Leading transformative organizational change initiatives is notoriously challenging. Up to 70% of these strategic initiatives achieve only partial success, and many fail outright.[1] Such failures occur for a variety of reasons – lack of funding or focus, internal politics and misalignment, or misallocation of resources and scope creep, to name a few. Autopsies on initiative failures can frequently be traced to the lack of a clear, concise, and compelling answer to the following question: “why change?” It is in striving to answer this question that leaders discover an ally in an often overlooked place.
Every commercial enterprise already possesses a resource that could accelerate strategic initiatives: data. Few things can create such a clear, concise, and compelling case for change as an applicable datapoint, trend line, or statistic. Through the strategic use of data, management teams can motivate change within their organizations. Further, they can do so with little or no additional cost.
Understanding Data and Change
Before discussing how to strategically use data in the context of change initiatives, it is important to understand how data motivates people. This may be easier to consider first from a personal context. If you have ever received news of an infant’s due date or targeted a weight goal to enhance your health, you have firsthand knowledge of how a number can prompt a rapid change in perspective. In the same way, being able to impact a key metric (say, moving the needle on blood pressure or cholesterol), can inspire positive changes in behavior as well.
Data has similar power to prompt transformative change for business leaders. You might learn your top two competitors are merging and will now have a combined 68% market share, or that a major new customer will require a 32% increase in production. The data clearly indicates a need for change in strategy, business processes, and even culture. There is a quantitative measure tied to a shift in reality, motivating change.
Essential Steps for Using Data to Promote Positive Change
Many organizations intuitively know data can motivate change within their teams but are unable to effectively harness it. Below are essential steps necessary to drive change via data.
Focus on a Single Datapoint
With advances in technology accelerating access to data, it can be tempting to use a plethora of datapoints to help ‘sell’ a case for change. This is a mistake that leads to one of the undermining causes of failed change initiatives: lack of focus. To be effective, leaders must choose one or two datapoints to make the case for change, differentiating signal from noise. Leaders cannot expect those they would compel to change to do this work for them.
The impact of focus is significant. It simplifies the change initiative from the outset and drives all resources, activities, and investments toward a unified target. The allocation of resources to one objective is a key success factor for performance improvement, and having a single datapoint everyone is trying to positively influence has the greatest chance of yielding the desired change.
To be sure, this does not mean all other metrics in the organization are ignored. For instance, even if a CEO makes an organization’s transformation target a 9% increase in production volumes, staying within budget parameters will still be paramount. However, having a central metric everyone can rally around will have an effect of channeling and allocating resources so that the transformation target is achieved, as opposed to having diffused efforts and underperformance.
Set a Realistic Target
It is surprisingly common for C-suite leaders of public companies to set dauntingly ambitious goals in the quest to meet or exceed Wall Street expectations. However, there is an important difference between a target that is ambitious and one that is unrealistic. An ambitious target is motivating – it’s achievable but will require a smart strategy and hard work to attain. An unrealistic target is deflating – it could theoretically be possible but not within the timeframe or resources provided. Chronic, unrealistic goal-setting can erode morale, and ultimately corporate culture, by opening the door to scapegoating, information-hoarding, and all manner of combative, silo-oriented behavior.
We have seen this backfire in the past. For example, when a well-intentioned CEO nearly doubled a cost savings target at the outset of a major acquisition, his C-suite team quietly balked at the goal. The team believed the prior goal, though a stretch, was possible to achieve, and leaders did not understand the rationale for raising the bar so much higher. The “why” was not clear and compelling. They also understood achieving such significant cost savings would require closing offices, outsourcing jobs, and downsizing teams. As a result, there was a high degree of pessimism, lack of collaboration, and detrimental political positioning. It subsequently surprised few when the goal was not achieved.
Align Performance Management Incentives with the Transformation Target
It is commonly accepted that monetary incentives are one of several organizational “currencies” that, along with other extrinsic and intrinsic factors, determine workplace behavior. Designing a performance management strategy that aligns incentives with an overarching change target can be a powerful way to unite teams to achieve the desired goal. This approach underscores the motivational component of the “why” with a tangible incentive for individuals to change behaviors.
For example, in a global healthcare corporation, a new safety and compliance imperative required physicians to write, record, and transmit prescriptions electronically. This required significant behavioral change for the physicians, however, many of whom had been using their paper prescription pads for decades. Moreover, many doctors viewed their prescription pads as a visible sign of prestige received with great honor upon graduation from medical school. They were highly reluctant to relinquish their prescription pads, even if it meant substantial error reductions.
To deliver a compelling “why” that also had meaningful benefits for the physicians, the organization incorporated conversion to electronic prescribing into the performance management targets for the physicians’ quarterly financial reviews. It was straightforward to measure, achievable, and aligned physician incentives with the organization’s change objectives. The effort proved highly effective. The net result was that physicians benefited alongside the organization, and problematic prescription errors were averted.
Conclusion
Although leading strategic organizational change initiatives can be challenging, the strategic use of data provides a catalyst for positive change. Used intentionally, data can lead to a compelling, concrete answer to the question: “Why change?” As individuals, teams, and organizations align to focus on moving the needle toward change, they can overcome obstacles and achieve positive results that exceed expectations.
[1] The Economist Intelligence Unit, “Why Good Strategies Fail: Lessons for the C-Suite,” March 2013. Donald Sull, et al., “Why Strategy Execution Unravels – and What to Do About It,” Harvard Business Review, March 2015.
© Copyright 2020. The views expressed herein are those of the author(s) and not necessarily the views of Ankura Consulting Group, LLC., its management, its subsidiaries, its affiliates, or its other professionals. Ankura is not a law firm and cannot provide legal advice.
