The McNamara Fallacy and measuring the invisible drivers of change success

In a nutshell

Measuring the invisible drivers of change success

When it comes to organisational change, senior leaders know the drill: set clear goals, track progress with KPIs, and celebrate wins.

But what if those KPI ‘wins’ disguise a lack of genuine progress?

Many executives find that while they’re hitting KPIs, something is missing. The numbers may look good, but have employees truly embraced the change?

This article explores the invisible indicators that can make or break a transformation: employee morale, adaptability, and influence networks.

While these elements don’t often appear on dashboards, they reveal what’s really going on beneath the surface and help leaders gain a full picture of change impact.

The pitfalls of a purely KPI-driven approach

KPIs are undeniably useful; they track specific, measurable outcomes like productivity, revenue, and project timelines, making it easier to see whether certain targets are hit.

But KPIs alone rarely capture the full scope of what’s happening within an organisation during times of change.

Traditional KPIs look backwards, measuring outcomes rather than capturing real-time dynamics that drive change. They may confirm whether a change initiative delivered the intended results, but they don’t reveal how employees are experiencing that change in the moment. For these reasons, they are really a proxy measure rather than a true measure of change.

This means KPIs often miss early signs of resistance, disengagement, or stress – issues that, if left unchecked, can derail even well-planned initiatives.

Relying solely on KPIs risks overlooking subtler, people-centred elements that drive sustainable change. Morale, adaptability, and influence networks give leaders a true sense of whether employees are genuinely invested in a new direction.

Without these insights, leaders may achieve their KPI targets but remain unaware of deeper resistance or burnout that could compromise the success of the initiative in the long run.

So, while KPIs are essential, they’re only part of the picture.

To gain a fuller understanding, leaders should focus on the intangible indicators that reflect the health of a change effort in real-time.

The McNamara Fallacy: The danger of measuring only what’s visible

A risk in relying on KPIs alone is falling into the McNamara Fallacy – the tendency to focus only on what can be easily measured while ignoring the deeper, less tangible factors that drive success.

Named after Robert McNamara, the U.S. Secretary of Defence during the Vietnam War, this fallacy illustrates how an overemphasis on quantifiable data, such as enemy body counts, led to flawed conclusions about progress, while critical qualitative factors like morale and political sentiment were overlooked.

In organisational change, a similar trap occurs when leaders prioritise KPIs over employee sentiment, cultural adaptation, and informal influence networks.

For example:

• Measuring training completion rates but not assessing whether employees understand and apply new ways of working.
• Tracking system adoption but ignoring whether employees actually prefer the new tools or continue using old workarounds.
• Counting survey participation but not analysing the tone and depth of responses to gauge real engagement.

When KPIs dominate decision-making, leaders risk misinterpreting success, failing to detect early warning signs of resistance, and missing the chance to adjust strategies in real-time.

The invisible drivers of change success

Here are three essential, but often overlooked indicators to track alongside traditional KPIs for a complete picture of change impact: 

1. Employee morale and engagement

Morale is more than positivity; it’s a barometer for resilience and readiness. High morale signals true commitment rather than compliance.

Sainsbury’s uses an engagement survey called “Talkback” with rolling quarterly updates to keep a pulse on employee morale. This regular feedback allows Sainsbury’s to address morale dips quickly, which has directly linked to better store performance and higher sales growth. 

Use pulse surveys regularly throughout a change programme. Open-ended questions can reveal employee concerns and motivations, providing insights for real-time adjustments.

There are great tools out there, such as Peakon from Workday, which can be easily configured to gather data on perceptions of change programmes.

2. Adaptability and learning ability

Adaptability is the antidote to change fatigue. When employees see change as an opportunity to grow, they’re more likely to engage with new processes and responsibilities.

Philips launched continuous team effectiveness surveys to encourage year-round development conversations between managers and employees. By tracking team engagement in training initiatives, Philips identified support needs and built resilience through ongoing feedback. 

Track learning metrics to gauge adaptability. High participation in upskilling efforts signals readiness, helping leaders pinpoint areas needing additional support.

3. Influence networks and social mapping

Informal influence networks – often the backbone of how change messages are disseminated – play a critical role in embedding change.

When Three UK launched a wellbeing strategy to support organisational change, they engaged key influencers across teams and used feedback to assess impact. These informal networks helped ensure the initiatives resonated widely, embedding the changes across departments. 

Social network analysis identifies informal leaders who can champion change. Engaging these opinion leaders early builds credibility and support, making them pivotal allies in driving cultural shifts.

Create a balanced change success dashboard

To fully understand your change programme’s impact, a balanced “Change Success Dashboard” is essential.

By integrating KPIs with qualitative indicators, leaders can avoid the McNamara Fallacy, where success is judged purely by numbers rather than how employees truly experience the transformation.

A well-structured dashboard should combine:

• Core KPIs – Project completion rates, productivity measures, system adoption metrics.
• Employee Sentiment Metrics – Pulse surveys, open-ended feedback, and sentiment analysis to gauge resistance or enthusiasm.
• Learning and Adaptability Indicators – Tracking whether training leads to behavioural shifts, rather than just attendance figures.
• Influence Network Insights – Social mapping to identify informal leaders who shape workplace culture.

By blending these data sources, leaders get ahead of hidden risks, ensuring they’re tracking not just outputs, but real engagement and adoption.

Such a dashboard provides a comprehensive overview of change, showing not just outcomes but how employees engage with the transformation.

Here’s how to build one

1. Select key metrics
   Identify core KPIs, then add morale scores, learning metrics, and influence networks. This blend covers both quantitative targets and qualitative insights into employee sentiment and adaptability.
2. Monitor regularly
   Intangible indicators benefit from frequent reviews. While KPIs might be tracked quarterly, weekly pulse checks on morale or engagement offer early alerts to potential issues, letting you adjust promptly to maintain momentum.
3. Communicate with stakeholders
   Share insights from both KPIs and intangible metrics to convey a fuller story. This approach not only mitigates “KPI fatigue” but also emphasises the human side of transformation, aligning with organisational goals and fostering deeper commitment.

Creating these dashboards is easy with modern technologies. We recently helped a client use Workday Peakon and Workday Analytics to combine data from various sources across the organisation into a comprehensive KPI dashboard.  

Case Study: When KPIs give a false sense of success

A large multinational company introduced a new AI-driven project management system. Six months in, leadership celebrated 90% adoption and training completion rates of 95% and ruled the transformation a success.

However, an independent review revealed

• Employees continued using shadow systems, avoiding the new tool for critical tasks.
• Many had completed training but didn’t feel confident applying new workflows.
• Productivity initially dipped as employees struggled with the new interface and processes.

Because success was measured purely on adoption rates, leaders failed to recognise the hidden resistance. Had they tracked qualitative insights, they would have spotted issues early and adjusted their change strategy before productivity was impacted.

Looking beyond metrics for sustainable change

While KPIs are essential, they only tell part of the story. True success in change management requires engaging with intangible elements – morale, adaptability, and influence networks – that underpin lasting transformation.

Leaders who integrate these metrics are better equipped to lead changes that not only meet short-term goals but become deeply embedded throughout the organisation.

Avoiding the McNamara Fallacy is essential for sustainable change. While KPIs are useful, real success comes from balancing hard data with deeper insights into employee sentiment, adaptability, and influence networks.

Leaders who integrate both quantitative and qualitative indicators can make more informed decisions – spotting risks earlier, addressing hidden resistance, and ensuring that change is genuinely embedded rather than superficially measured.

Get in touch to discuss how we can help you with your change initiative. 

Image by MidJourney