The Budgeting Oversight That Leads To Failed Transformation

Across the last 25 years, I've had the privilege of working with hundreds of CEOs and leadership teams in more than 40 countries, and I’ve seen a similar story repeat itself: game-changing strategies that don’t deliver on their promise. The most common root cause is not because the technology didn’t work. Not because the process was flawed. But because the people side of change was left undervalued, underfunded, and underestimated.

The reality is that technology and process deliver outputs, but leaders deliver outcomes. A new system can be installed overnight, but real results only come when people embrace, adopt and sustain new ways of working. That’s the bridge from strategy through execution to value realization—and it’s a bridge leaders are responsible for building.

As you step into strategic planning season, this is the moment to decide whether your bold ideas will thrive or stall. And the difference between success and another set of costly lessons doesn’t only lie in the quality of the plan itself—it also includes how well you bring the strategy to life with and through your people.

What Most Leaders Get Wrong About Change

Every initiative on your roadmap—AI adoption, ERP implementation, digital transformation, organizational restructuring—requires people to change how they work. Yet most leaders allocate nearly all their budget to building solutions and almost nothing to ensuring people actually adopt them. Ignoring the critical role people play in strategy adoption creates a chasm between leadership aspiration and organizational value realization.

Let's be clear: there's no such thing as free change. You can invest proactively in the people side of transformation, or pay a multiplier when attempting the same initiative for the second, third, or fourth time. Failed change undermines your trust and credibility. So the question is: Are you playing to win with proactive investments, or trying not to lose by managing expenses in reactive mode?

To illustrate this point, I had a CFO of a global Fortune 500 company tell me bluntly: "We never seem to fund the people side of change on the first try, but we seem to have a blank check mentality by the third try." That's the cost of ignoring the reality; without adoption, your transformation strategy struggles to deliver the promised value.

This pattern of underfunding the people side may look efficient on paper, but it's an expensive mistake with real consequences. Every missed deadline, frustrated employee, and negative customer experience impacts the bottom line—and leaders are being held accountable. The first half of 2025 saw record CEO departures, with 1,235 exits through June—a 12% increase over 2024. While CEO departures have multiple causes, one pattern is clear: leaders who expect strategic adoption to happen by chance often find themselves explaining to boards why initiatives failed to deliver expected results.

The Leadership Gap That Hurts Change Success

Leaders live with their heads in the future state, while front-line teams are still living in the current reality. This drives us to underestimate how long organizational transitions actually take—we're often thinking months or years ahead of where our people are.

I coach leaders that they have what we call the curse of knowledge. Your single email isn't going to fast-forward everyone through the journey you've already taken. You have to respect that change is a process, and people move at different paces through it.

Leaders also need new plays for their playbook. The command-and-control structure from the eighties and nineties isn't nearly as effective as it once was. As a young professional, if my boss said "Jump," you asked, "How high?" If I ask anyone in my organization to jump today, the first response will be, "Why jump? Why now? Maybe I'll think about jumping, maybe not."

This isn't resistance—it's human nature. And it's exactly why active, visible executive sponsorship remains the number one predictor of change success, according to our research spanning three decades.

The ROI of Getting Change Right

What's the cost of getting it wrong versus the investment required to get it right?

Our research on change management effectiveness shows that moving from poor to excellent change management makes you seven times more likely to deliver results. But what might be even more interesting is that moving from poor to just fair change management—taking one step out of the basement—triples your probability of success. Progress beats perfection when it comes to change.

 Most budgets allocate less than 5% to the people side of change. In my experience, organizations that consistently execute change well typically invest 10-15% of their project budget in ensuring people are ready to adopt and use the solution—not just build and install it. When you make that shift, you reach your desired outcomes much faster. 

Correlation of Change Management Effectiveness With Meeting Objectives

Building Competitive Advantage Through Change Capability

Success should be measured in numbers, not adjectives. When leaders tell me they want to be "more customer-centric" or "more agile," I ask them, "How do you translate that into measures where we can definitively say whether we are making progress?"

As you develop your strategic roadmap, remember that your competitors can copy your technology, your supply chain, and sometimes your organizational structure. What they can't copy is your ways of working—your culture. If you can build a change-capable culture, that becomes a real source of sustainable competitive advantage.

Most organizations have clearly defined financial controls, sales processes, and operational standards. But ask a senior leader, "How do you drive change around here?" and you'll rarely get a consistent answer. That gap represents both a vulnerability and an opportunity.

Making change capability strategic

The organizations that execute strategy most effectively treat change management like any other core competency—something to be developed systematically, not left to chance.

This means making strategic decisions about:

• Establishing a common methodology and language across your leadership team
• Creating the infrastructure needed to support your strategic initiatives
• Building internal change management capability through certification, training, and the consistent application of a change management methodology 

This isn't about adding overhead—it's about ensuring the investments you're making deliver results. When you budget for change capability, you're not just funding individual projects. You're building organizational muscle that makes every future initiative more likely to succeed.

The executive decision

Every organization has too much change happening simultaneously. We flood the system thinking more change will drive better outcomes, but organizations are like sponges—there's only so much they can absorb at one time.

The question isn't whether you'll invest in change management. The question is whether you'll invest proactively to ensure success, or reactively to fix what went wrong.

As you develop your strategic plans, ask yourself: Are you funding for technical delivery or business results? Are you building solutions or building capability?

Here's where to start: before you finalize next year's project budgets, conduct a simple audit. Look at your three most critical initiatives and calculate what percentage of each budget addresses the people side of change. If it's less than 10%, you're planning for technical success but hoping for business results.

Your strategy's success won't be determined by your written plan—it will be determined by how effectively your people adopt it. The time to build that capability is now, during planning season, not when initiatives start missing their targets.