The Scientific Reason for CRM Failure, Part 1

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Clients often ask us, "Why are CRM failure rates so high and how can we avoid it?" The answer? Resistance. Years of data show that the people part of CRM projects has the most impact on business results. The danger is when leaders don't realize that they need to alter the way they do things. At the crux of resistance is a tiny, almond-shape part of our brain called the amygdala. It's the part of the brain that translates the boss's statement "We are installing a CRM system--everything is changing" into "We're replacing you with this technology. You won't be able to put your kids through college, much less keep your job." The science behind resistance is simple. When the amygdala interprets a change as threatening, it kicks in hormones that tell the body "You are in danger," resulting in involuntary reactions of freeze, fight, or flight. The consequence is the dip in the CRM project performance curve (see chart), leading to longer time lines, scope creep, missed milestones, higher implementation costs, and fewer realized benefits. Innovative leaders are now weighing large project losses against their intended high ROI CRM business results. The primordial fear response of humans can be made worse or lessened based on leadership behavior and how the organization is designed to handle change. Leaders ask us, "If I can't prevent human beings from their natural reactions, how can I lessen them? Also, what can I do to ensure that the money I'm spending on CRM will net a high ROI?" The worst thing leaders can do is to lead via the command and control method, such as stating, "The bus is leaving the station. If you are not on it we'll leave you behind." That type of declaration makes the amygdala kick into high gear. The best thing leaders can do is approve the budget and integrate a change management program into every step of the project. When change is managed properly, the reaction of the amygdala is manageable. Why? Because when change is handled well adverse reactions of the amygdala are overridden by other parts of the brain. When the brain functions as a unit this leads to positive perceptions, good decision making, and optimal performance. It's a fact.
Successful CRM implementation leaders embrace the biological fact that people are hard wired to resist change and decide the business results are worth altering how things are done. It means not telling people to get over it, or to get hold of themselves, because statements like these create resistance. It means implementing a change management program (CMP) to handle transitions the business will go through from the as-is state to the could-be state. The change management (CM) processes are strategies and activities that support personal and organizational transitions. The amygdala reaction is minimized, overridden, and transformed into buy-in, support, and ownership. Transforming resistance to ownership is the only way CRM can achieve business results. Another root cause of CRM failure is thinking that change management means solely communication plans and training activities. These only account for 50 percent of CM activities. A CMP comprises a set of tools and a methodology to manage change so that desired business results are reached. CM's principal function in a business setting is to obtain greater economic value faster by effectively developing, deploying, and aligning the company's assets. The promises of CRM's business benefits can be kept if leaders shift paradigms by altering the way they lead business change. (Next month in CRM magazine, Part II: How to Reduce Resistance and Increase ROI.) Why People Hate Change
  • It will change who's powerful
  • It will change how people work
  • It will make some feel out of control
  • It's different
  • It's challenging
  • It's demanding
  • It's unproven
  • It's stressful
  • It's irritating Natalie Petouhoff, Ph.D., is a CRM thought leader at Hitachi Consulting's Customer and Channel Solutions Group and the author of Integrating People, Process and Technology. Contact her at npetouhoff@hitachiconsulting.com
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