The answer is of course yes, but is it also sapping the organisation’s attention, energy and intellect at the expense of other more important things such as strategy, customer focus and genuine evolution of the business’s operating model?  Profits aside, what are the wider impacts of dysfunctional change? What is the trajectory of defective change, and most importantly, what’s the solution?

Friday’s Times carried the headline of “Asda sinks to near £1bn loss after price-cutting drive”, an eye-watering headline for the grocery business that has endured far more than its fair share of bad press over the past five years.  Amidst the stories about the debt position, the Issa Brothers and TDR Capital and some embarrassing  operational problems in store, the longest-running saga has been the programme to separate Asda’s IT from its former parent Walmart.  The largest component of that has been Asda’s move from the Walmart instance of SAP to its own instance combined with an upgrade to a newer version of the SAP technology.  Projected to cost £189m, it has actually cost c. £1bn: An overspend factor of 5.2x.  In the financial results, £656m of last year’s total losses of £989m (exactly two thirds) was directly attributable to the costs of the IT separation – of which less than 20% was planned spend.

The overspend hasn’t been the full story though.  The accounts include £284m of additional cost in the form of disruption to store operations, caused by ‘glitches’.  Executive Chairman Allan Leighton later admitted that the chaotic final stages of the migration were completely “self-inflicted” due to poor integration capacity planning and insufficient testing.  In other words, because the programme had overrun and overspent, the system was rushed into production without the proper testing.   Adding all of the costs together, Asda actually spent c. £1.3bn, so the real multiple of projected versus actual is 6.7x, and the projected spend as a percentage of the actual was only 15.4%.  The other 85.6% was a slow-moving surprise.

Anyone reading the press coverage could be forgiven for thinking that Asda was an outlier, but in reality the story garnered attention because Asda breached the £1bn psychological threshold.  In terms of overspend, a five, or even seven-fold overspend is by no means uncommon.  In the financial services sector, recent years have seen multiple instances of overspends in excess of 10, 12 or even 16 times the original budget.  That’s a lot of unanticipated cost for the CFO to resolve and a lot of additional profit for the business to generate in order to pacify its shareholders.

Aside from the financial impacts, there are all of the other negatives: A dysfunctional programme can drain the life-force from an organisation.  It becomes the main topic of management conversation at the expense of other agenda items that should be more important.  It consumes board and executive attention, and drives the deferral of other initiatives that might otherwise deliver a strategic edge in a constantly evolving and geopolitically unstable world.

Now comes the fun part: Look at how many of the organisation’s programmes have completed on time with all of the objectives met, and you’ll probably find that it’s a low percentage.  That means that the overspill leaches into the following business cycle and eclipses the other programmes that haven’t yet started.  ‘Technical debt’ is a well-understood term, but what about ‘change debt’; all of that lost evolution, opportunity and ultimately, market position.  And over years, the cumulative impact can be considerable.  So it’s not just the last full year’s profits that have suffered: It’s the knowledge that future years of profit will already have been impacted by the things the organisation didn’t do whilst sorting out the multi-year mess, and the backlog is growing, not shrinking.

The irony is that this simply shouldn’t be happening;  The learning curve should be enabling organisations to avoid a repeat experience, but instead it’s deceiving them into believing that lightning won’t strike twice.  What’s the evidence?  The number of anecdotal instances where an organisation suffers one Asda experience following closely on the heels of another.   And AI should be accelerating the delivery of multiple aspects of programmes, turning months into days and hours into minutes, but instead it is elongating and complicating programmes whilst simultaneously undermining the quality of the key outputs on which the programme relies so heavily.  We’ve yet to see the eureka example of a programme delivered at blistering pace through the use of AI, but we do see instances where business requirements were generated via AI but never properly validated by humans until it was too late, resulting in costly rework.

So what really lies at the core of the problem?  Ask an organisation that has recently had an Asda-esque programme experience and they will typically say “we’re not very good at change”.  Dig a little deeper and they’ll say that their change teams don’t have the capability.  And yet when the team changes, the outcome remains the same, so is that lightning striking twice, or is it instead an indication that the system of change delivery itself is the culprit?  And if the culprit is the system, what specifically is wrong with it.  Figure that one out, and just imagine what it could do for profitability…