February 21, 2019
For the last decade, industry after industry has been disrupted by innovative, cloud-first upstarts who put the customer at the center of their strategy and adapt quickly to market needs. To survive this disruption and position themselves for the future, enterprises are overhauling the way they do business through digital transformation initiatives. These initiatives involve changing everything about an enterprise – mission-critical technology, processes, operations, and skillsets – even the very way an organization thinks. Though technology is the driver of digital transformation, people are at the heart of their ultimate success or failure.
For any change to stick in an enterprise of tens or hundreds of thousands of people, meticulously planned and executed change management is crucial. The change management of digital transformation, however, brings complexities not seen in traditional change efforts. McKinsey found that as digital transformation change management initiatives grew over the last few years, successful change efforts declined. Common practices remained the same but the number of respondents who agree their firms are doing a good job in those areas are down across the board. And tellingly, employee commitment is down 13%.
We believe the dropping numbers are due to the disruptive nature of digital transformation. Its disruption is felt not only externally, in the market, but internally as well. Declines in change management success signify the need for a change in change management.
A study by Forrester Consulting and Accenture Interactive found that company culture and organizational changes generally lag behind technology and process in digital transformation initiatives. We’ve observed several organizations make the critical misstep of not allowing the resources (appropriate budget and timeline) to adapt their people to not only the new technologies but also the new agile, customer-centric, design-thinking mindset. Embracing the paradigm shift to a more open, less hierarchical environment can be difficult for long-time enterprise workers, used to the silo-mentality so common in the traditional enterprise.
The general lack of understanding of digital technologies for pre-Millenial workers is also a challenge. The McKinsey study found just “one in three respondents said it has been easy for their organizations to internally source the necessary piloting and rapid-prototyping skills for digital solutions.” Reskilling takes time and, for many of the newest digital technologies, the talent pool for hiring new workers is extremely competitive. Job seekers are empowered by digital networking and job marketplaces like LinkedIn, Glassdoor, UpWork, and the list goes on. The best talent has a good sense of their value and recruiters can find – and poach – them more easily.
Finally, digital transformation change management efforts run through the entire organization, crossing multiple business units and job functions. With traditional transformations, only 64% of companies say their change efforts do the same. An organization-wide transformation requires commitment at the highest levels. Yet, leader ownership & commitment is down over the past few years. RedHat CEO, Jim Whitehurst, an innovation leader in agile, says “The reason – and I see this on the technology side all the time – that agile transformations fail, it really does come down to how you are running the organization. The problem is that everybody comes around very simply to, ‘Well, it’s a culture problem. My culture just is unwilling to change.’ And what I want to say is, culture is an output; it’s not an input. Your culture is an output of your leaders, the messages they’re sending, and the processes and systems you’ve put in place.”
Let’s be even more clear regarding the drawbacks of traditional change management for digital transformation: 70 percent of change programs fail to achieve their goals, largely due to employee resistance and lack of management support. In today’s fast-moving, highly competitive world, the success or failure of a digital transformation effort can make or break a company.
Change management must undergo an evolution to match the new paradigm of the digital world: agile, collaborative, and customer- (employee-) first. To make changes in your organization stick, employ the following digital age change management best practices.
Make change management the center of your digital transformation vision. The most difficult thing about a digital transformation for the enterprise is the introduction of an entirely new way of working and thinking. Employees must shift gears from ‘this is the way it’s always been done’ to ‘what’s possible?’ and move from linear, siloed workstyles to collaborative, less hierarchical team-based approaches. You must lay the foundation to drive change, right from the start.
Plan for long-term sustainability and demonstrate commitment to change. Top digital implementers are more than three times likelier than others to say that from day one, their organizations planned for the long-term sustainability of the changes they made. Build change management into your vision, identify executives and functional advocates to commit to and carry the message from day one, develop clear, measurable priorities for execution, and plan to regularly assess the impact of initiatives and changes once they have been implemented.
Put people first. All of your technology, processes, and procedures are run by people. Even most automation is human-in-the-loop. As we’ve discussed ad nauseam, digital transformation is a big deal and typically very uncomfortable for, even threatening to, your employees. Manage your change with empathy. Instead of imposing new processes and tech, help them understand how it can make their work life better. Involve as many people in the change process as you can. A collaborative way of life will be the new world for all of you, after all.
Employ digital technologies to manage change initiatives. Change in today’s global and remote enterprise workforce doesn’t need to be slowed down by physical distance. Dashboards and community tools (e.g., Slack, Salesforce Chatter) can be used for collaboration between teams and team- or company-wide communication and motivation from leadership. Personalization is another digital trend that should be employed to deliver specific goals and progress to team members.
Organization-wide digital transformation change takes time. Object Edge works on a Build, Operate, Transfer model to solve some of the major challenges around change management. We build your systems, run the program for as short or long a period as you need, then transfer management to your internal staff as we help you build up and train your operational team. Schedule a free, 30-minute call with our team to evaluate your digital transformation concerns.
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