It’s easy to be sucked into the vortex of now but good leaders will almost always be thinking about tomorrow. These leaders consider what changes are required to prepare the organization for the future—and how big a change should be made to get there. They may evaluate changes to the business model, growth strategy, operational process, or something else that will improve performance and their odds of success. Understanding the magnitude of change and its potential impact demonstrates a thoughtful approach to change management and performance improvement and ensures a balanced strategy. Change usually comes down to whether you need to tweak or transform.

Transformation has been the modus operandi for a while, but in some instances, it might not be the optimum approach. We like the way Cameron Atlas looks at tweaks and transformation. In his framework, tweaks result in modest improvements of 1%, 5%, or even 10%, while transformations are monumental shifts that reimagine the landscape of an organization. The stakes are high—tweaks require fewer resources but may fall short of achieving long-term goal,s while transformations are resource-intensive and risk-laden.

Timing is a critical element in this equation. If there is no urgency, incremental improvements can eventually culminate in significant results. But when urgency looms or the window for change narrows, transformation may be the only viable path. If you have a board of directors, it plays a role in guiding these decisions—finding the balance among fiduciary duties, stakeholder interests, and strategic foresight.

Let’s explore

• The nuances of tweaking versus transforming
• Who has done tweaking and transforming well when the decision failed, and
• Some consideration and a framework to help answer the question: to achieve our growth strategy, should we tweak or transform

The Key Question: Incremental Change Or a Massive Shift?

We’ll define our terms as follows.

Tweaks: Incremental changes that address specific issues or enhance existing processes that result in performance improvements. They are cost-effective, low-risk, and achievable within short timeframes. When compounded over time, tweaks can lead to significant improvements. Toyota’s Kaizen philosophy is a testament to the power of continuous, small-scale improvements.

Transformations: Fundamental shifts or massive actions that redefine a company’s operations, strategy, or identity. These require substantial investment, disrupt the status quo, and are often necessary to address existential threats or seize unprecedented opportunities. Think of Netflix’s pivot from DVD rentals to streaming, which transformed the entertainment industry.

Boards play a vital role in assessing whether incremental changes suffice or a radical shift is required. Their fiduciary responsibility includes weighing short-term gains against long-term viability. Boards have a unique vantage point and responsibility to ensure organizations strike the right balance. Their duties include:

• Strategic Oversight: Ensuring management’s decisions align with long-term goals
• Risk Assessment: Evaluating the potential benefits and risks of tweaks versus transformations
• Performance Monitoring: Using data to track the impact of incremental improvements and the feasibility of large-scale shifts
• Stakeholder Advocacy: Balancing shareholder expectations with customer and employee needs

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3 Considerations that Provide Insight into the Question of Timing 

The decision to tweak or transform hinges on urgency and relevance. Boards and executives must evaluate whether incremental changes can deliver results and future-proof the organization before external factors render the shift irrelevant. Therefore, we recommend taking three considerations into account:

1. Market Dynamics: Is the industry undergoing rapid change? For instance, I believe we can all agree that Blockbuster’s failure to embrace streaming in time led to its demise.
2. Competitive Pressure: Are competitors gaining an advantage through innovation or transformation? IBM’s transformation in the 1990s under CEO Lou Gerstner provides a good example. Facing declining market share due to the rise of personal computers and competitive pressures, IBM shifted its focus from hardware manufacturing to providing IT services and solutions, including e-business. This strategic pivot revitalized the company and positioned it as a leader in the technology services industry.
3. Technological Advancements: Does new technology make existing systems or processes obsolete? Kodak’s reluctance to embrace digital photography serves as a cautionary tale.

When Tweaking Led to Monumental Results and Came Too Late

Let’s look at some examples where tweaking was successful and where it failed. As mentioned previously, Toyota’s Kaizen philosophy of continuous improvement illustrates how small, consistent changes are compounded to create an unparalleled system of efficiency and quality.  Amazon provides an additional example. By iterating on customer experience—such as faster delivery times and personalized recommendations—Amazon achieved dominance in e-commerce.

Both Kodak and Blockbuster serve as examples of tweaking that came too late. Despite incremental improvements to film technology, Kodak failed to recognize the urgency of transitioning to digital photography, ultimately losing relevance. Efforts by Blockbuster to improve late fee policies and store operations were insufficient to compete with upstart Netflix, which transformed the market with streaming.

