Data-Driven Change Management

Change is inevitable for business owners striving to remain relevant in competitive markets fueled by digital innovation. Today, more business owners and managers are exploring strategic change tactics to improve business or project operations.  

Strategic change refers to change(s) to key features of an organization’s business processes. The need for change is often easy to identify (e.g., obsolete technology), but implementation can present considerable challenges and barriers. These challenges and barriers are best addressed when data is incorporated into change strategies and when success is measured through key change indicators (“KCIs”).  

Humans are Hard-Wired to Resist Change 

Resistance to change is the primary roadblock to new change strategies. The underlying reasons for both individual and organizational change barriers may include lack of clarity, lack of communication, lack of accountability, insufficient resources, or introducing too many changes at one time. Even if these challenges are addressed, humans are inherently wired to resist change due to a small part of the brain called the amygdala; the amygdala perceives change as a threat and releases hormones to address the threat. This natural resistance to change, coupled with other complexities, is often the reason that new initiatives fail. The key to understanding and addressing change barriers is an effective strategy that holistically considers all implementation challenges, including both the human element as well as the operational impediments. 

Impact of Digital Transformation on Change Strategies 

Digital transformation, or the integration of digital technology into an organization, has fundamentally changed the way businesses make decisions. Data outputs provide meaningful insights into successes and failures within the organization. As a result, data-driven organizations benefit from increased productivity, better customer service, and improved decision-making.  

Although data contains valuable information about organizational processes, data alone is not sufficient to implement change. Traditional change strategies must still be considered, and the data-driven and traditional strategies should complement one another. Traditional change strategies focus on managing the people-side of change and rely on intuition and experience to make decisions; data-driven change strategies extend this approach to include data collection, acquisition, and analysis to facilitate informed decision-making. This aids organizations in making changes based on facts rather than assumptions. 

Measure Twice, Cut Once 

A data-driven change strategy involves collecting and analyzing both qualitative and quantitative data. Qualitative data focuses on non-numerical information, such as employee feedback, and provides insight into how people feel about proposed initiatives. On the other hand, quantitative data provides empirical evidence about the current state of the business. Both forms of data are critical to understanding the organization’s current state, determining the desired future state, and identifying the gaps that must be addressed to successfully implement the change. 

A current-state assessment involves the collection of both qualitative and quantitative data and helps identify where change is needed. This assessment helps thwart potential issues before they arise and provides a baseline for measuring the success of the change.  

Once the current-state assessment is complete, the data can be used to identify areas for improvement and determine the desired future state. This can be accomplished by answering three critical questions: 

1. What is the desired outcome?
2. Which data affects the outcome?
3. What is the measure of success? 

A strategy can then be developed to implement changes needed to reach the desired future state. Incorporating data to project the organization’s future enables the change strategy to focus on critical issues, align with the goals of the business, and identify the correct data points to measure success. 

Key Change Indicators (KCIs) 

Once the strategy is launched, it is important to measure success using key change indicators (“KCIs”), which are metrics specific to change management that measure the project’s progress. To be effective, KCIs should align with the goals of the change and be SMART – Specific, Measurable, Assignable, Realistic, and Time-related.

Though KCIs will vary by project, they can generally be broken down into four categories: team performance, which measures team acceptance of the change; organizational performance, which measures the rate of change at the organizational level; change communication, which measures employee understanding of the change; and training programs, which measures the effectiveness of training and engagement with employees.  

KCIs should be regularly monitored to confirm the project is on track and moving in the right direction. Monitoring also helps managers identify when adjustments are needed to meet the objectives defined in the strategy. When KCIs indicate that the change strategy is not working, it signals that adjustments will be needed to address the issues.  

For example, if a current-state assessment reflects a lack of customer relation skills throughout a customer service department, managers can implement a learning management system (“LMS”) as part of the change strategy. Data from the LMS can be used as a KCI to measure employee knowledge before and after prescribed training. A key performance indicator (“KPI”), such as the customer retention rate (“CRR”), can also be measured before and after training to determine the success of the training. If no improvement is noted in the customer retention rate, then an adjustment to the change strategy may be necessary to modify existing training content or prescribe additional training. If it is determined that the low customer retention rate isn't a training issue, a different change initiative will be required. 

Data-driven change management can be a powerful tool for transforming any business strategy. Supporting data establishes the capacity for change, simplifies the decision-making process and measures the success of change in a tangible way so the desired outcome is met. 

If you are ready to adopt a change strategy but don’t know where to start, EisnerAmper professionals can tailor a plan to help guide your organization or project toward sustainable success. Contact us to discuss how we can support you.