While change is constant, half of all change initiatives fail. And the top-down approach to implementing change has lost its impact in modern society. So, companies have shifted change management to a collaborative approach with their employees.
Successful digital transformations rely on the employees to lead the changes, not the executives. And at the crux of it, the system’s end-users want to know what’s in it for them from the start. Why bother to learn a new system?
Let’s dive deeper.
What is change management in digital transformation?
Helping people adopt new technology is change management in digital transformation initiatives. It’s any strategy/set of tools to counter fear and doubt. And instead, build confidence, gain buy-ins, and accelerate user adoption. Change management reduces employee resistance and attrition to maximize the benefits of a digital transformation.
Naturally, the main pillars of a change management initiative are communication and training. But there are other essential things like defining the future state organizational structure, how roles and responsibilities will look, how processes will work, and who does what. And beyond that, there are change discussions and workshops to help people understand the changes.
Change management is not just about how people will use the technology but also operationally. How will the organization use the system to move forward, and how does it fit into the business?
For small projects, a company could use an in-house change management team. And it’s even better to embed change management into everything. But if employees have to choose between their usual business operations and change management activities, they’d prioritize business activities. Yet commitment is the second most important ingredient of digital transformation.
For projects with extensive impact, companies need the expertise of a well-built and mature capability. If they don’t already have this in-house, they hire change management consultants. On the flip side, they risk siloing the change management initiatives from the technology implementation.
But companies can sync change initiatives with all the different pieces of a transformation by:
- Having a dedicated change management board where people talk it all out. You wouldn’t know what’s going on unless you ask people. The board should involve all key stakeholders and pieces to consider when moving to the new system.
- Having a community of practice with the change team and representatives from the strategy or transformation side of the business. And include the functional areas like IT that enable the business to generate revenue to minimize disruption.
Nonetheless, change management is expensive. In fact, researchers identified that limited resourcing is a major obstacle to change management success.
You might like this rundown on the negative side of change management.
Is change management part of digital transformation?
Digital transformation requires change management because, in most cases, it’s not about if there’ll be resistance to change. Rather, it’s about how much resistance? Where will the resistance come from? And how will the company mitigate these risks and help people through the changes?
It’s common for companies to assume that the people are ready to move to a new system. However, most resistance to change is never from a desire to be difficult. It’s mostly a natural response to change when you move roles and responsibilities around, take away responsibilities after automation, etc.
What is digital change management?
Digital change management is moving people through technology adoption. It’s similar to change management in digital transformation, which is any structured process for helping people adapt to new technology and use it to achieve the expected benefits.
Why does digital transformation require change management?
The impact of a digital transformation (saving costs, increasing efficiency, etc.) is theoretical until your people are equipped to use the technology and realize the benefits. And any activity/strategy that enables people to move to a new system is change management.
Change management mitigates digital transformation risks from the people side
Change management mitigates the following risks in digital transformation:
- Fear and resistance
- Poor technology implementation
- Missed milestones
- Project delays – not having the right people involved in the software implementation
- The project fails to deliver the desired results
Without a change management strategy, organizations lose buy-ins and confidence in what the project is trying to deliver. And since most transformations last months, it’s easy for people to lose motivation if the progress is slow.
Besides lowering productivity, lacking a change management initiative leads to frustrated users who aren’t ready to use the technology and don’t understand the business’s direction. It reduces the return on investment from your digital transformation efforts.
A change management strategy anticipates these risks and outlines the steps to mitigate them. It lays out the answers to three important questions on the people side of the business:
- Where are we now?
- Where do we want to be?
- How do we get there?
Organizations create change management strategies to handle freakouts from the beginning of the transformation. And they lay it out on top of the digital transformation project.
Change management increases the chances of success and ROI on digital transformation
A Mckinsey study on successful digital transformations found that each had effective change management at the c-suite and middle-level management and frontline employees. As a result, these organizations realized a 143% return on the digital transformation investment.
Most importantly, the study also found that perfecting a change management strategy isn’t necessary to capture a digital transformation’s value. The worst change management initiatives still captured 35% of the expected value.
What makes a successful digital transformation change management strategy?
There’s no one-size-fits-all organizational change management strategy. In fact, organizations don’t take a change management tool and push their organization into it. Instead, they customize a strategy based on the organization’s communication style and culture. It starts with an organizational readiness assessment.
Let’s see the components needed to build your digital transformation change management strategy.
Start with an organizational readiness assessment
The readiness assessment identifies and defines the potential sources of resistance. What areas of resistance do you expect, and how do you tackle them? The assessment data leads to and informs a change strategy specific to your organization’s culture.
