

The methodology, terminology, and ideology aside, our experience shows us that there are three fundamental reasons why change projects fail. Let’s go over them one by one.

PURPOSE

According to the Wall Street Journal, 39.2 percent of Americans are employed at either large or giant corporations, while 26.5 percent worked at mid-sized companies. In other words, every two out of three people are working for a corporation. That’s why let’s start by unearthing the meaning of the word “corporation.”

The word corporation originates from the corpus, which means body. Following the same logic, corporate means “united in one body.” Finally, a corporation can be translated as “persons united in a body for some purpose.” The keyword that we should focus on is purpose.

“Corporation” can be translated as “persons united in a body for some purpose.”

All reorganization projects have a particular goal: To trim the fat, to save cost, to increase efficiency. While those are concrete business objectives, however, they are not purposeful. That’s why, for a reorganization project to work, the change initiatives should be linked to the shared purpose of the organization.

Lesson 1: For a change initiative to yield the intended results, it should be tied to the organization’s shared purpose.

CONTROL

Let’s continue by analyzing the origin of the word “reorganization” and see how its meanings have changed over the years.

The etymologic root of the term reorganization is evident: organ, organic, a living system. Interestingly, though, in biology, there is no such thing as RE-organization. Biologists point out that life evolves through SELF-organization. 

Living systems do not need outside assistance to evolve. They determine their destiny. Granted, an outsider could influence the process by guiding it towards a specific direction. But it cannot control it.

“An outsider could influence the transformation process by guiding it towards a specific direction. But it cannot control it.”

As Margaret Wheatley once said, “All this time we have created trouble for ourselves in organizations by confusing control with the order.” We can see the manifestation of that confusion in two areas. The first one is how organizations are built: Almost all corporations have a top-down structure, having a Pyramid-shaped organizational chart.

The second one is more subtle: it is the language we use. Without knowing, most business professionals use battle metaphors in their everyday communications. Words and phrases like a campaign, rally the troops, follow the leader, deadline, even recruitment are jargons borrowed from the military. Not surprisingly, the military is the ultimate command-and-control structure build by humanity.

Ironically, the yearning to have complete control over organizational change contributes to the demise of the initiative. If we want to change that, then we should start thinking about organizations less as lifeless things to be controlled and more as living systems to participate.

Lesson 2: For a change initiative to yield the intended results, we should let go of our desire to control the process. Instead, we should focus on influencing the direction of the change.

TRANSITION

aspect that determines whether your business transformation efforts would succeed or not. Any transformation effort involves change. But as William Bridges said, “Change is something that happens to people, even if they disagree with it. On the other hand, a transition is internal: it’s what is going on in people’s minds as they go through change. Change can happen very quickly, while transition usually occurs more slowly.” Put simply, change is what happens to you; the transition is how you experience that change.

“Change is what happens to you; the transition is how you experience that change.”

All transitions have three stages: Ending, neutral zone, a new beginning. Arguably the most important yet most often ignored part is the middle stage. That is a frustrating and challenging time of “both not anymore, and not yet.” It is also the least prepared for the stage.

Consequently, one of the reasons why two out of three transformation initiatives fail is that project managers often focus too much on the process, overlooking the transition.

Lesson 3: For a change initiative to yield the intended results, the emphasis should be on “transition,” which is going on in people’s minds as they go through change.

PUTTING IT TOGETHER

At its essence, every organization forms from shared interests. So, the first step of any reorganization project should be to discover the corporation’s shared purpose. Shared purpose, alongside sacred values, pull and keep people together. Identifying and sharing those ideas would help contain an organization during times of rapid change.

As discussed above, change is not something to be dictated, demanded, or forced to an organization, but something that the organization must willingly participate in. Once we fully buy into that idea, then we would let our desire to control the process. 

Finally, focusing equally on transition (the psychological aspect of reorganization) on change (the implementation leg of change) is vital. Acknowledging and planning accordingly for the transition part of change could make a big difference.

“A reorganization is not a bad thing. Not understanding its essence, process, and logic, however, is.”

A reorganization is not a bad thing. Not understanding its essence, process, and logic, however, is. If we discover the shared purpose of the organization, let go of our desire to control, and focus on transition as much as we do on change, then we would ensure that our reorganization project will be successful.