In the past 18 months, we’ve all been through significant change. The pandemic disrupted our work and personal lives with work-from-home requirements, laws around wearing masks, supply chain issues, childcare issues and more.
Given this, it seems like the perfect time to consider how good one is at handling change. And, while I like to think that we as a company are pretty good at it, there hasn’t been a way to quantify this ability until now.
In the July-August 2021 issue of Harvard Business Review, David Michels and Kevin Murphy, both partners with Bain, introduced “a new system for measuring (and improving) your ability to adapt.” It’s a nifty rating system that identifies nine essential traits that companies should possess to succeed at change.
And before you dismiss the importance of possessing an institutional change-management skillset, consider the following:
The Significance of Change Power
According to the research done by Michels and Murphy, “Change power is a strong predictor of performance. Companies with high change power scores are more profitable, grow revenue faster, offer better shareholder returns, have leaders and cultures that are more highly rated, and are home to more engaged employees.”
The authors share the example of Delta Air Lines’ response to the pandemic and point out that its change management acumen led to its decision to remove the middle seat in plans. This decision had a significant impact on the airline’s operations and business. One outcome was on revenue. In Q4 of 2020, “Delta’s revenue was 12% higher than the average of American, United and Southwest combined – a difference management sees an indication that its customers were willing to pay for the extra space.” The airline also saw its Net Promoter Score (NPS) reach an all-time high during this period (see below).
Calculating Your Change Profile
To determine a company’s change profile, the authors designed a system in which employees are asked to provide a score “on statements related to each of the nine traits.” The survey is then scored and compared to an index, and the research found that organizations who score in the top quartile of the index have a more robust capacity for change.
They explain, “Each move into a higher decile on the index (from, say, the 50th to the 60th percentile) correlates with a margin of improvement of 150 basis points and an increase in total shareholder returns of more than 250 basis points.” And this shareholder return is just one benefit.
Companies with higher capacity for change also tend to have employees who view their leaders and cultures more favorably and state they feel more inspired and engaged than companies in the lower half of the index.
The Connection to the Net Promoter Score
If you’ve worked in PR and marketing, you’re probably familiar with the Net Promotor Score (NPS), but you may not know it, too, was developed by Michels and Murphy’s Bain colleague Frederick Reichheld. Today it is a very popular predictor of business success, so much so that we often included it in our clients’ press materials.
Consider one of our clients, Kantola Training Solutions, as an example. During its 35 years, Kantola has focused on continuously improving its platform and client service approach to drive superior levels of customer satisfaction. As such, it has achieved a world-class Net Promoter Score of 70 with its clients.
With the Change Power Score, I soon predict more of our clients will want to include it. I also wonder if Bain has additional research planned to determine a correlation between these two scores or systems.