People don’t like surprises. Change management disasters – Mary T. O’Sullivan

By Mary T. O’Sullivan, MSOL, contributing writer

“Poorly planned change breeds chaos.”  –  Safe Work Australia

Change is a constant in organizations and in our lives. Without change, people and business and even government can turn stale and stagnant, lack innovation, and become irrelevant. However, when change is forced upon people, it leads to confusion, reduced morale and engagement, major financial losses, and in some cases, complete failure. It’s not that hard to remember some bad change management efforts that are notable examples, and the negative outcomes that followed.

New Coke

Who remembers “New Coke”? In 1985, Coca-Cola rolled out a “new flavor” of the classic recipe for Coke. The problem was nobody liked it. This change is now known as one of the most infamous disasters in marketing history. The leaders at Coke, fearful that Pepsi could overtake Coke’s market share, decided the beloved drink needed a change. As we know, Pepsi is sweeter than Coke. Coke determined  that a sweeter “New Coke” could aptly compete and attract new consumers. Not so! Coke’s consumers did not like the surprise.

The rollout of “New Coke” was met with vociferous backlash from loyal Coke drinkers, who demanded the classic formula be returned. As one academic studying the phenomenon stated, “Coca-Cola underestimated the emotional attachment consumers had to their brand.” Within three months, Coke reintroduced Classic Coke and it didn’t take long before “New Coke” disappeared from store shelves. Coke had to learn the hard way that customer loyalty and intense market testing need to drive decision making when introducing change, especially change to a product as traditional, time honored, and beloved as the standard Coke formula.

Target Canada

Another interesting example of poor change management is Target’s 2013 expansion into Canada. Target made a similar mistake as Coke did. It rushed 124 stores into Canada without first understanding the Canadian market. Their strategy included speed, but not market testing. There was no consideration for the complexity of supply chain issues, how to select locations, and pricing that made no sense to Canadians. As retail analyst Doug Stephens observed, “Target ignored crucial cultural and logistical differences, assuming that what worked in the U.S. would work just as well in Canada.”

What did Target get in return? Empty shelves, unhappy customers, and a $2 Billion loss within two years! These missteps forced Target to withdraw completely from the Canadian market. Why? Their strategy was flawed and risky. They moved in too fast, were ignorant of the Canadian market, and disregarded the revered Canadian culture. They quickly learned that Canadians don’t like surprise.

A Modernization Misstep – Culturally Misaligned

Who doesn’t agree that the Labor Department, the Department of Health and Human Services, the Centers for Disease Control and Prevention, the Centers for Medicare & Medicaid Services, and the Department of Veterans Affairs could use some modernization? But what does that actually imply? Experienced veterans of software engineering are concerned that it means “modernizing” the computer code that runs these systems, and that could be dangerous.  In the business magazine, Fast Company, an experienced government software consultant notes, “You look at the way … the early Tesla full self-driving software was put together, and we have a culture in the tech industry of, ‘Let’s hack it together, let’s get something that works well enough, and then it’ll break and then we’ll figure out what to fix,’”

Remember the statement that Social Security payments were being made to someone 150 years old? That quirk happened to be the result of the old software called COBOL, which was designed to default to the year 1875 (for some reason) if the field for the year was left blank. So, in reality, a huge, embarrassing mistake was made in announcing wasteful government spending, sending social security checks to non-existent 150-year-old people. How could this happen? It’s easy to understand once we know that COBOL hasn’t been part of the computer science curriculum since the 1990s, and it’s unlikely that the people sent to rid the system of waste would know what to do with it. The typical Silicon Valley methodology is to kludge a system together and then fix it later. The problem arises what federal funding programs like Social Security, Medicare, Medicaid, VA payments, etc., are delayed or never arrive because COBOL was toyed with by amateurs.

The problem arises when the “modernizers” may not be equipped to draw a correct risk profile for implementing changes to a government payments system, “ according to Fast Company. Another issue comes from the COBOL system itself. Any new code must be manually tested by hand, and unless the coder knows this and is able to follow the correct process, the entire system could crash. This means that federal money promised to people and states would not be processed, an ugly surprise.

Without whistleblowers, no one can know if the COBOL code has been or will be altered. Any attempt to alter the code within the mainframe system, could disrupt government payment operations in a way that would impact millions of Americans. But the “modernization” team “may think twice before firing the veteran staffers who speak COBOL and know where the bodies are buried. In the end, COBOL’s incomprehensibility and brittleness may be features, not bugs.” – Fast Company

Looking back on changes improperly implemented, a concerning pattern seems to emerge. The failure of New Coke remains one of the most infamous examples of mismanaged change in business history, but it is far from unique. Target Canada and others,  executed change with poor change management, leading to financial losses, reputational damage, and, in some cases, complete failure. Similarly, the recent hubristic governmental initiatives show that even what is intended as well-intentioned change initiative will eventually fail when they act recklessly and  lack careful planning and vigilant consideration of all wide-ranging consequences. Will these unpleasant surprises serve as cautionary tales for all organizations navigating change? History says not.

“A useful rule of thumb: Whenever you cannot describe the vision driving a change initiative in five minutes or less and get a reaction that signifies both understanding and interest, you are in for trouble.” – John Kotter

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Mary T. O’Sullivan, Master of Science, Organizational Leadership, International Coaching Federation Professional Certified Coach, Society of Human Resource Management, “Senior Certified Professional. Graduate Certificate in Executive and Professional Career Coaching, University of Texas at Dallas.

Member, Beta Gamma Sigma, the International Honor Society.

Advanced Studies in Education from Montclair University, SUNY Oswego and Syracuse University.

Mary is also a certified Six Sigma Specialist, Contract Specialist, IPT Leader and holds a Certificate in Essentials of Human Resource Management from SHRM.