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by Bettina Büchel Published 2 February 2023 in Strategy • 5 min read
Moving from paying lip service to change to realizing its economic benefits can be difficult. At the same time, project and change leaders in most organizations are pressed to show the economic benefits quickly. Yet measuring change is difficult. How do you know if the benefits are worth the costs? To help guide you, think about the following five principles for measuring change.
Even though measuring activities of change is a good starting point, achieving performance when driving change will not be secured if you focus only on change activities such as software installations or workflow updates.
The quality of change can be assessed at three levels: system or practice introductions, process adaptations, and results. While it is important to measure the intermediate outcomes listed above, it is vital not to lose focus on the results. In terms of intermediate outcomes, change activities are important initially and, depending on your change initiative, this will vary widely.
Take the example of the introduction of a new customer relationship management (CRM) system. The first quality level of change is the need for implementation and completion of a functioning system without bugs.
Measures for the introduction of a system include the total number of open tickets versus open tickets, average handling time, number of critical bugs, etc. Then most system introductions, not only CRM but almost any software introduction, are associated with process changes within the organization that require stakeholder acceptance. These process changes need to be mapped out and then adopted by users – the second quality level of change.
Some examples for process effectiveness measures address quality: does the output meet the internal standards? This is usually measured in terms of user satisfaction. Then there are other measures such as customer satisfaction or the net promoter score (NPS) – essentially measures focusing on external stakeholders. Finally, there are the overall results of the change initiative to be measured. In the case of a CRM, this could be the close rate, the abandonment rate, the upsell rate, the customer acquisition rate, revenues generated by campaign, or simply revenues or revenues by sales representative.
Ultimately, performance results will only be achieved if both implementation or completion and stakeholder acceptance are sufficiently high or else results are unlikely to materialize.
If you want to measure change you need to set goals with an associated target.
Ask yourself the following questions: what will the organization, department, initiative, or employee behavior look like after the change is in place? How will current processes be affected? What are the skills to be acquired?
Once you know the expected outcome, you can set targets. These will again vary by initiative.
The next step is to keep track of the measures and targets to see the evolution and to evaluate progress. Goal setting is often not enough. You also need to break down the overall change goals into business unit goals, departmental goals, and eventually individual goals.
On top of this, you need to align departmental or group goals and review existing goals to avoid conflicting messages.
There are different levels of change that you can assess: change at the individual level, at the initiative level, at the business level, and the organizational level.
Success at the organizational level might be if the customer acquisition rate across the business has gone up. At the business level, it is often just a subset of the organizational level goals as not all change efforts affect the entire organization.
Success at the initiative level is more subtle. Operational non-financial measures that are leading indicators of financial results need to be established with clear targets.
Assessing change at the individual level is relevant for almost all types of change initiatives. It is ultimately the aggregate of individual skills, commitment, and actions that drives the achievement of goals.
In summary, measure your change at multiple levels and break it down to the individual level as this will enable you to determine if stakeholder acceptance is on track.
Multi-dimensional operational measures are important for strategic change to be effective. In particular, non-financial measures such as measuring process or practice changes are suited to help guide and motivate long-term efforts.
Given the time-based dimension of change, it is also important to realize that there is typically a lag between the implementation of operational changes and firm performance, particularly if the results are expected in terms of financial measures.
As operational measures will vary by type of change, it is important in the early phase of change to establish and agree upon the expected outcome with key stakeholders so that the measures can be put in place and tracked.
As change is dynamic, it is crucial to be able to adapt to feedback over time. Putting measures in place early on so that you can respond to feedback is an important starting point. In addition, there are a multitude of time-based reflections for a change leader. The right time for an action is often based on feedback and windows of opportunity.
The right pace for change is equally important to determine – too fast and you lose stakeholder acceptance, too slow and it seems to take forever until financial results are achieved.
It is important to note that early changes are more likely to be more consequential than later ones. They disrupt routines which then can be followed by a period of stability. Also, pace and sequence are often linked as too much change is detrimental and unmanageable and therefore large-scale changes should be implemented sequentially.
To be able to assess this temporal element of change, it is a good idea to assess the number of changes initiated in a single year and the number of changes over multiple years. If both are high, then sequentially introducing change at a slower pace is often needed. Feedback from stakeholders will often be the best source of making decisions about timing.
We often hear change agents and leaders talk about being stuck in a tunnel when they are in the middle of a change process. While this feeling of darkness is probably always going to exist to some extent, having non-financial operational measures in place with goals and targets that inform you at multiple levels about the change will help to guide you.
This combined with a feedback process which helps you to adapt the timing, pacing, and rhythm of the change will increase your chances of success.
Professor of Strategy and Organization at IMD
Bettina Büchel has been Professor of Strategy and Organization at IMD since 2000. Her research topics include strategy implementation, new business development, strategic alliances, and change management. She is Program Director of the Strategy Execution and Change Management open programs, as well as teaching on the flagship Orchestrating Winning Performance (OWP) program.
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