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This chapter is from the book

Evidence on Change Failure Rates

It seems that 70 percent is only a modest exaggeration: Dozens of surveys place the actual failure rate at around 50 percent, for example:2

  • Fifty percent of mergers (totaling one trillion dollars in the United States alone) fail to deliver value.3
  • Seventeen percent of large IT projects go so badly that they can threaten the very existence of the company, and large IT projects run an average of 45 percent over budget, while delivering 56 percent less value than predicted.4
  • 41 percent of change projects were described as successful in an IBM report.5

Perhaps this success rate is something we have to live with. In baseball, a .500 batting average is stellar. Venture capitalists (roughly) expect big returns on only about 20 percent of projects, break even on another 30 percent, and write off the rest. Is change like this? On the other hand, it is hard to imagine driving a car or using a computer that works 30 percent of the time; we expect 100 percent or nearly so.

The challenge that change failure rates pose for C-level change governance is: Are we being honest with ourselves when assessing costs and benefits, return on capital, and risks of major change? Do the firm’s accounting and capital budgeting processes reflect these failure rates? Do internal and external management consultants’ proposals reflect these failure rates?

The next skeptical question is: What do we mean by change failure? Do failure rates vary by type of change?

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