The Plateau Effect and Why Initiatives Fail

We have all seen this movie before. The scene opens with lots of fireworks and fanfare announcing the next great corporate initiative, which promises significant and sustainable improvements! This rollout is typically followed by lots of new staffing, training, slogans, and goals. The excitement level is pretty high . . . initially. A few quick wins follow. Then, although there is still some success, the air starts leaking out of the initiative balloon. Morale drops, leaders lose interest, and the organization is now dragging an anchor that must eventually be cut. Why?

The very nature of the competitive corporate environment creates a natural catalyst for change. Positive changes that result in a better products/services or more favorable market positions are ultimately rewarded. Failing to change doesn’t create success. Failing to create positive change leads to the business carnage we read about every day. Organizations must change, but making the right moves isn’t always easy. Much has been written about organizational change, change management, and a host of other related subjects. Conventional wisdom recognizes the need for change—as well as the failure modes that organizations exhibit when trying to enact change.

This post addresses one specific part of the process: The Corporate Initiative.

A corporate initiative could be broadly summarized as a plan or program intended to create an opportunity, do something ahead of others, improve a situation, or solve a problem. There are two major challenges to making change happen. The first is creating change. The second is sustaining it. John Kotter articulated these challenges in his best-selling book Leading Change, and he outlined a logical path to address them. Kotter says,

“Whenever human communities are forced to adjust to shifting conditions, pain is ever present.”

Ronald Heifetz is the Senior Lecturer in Public Leadership, co-founder of the Center for Public Leadership at the John F. Kennedy School of Government, Harvard University, and co-founder of Cambridge Leadership Associates. He says,

“What people resist is not change per se, but loss.”

Both authors wisely point out that creating change is never an easy task. Despite the odds, organizations continue to attempt instituting organizational changes through corporate initiatives. The data are clear that most initiatives fail, but companies continue to roll them out in hopes of success.

I have worked for Milliken & Company for over 40 years. Milliken is a privately held company that has been enhancing people’s lives since 1865 with its expertise across a breadth of disciplines, such as specialty chemicals, floor covering, and performance materials. A couple of decades ago, Milliken & Company found itself under severe threat from low-cost, offshore competition. While Milliken dedicates more to R&D than any other company in the textile industry, it had to make fundamental changes for its long-term survival.

Milliken did make improvements and was recognized internationally for those efforts (Malcolm Baldrige Quality Award, European Quality Award, Fortune Best 100 Companies to Work For, etc.), but the company wasn’t successful in sustaining the improvements it had made.

Milliken didn’t win the Malcolm Baldrige Quality Award in our first attempt. We were chosen as a finalist, and the feedback report showed many opportunities, with the major gaps being a clear lack of statistical process control (SPC). The company then declared SPC to be the main “corporate initiative” for the coming year. Every single management associate (including HR, Tax, Legal, etc.) was trained in SPC. The following year, Milliken received the National Quality Award, as did Xerox.

The short-term success of the SPC initiative made such an impact at Milliken, it created a desire for more initiatives. We found out Motorola was doing Process Mapping, so that become the next annual initiative. While doing Process Mapping, we learned from Ford about their success with QFD (Quality Function Deployment), so QFD became the next corporate initiative. And so on . . .

All of these initiatives brought quick results, but the results were not fully realized or sustained. Associates became cynical about the next “new thing” just around the corner. Milliken tried to implement over 125 corporate initiatives between 1980 and 1995. Although we won awards, we were caught in an endless cycle of launching initiatives and plateauing into failure with no clear path to sustaining success.

7 Major Reasons Corporate Initiatives Experience the “Plateau Effect”:

1. By definition, initiatives have a beginning and an end.
   One of the biggest challenges with an initiative is that it’s positioned by the organization as a “new” program to replace the “old” program — until the new program gets replaced with something newer, of course. Associates don’t fully engage in any of the initiatives but rather just ride them out. An attitude of “this too shall pass” becomes a self-introduced cultural hurdle that the organization and must overcome.
2. Initiatives tend to be one-dimensional.
   Another speed bump for initiatives is that they tend to be rolled out as a “cure-all” even though they’re typically designed to solve only certain problems. The initiative becomes a universal hammer and every organizational problem a nail.
3. Most initiatives fail to engage the entire organization.
   Milliken’s survey data says only 31% of companies engage everyone in improvement efforts. That leaves almost 70% of organizations supporting the “old” way of doing things. While some processes may require advanced training for a specialized few, most problems are solved without the need for advanced tools. This is a huge opportunity to turn all associates in the organization into problem solvers.
4. New leaders often bring old habits disguised as new initiatives.
   New leaders are put in place for a reason: to create positive change. However, even if the company is doing well with its current system, there is a good chance the initiatives that the leaders drove in their previous organization are going to be tried in the new organization.
5. Initiatives can confuse the organization.
   If one specific initiative is the most important thing we should be working on today, but tomorrow there is a new one, what is the organization to think? Often, functional teams are created to support the initiative only to be downsized later. Over time, associates begin to sense change is coming and reduce the level of engagement, many even seeing the initiative as a threat to their jobs.
6. Initiatives fail to sustain the gains.
   Sustaining the gains may be one of the biggest organizational challenges of all. Short-term wins are easy, and there are many ways to obtain them. However, replicating that success requires different ways of thinking and acting. Sustaining relies on commitment, discipline, auditing, training, and much more.
7. Initiatives don’t make it to the bottom line.
   The biggest challenge of all is for improvements to make it to the bottom line. I always ask the question, “Is your CFO seeing the improvements you’re making on the P&L?” Organizations will typically invest more in those things that are delivering. The first challenge, therefore, is to separate the improvements from all the other “noise.” Secondly, sustain those improvements over time without “plateauing.” Both challenges are difficult and usually justify the next new initiative.

A few years ago, I met with the CEO of a major client. He said, “I have run my company using Jim Collins’ book Good to Great.” He went on to say, “I have never been able to understand how to create the ‘Culture of Discipline’ until now. It’s not about initiatives, it’s about a system that engages everyone with the tools and processes to continually create change.” As Jim Collins said,

“Each piece of the system reinforces the other parts of the system to form an integrated whole that is much more powerful than the sum of the parts.”

In the mid-90’s Milliken overcame the “Plateau Effect” by moving from an “initiative-based approach” to a “system-based” approach.” The change proved to be vital to not only surviving but also thriving in a highly competitive industry.