The best approach for the assessment is using anonymous online surveys to capture data on the organization’s culture and start to quantify the areas that could lead to failure. You can then dive into these areas using focus groups and interviews to understand communication style and the best way to manage change. Use a third party to conduct the research because people will tend to give reasonable answers when the survey comes from HR.
Ask questions like how do you feel about training in previous transformations? How do you like our current technology? What do you want?
As part of the readiness assessment, organizations also assess the executive management to ensure alignment. The third-party would meet with the individuals to break down their motivations and expectations.
Design the future state organization structure
Organizational design is constantly ongoing, especially once the technology goes live. First, define what success looks like regarding the technology implementation and change management initiative.
What will the organization look like after digital transformation? How will people do their roles and responsibilities? How will their jobs be affected? And how will you run the change management after your consultant leaves?
Have a clear definition of what the future state business processes will look like. So that you can look at how people are affected by the changes in each department. Communicate these changes before launching the technology.
Create your communication plan
Communication is the backbone of the change management initiative. So keep your people in the loop on where you’re going, how to get there, upcoming changes, milestones, and dates. Give the staff a chance to see the entire project and see the big picture, including their contribution. It keeps the team in a comfort zone.
Start with a communication timeline, what you’ll say, when, and how. Then align the goals of your transformation strategy with your communication plan. It should fit into the goals and timeline of your transformation strategy.
Be sure to utilize different communication channels to meet your users where they are. It could be email, text, video conference, phone, flyers, seminars, presentations, or round tables to understand what your team is feeling. If you use social media groups, who will moderate the conversations?
Organizations need two-way communication that gives employees the chance to discuss challenges and successes, hear other questions and concerns, and celebrate achievements.
Personalize the change management plan
Show every affected stakeholder what’s in it for them. How will it make their life easier? Why should they even be on board? Lean on the information from your middle management team to personalize communication and change strategies. What are people’s motivations? The goal is to address change resistance.
For example, you’d show the sales team how the new system will help them get more business and close more deals. But for the accountant, you’d focus on how the system will automate their repetitive tasks. And speaking of automation, you also need to show them what happens after the automation. Will they still have a job? How will their roles change? Will they still be valuable?
Change management at an individual level:
- Personalizes the experience
- Builds responsibility, empathy, and shared purpose
- Removes fear
Define your timings, milestones, and KPIs
Approach Key Performance Indicators with the mindset that you’ll measure what you can, relevant to how it’ll help the business move forward.
What can you track in the technology initiative to show whether it’s making the business better or worse? The KPI should drive the change that you’re going for. And allow the teams to constantly look at where they are and where they want to be.
For timings and milestones, divide the project into mini-projects. For example, you could divide an ERP implementation based on the lifecycle stages, e.g., planning & discovery, etc. And you can divide the stages into milestones like requirements gathering, workflow analysis, etc. The key here is setting the immediate, short-term, and long-term milestones. And celebrating once each is achieved. Celebrating and communicating successes throughout the organization keeps the people motivated and encourages culture change.
Organize your funding, training, and resources
- What funding do you have? Where will you seek further funding in case of challenges? The key point is being realistic.
- Define your partners and how they’re involved. Who will lead the tech implementation and change management initiative?
- Define and allocate resources. You need a solid online learning facility, communication tools, and a platform to support the change management and the entire project.
- Layout who will provide the training, what kind of training, and how often. Organize training in different formats – live videos, seminars, video courses, round tables, and conference calls. You want to meet your people where they are.
- Define the immediate, short-term, and long-term skills needed to move the organization forward? The organization will need new job descriptions to create the staff that will use the tech, reporting structure, etc. So, how will you put the staff and resources in the best position to take advantage of the technology?
Assign people to own the change initiatives
Who will be accountable for the milestones? It should be someone who understands change management and the business. A strong change leads with a good grip on what needs to be done and how it should be done.
Usually, change directors work side-by-side with the project managers to direct the project focus and change focus at the senior level. They’d also work alongside business analysts and solution architects. And they’ll have the support of the sponsorship team and the change champion network. The sponsors need to be active and vocal.
Under the change director, we have the business change managers, communication managers, and training managers.
Know the change management success contributors in a digital transformation strategy
- Clear and documented project plan with milestones
- Change management and project management strategies go hand-in-hand
- Constant, open, and concise communication
- Continuous training
- Communicate and celebrate successful milestones
- Active, visible, and vocal executive sponsorship
- Engaged and cooperative employees
Avoid these change management pitfalls
- Siloed change management and technology implementation
- Unclear commitment and communication from the leadership
- Misaligned project goals and how to get there
- Ineffective training
- Limited resources
Ultimately, a successful change management strategy answers the question, “what’s in it for me? So businesses customize their communication to reflect this in each team. And beyond that, a change initiative needs clear and continuous communication and training. Dive deeper into the change management models, best practices, and more in this ultimate change management guide.
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