Why Corporate Initiatives Fail

Portrait of a young business man looking depressed from work isolated over white background in studio

According to the Cambridge Dictionary, one definition of initiative is. “A new plan or action to improve something or solve a problem.”  In corporate parlance this often translates into yet another short-term and often politically correct effort to demonstrate forward motion/social citizenship.  Often forgotten faster than the evening news cycle as new searches for performance take their place.

Organizations of all types, public, private, profit and nonprofit etc. tend to announce new initiatives with great fanfare and pronouncements about ‘transforming our culture.’  So why do they continuously fall short of expectations?

According to a Forbes Survey released just before the pandemic, “When participants in our survey were asked to create a list of reasons for (change programs) failure, ‘insufficient budget’ was cited by 23% and ‘insufficient time’ by only 17%.  Instead, participants ranked poor communication (62%), insufficient leadership and support (54%), organizational politics (50%), lack of understanding of the purpose of the change (50%), lack of user buy-in (42%) and lack of collaboration (40%) as the most critical issues.”

In aggregate, the article suggests a total failure rate of70%.  This percentage level was first put forth in the early 1990s and is accepted by many as still correct today.  While empirical evidence is sketchy, none-the-less, the perception of failure remains high.

This tracks with other project failure statistics this author has seen over the years.  Yet, all of these failure attributes are human and therefore, manageable and correctable.

Today’s Buzz

The economy is always front and center.  More so today given Inflation and Supply Chain problems.

In this blogger’s opinion and in order of priority other key issues include Diversity, Inclusion and Equity (DEI), Climate Change and Environmental, Social and Governance (ESG).  While different organizations may face other challenges, these Four tend to dominate the news.

Often issues overlap or compound, thus exponentially amplifying the impact on society.  For example, the electric vehicle (EV) is touted as a lynchpin to ‘fixing’ the Climate Change issue.  However, supply chain issues currently limit battery production and one can surmise this is a long-term problem and not simply current shortages or delays.  If this is correct, meeting desired climate metrics is problematic.

Diversity, Inclusion and Equity

Perhaps the most emotional of the Big Four, DEI seeks to level the so-called playing field for all regardless of ethnicity, gender or behavioral preferences.  Almost all organizations have a DEI Initiative underway.  Yet, they seem to be stalling much to the frustration of advocates.

According to one source, “The DEI industry is dominated by what scholars call ‘personnel managers,’ employees in human resources.”  This is also the observation of this pundit as well.

LinkedIn profiles include, Chief Diversity Officers, any number of DEI consultants and others carrying similar titles as well as commercial organizations offering DEI products and solutions.  Much like the plethora of Safety Culture ‘experts’ and tools that emerged after Deepwater Horizon offshore drilling rig disaster in 2010.

From a recent Korn Ferry article, “Experts say companies must treat DE&I as they would any other business issue and use data analytics to understand why things aren’t working.”  This author interprets this to mean that DEI must be incorporated into ‘the way we do business‘ or part of the organization’s culture.

No longer a simple initiative, the next Chief Diversity Officer may be a Caucasian male or even redundant.  Then, DEI will no longer be seen as a separate and different department.

Energy Transformation

The president of the United States recently said, ““ it comes to the gas prices, we’re going through an incredible transition that is taking place that, God willing, when it’s over, we’ll be stronger and the world will be stronger and less reliant on fossil fuels when this is over.”  As many countries implement Climate Change policies, this transition is economically rough to say the least.

And with no guarantees that these efforts will actually reduce the earth’s temperature decades out, is this a Big Bet with major consequences to all of us.  In our last blog, Innovation: The Key to the Global Future we addressed the economics in detail.  Interested readers should refer to that piece.

An extensive assessment was developed by Bjorn Lomborg in his latest book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.  His credentials include the fact that he believes in global warming and is not a ‘denier’ as the phase goes.

Caution to the lemmings jumping off the Energy Transition cliff, this is the ultimate initiative as it is political by nature.  Fickle by nature, political winds can change quickly and with that the value proposition.

To some extent we are seeing this already as governments seek to address spirally energy costs, i.e., Germany restarts coal-fired power plants.  We might see more of this after the US midterm elections in November.

ESG

This initiative is treated as if it is new.  Well run companies have always enjoyed higher equity value.

In 2011, we published our White Paper, Asset/Equipment Integrity Governance: Operations–Enterprise Alignment.  In that paper, we quoted, “During that period (2002), McKinsey & Company in conjunction with the Global Corporate Governance Forum conducted a study and found that over 75% of over 200 fund managers would value a stock at a higher price point if the company could demonstrate it had strong governance in place.  Moreover, the study also revealed that for western markets, firms with strong shareholder rights averaged 12-14% higher stock prices.”

We previously addressed ESG in detail and how it fits in our Relationships, Behaviors, Conditions (RBC) Framework  (risk mitigation).  The operative word is Relationships.  This will include every stakeholder, so the impact can be substantial.

For some organizations, ESG is new and the source of value in the annual Letter to Shareholders.  For others, business as usual incorporates those premises.  Begs the question, which organization would you like to invest in?

Concluding Thoughts

In this corporate animal’s experience, initiatives are seen as short-term events.  Leadership’s ‘rubber stamp’ does not carry gravitas.  Employees often ‘wait them out’ and go just about their business.  Others create media splash which dies quickly as well.  Only when change is codified in the organization’s culture do new approaches add sustained value.

Initiatives fail because neither the board room nor the factory floor see them as adding value.  Fads driven by political winds, activists or social desires come and go.

Strong governance is a proven value add.  A diverse workforce can add value but climate change as currently practiced will most like fail and fail Big and Expensive.  Society has addressed similar economic issues and will again.

Are Your Organizational Initiatives Sustainable or Simply Fads?

For More Information

Please note, RRI does not endorse or advocate the links to any third-party materials herein.  They are provided for education and entertainment only.

The author’s credentials in this field are available on his LinkedIn page.

Disclaimer, the author has no personal or business relationship with Bjorn Lomborg or his publications other than reading and commenting on his latest book, False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet.

For those start-up firms addressing energy challenges, the author is a member of Global Energy Mentors which provide no-cost mentoring services from energy experts.  If interested, check it out and give us a shout.

For more information on Cross Cultural Engagement, check out our Cross Cultural Serious Game.  You can contact this author as well.

 

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