In these two instances, the right decision would have been transformation over tweaking. But that’s not always the case. For example, Coca-Cola’s decision to overhaul its flagship product and introduce New Coke alienated its loyal customer base, demonstrating that not all monumental shifts resonate with the market. According to a Fortune magazine article, the major package design change by Tropicana, which cost $35 million, resulted in a 20% and 19% drop in unit sales and revenue, respectively, over the course of six weeks due to consumer backlash.

The Best Course of Action When Performance Improvement is a Must for Growth

To determine whether tweak or transform is the best course of action for your growth strategy, boards and leadership teams should consider:

• The Scale of the Problem: Is the issue foundational (requiring transformation) or peripheral (suitable for tweaks)? For example, minor inefficiencies in processes may warrant tweaking while a decline in market relevance may necessitate a transformation.
• Resource Availability: Does the organization have the time, budget, and capacity for a transformation? Consider the potential return on investment and the risk of exhausting resources.
• Urgency and Relevance: Will incremental changes suffice, or will delay lead to obsolescence? Evaluate how external pressures like market trends or customer expectations influence the timeline.
• Customer Impact: How will the decision affect customer loyalty, advocacy, and share of wallet? Transformations may disrupt customer experience in the short term, while tweaks are less likely to.
• Cultural Readiness: Is the organization prepared for the disruption of a transformation? Leadership buy-in and employee engagement are critical to success.

One Practical Framework for Decision-Making  

The decision to tweak or transform is one of the most critical choices organizations face. Our customers have found it helps to leverage a framework. If you and/or your board are in the process of making a decision, the basic framework below may be worth considering.

1. Define the Problem: Clearly articulate the challenge or opportunity. For example, identify whether lagging sales are due to inefficiencies in the sales process (tweak) or a fundamental misalignment with market needs (transform).
2. Assess the Context: Evaluate market trends, competitive pressures, and internal readiness. Use tools like SWOT analysis or scenario planning to understand the broader implications.
3. Analyze Options: Compare the costs, benefits, and risks of tweaking versus transforming. Quantify potential outcomes to inform the decision.
4. Engage Stakeholders: Consult with customers, employees, and shareholders to gauge potential impact. Their insights can provide valuable perspectives on feasibility and reception.
5. Monitor and Adapt: Continuously measure outcomes and adjust strategies as needed. Implement performance metrics to ensure accountability and course correct as necessary.

Both tweaking and transforming can lead to performance improvements that support your growth strategy. The question is whether you can realize the improvement or change with tweaking within the optimal timeframe. If not, transformation may be your best option. As you evaluate your own organization’s challenges and opportunities, the ultimate question is this: What do you need to do to prepare for the future? Let’s talk about future-proofing your organization.

FAQ:

• Strategic oversight: Confirming management’s approach aligns with long-term goals and customer value.
• Risk assessment: Weighing the downside of disruption against the downside of delay.
• Performance monitoring: Using data to evaluate whether incremental improvements are sufficient.
• Stakeholder advocacy: Ensuring decisions protect customers, employees, and investors—not just short-term optics.

1. Market dynamics: Is the industry changing rapidly, shrinking the window for incremental progress?
2. Competitive pressure: Are competitors gaining advantage through innovation or reinvention?
3. Technological advancement: Is technology making the current model obsolete?
   When these forces accelerate, “tweaks” can become a form of denial—because the market moves faster than improvement cycles.

• Scale of the problem: Peripheral inefficiency (tweak) vs. foundational relevance gap (transform).
• Resource availability: Time, budget, talent capacity, and risk tolerance.
• Urgency and relevance: Will incremental change arrive in time to matter?
• Customer impact: Will the change disrupt loyalty, advocacy, and share of wallet?
• Cultural readiness: Can the organization absorb disruption and execute a major shift?

1. Define the problem (symptom vs. root cause; execution gap vs. relevance gap).
2. Assess the context (market, competition, technology, internal readiness; use SWOT or scenarios).
3. Analyze options (cost/benefit/risk; quantify outcomes and tradeoffs).
4. Engage stakeholders (customers, employees, shareholders; validate feasibility and reception).
5. Monitor and adapt (establish metrics, review cadence, and course-correction mechanisms).