In times of uncertainty in the global business landscape, the organizations that are quick to adapt and respond to change are the ones that survive crises such as the pandemic. In the past five years and especially during the pandemic, global organizations have been under tremendous pressure to adopt digital transformation to survive. The truth is that for an enterprise to successfully implement a digital operating model, it must “manage” change. Without creating and incorporating a change management plan, a digital transformation initiative is likely to fail.
For those who may be new to digital transformation and change management, here is a quick review of both concepts:
Digital transformation involves utilizing digital assets such as digital technologies and tools to transform existing business processes and systems. Thus, digital transformation is quite hard to achieve without first understanding how digital technologies can benefit businesses.
Change management is the documented process for implementing any change, large or small, to an existing business process or system. Well-executed change management steps can significantly improve digital outcomes.
Change Management and Digital Transformation: Both Required for Business Transformation
Change management and digital transformation, though not the same, often require each other for the successful digital transformation of a business.
In a modern business, change or transformation cannot happen without the use of data and digital technologies. In a digital transformation, digital technologies and tools are used to transform the business model. And change management, through its systematic approach to managing change, aids the digital transformation process in planning, executing, and implementing the required changes throughout the organization.
The idea behind change management is to predict problems, mitigate errors, manage resistance, measure impacts, and coordinate adoption so the transition is seamless for all users. Having a change management plan ensures that the adverse impacts of digital transformation are minimal.
In digital transformation, digital technologies are extensively used across business areas – leading to fundamental changes in the way business is run and delivers value to customers.
Digitalization involves deeper, wider human impacts that are connected to the changes, not just new systems and processes being implemented. Typically, when businesses undertake digital transformation initiatives, they engage organizational change management (OCM) experts to assist. OCM can help with managing the people side of risks associated with proposed changes.
Change Management Is a Core Component of Digital Transformation
A change management plan fulfills the following steps in a digital transformation initiative:
- Evaluates the current state of business to identify gaps in processes and systems
- Defines the intended goals and purpose of the digital transformation
- Helps outline a blueprint or roadmap for completing all the steps in the transformation
- Helps manage (monitor) and implement the transformation (change) at every stage
Change management, through the judicious use of best practices, helps minimize identified risks and implement changes in a secure manner.
Refer to William McKnight’s webinar on change management, which is designed to teach companies how to bring in performance changes with the help of technology.
Change Management During Digital Transformation
As a digital transformation initiative undertaken at an organization can be challenging and difficult, change management plays a crucial role in ensuring that the entire process goes smoothly by:
- Being the first line of defense against organizational resistance
- Keeping a firm grip on all the identified goals and objectives of the digital transformation
- Communicating issues, problems, concerns, and also future benefits to everyone at every stage
- Ensuring that the transformation does not happen overnight but gradually, in stages
- Providing adequate support and training to the business staff for embracing change.
Advantages and Disadvantages of Change Management
Implementing a change management plan enables the leadership teams to effectively strategize and manage proposed changes to business processes or systems. Here are the visible advantages and disadvantages of change management:
- Change management offers a framework for supporting and understanding change and its impact on an organization, for example, Lewin’s model of change management.
- If the business team members are taken into confidence, they will drive their own strategic changes instead of being forced by management to embrace change.
- The change management team will ensure that the changes have been implemented correctly and that the business staff has been properly trained to use the new systems or processes.
- In the course of organizational change, the business staff will be able to gain new skills, pursue new opportunities, and exert their creativity in ways that ultimately benefit the organization.
- Change can be completely ineffective when a strategy is either undeveloped or underpowered.
- If workforce resistance to change is not dealt with effectively at the early stages, it could derail and harm any change management effort.
- Without enterprise-wide buy-in, the business staff will only see the changes as updates or replacement processes, rather than a completely new direction for the organization.
- Change management may be capable of making minor changes in the status quo, but it cannot take a business in a completely new direction.
- To minimize the negative aspects of change management, the change management team has to make sure plans are well-crafted, and strategies are effective and constantly improving.
The key tools for dealing with the above disadvantages are honest and timely communication about the perceived vs. real value of any change.
Advantages and Disadvantages of Digital Transformation
Digitally transforming the business is essential in today’s rapidly changing world, and it can help launch new products, reach new customers, and expand to various segments of the market. While companies have digital agendas and are looking to digitalize the workforce, the level of digitization competency of their employees and the motivation for the changes varies greatly.
- There are a variety of benefits to digital transformation, including better customer experiences, business models, and collaboration as well as increased productivity, agility, innovation, and transparency.
- The biggest benefit of digital transformation is automation of routine tasks that take up too much human time and labor.
- Digital technologies enable businesses to use data to gain actionable insights and competitive intelligence for business gain.
Enterprise-wide digitalization also allows for instant remote collaboration, consultation, and teamwork between different business units.
Digital transformation in manufacturing leads to the integration of IoT sensors and devices for real-time tracking of production; automation of manual processes like inventory management and stocking; and use of data analytics to uncover supply chain inefficiencies to be improved.
- Digital channels of communications (web, mobile, social) empower businesses to better understand their customers, engage directly with them, and enhance customer experience.
- Ideally (when done right), any digital transformation initiative provides the opportunity to evaluate and optimize business systems and processes, to ensure that they are compatible and agile enough to deliver solid business insights, and to position a business for future success.
- Because digital transformation typically requires businesses to overhaul existing processes and procedures, significant costs are involved with the evaluation and implementation of changes.
- Another potential drawback of digital transformation is loss of client confidence, which may happen as businesses implement changes in their systems or processes.
- Failures in implementation are inevitable, so digital transformation teams must seek ways to mitigate risk of failure by identifying what needs transformation and why, identifying required skill sets, testing new technologies before rolling them out, training support personnel, and pushing a digital-first culture throughout the enterprise.
- New technologies keep emerging and existing technologies keep upgrading, so it is necessary for organizations to be flexible enough to embrace new technologies as required.
Your business objectives, combined with a well-thought-out change management plan and help from experts who specialize in digital transformation, are the best strategies to make a shift to digital. If your organization is embarking on a big digital overhaul, like launching a new e-commerce platform or shifting to a fully connected customer experience, it is crucial to think about how you are going to design a change management strategy.
To promote innovation and output, it is necessary for businesses to have a digital platform, which facilitates communication and collaboration among all the departments within the company. When internal communications are digitized, productivity, accountability, and creativity increases while preserving the much-needed competitive edge. With the power of a digitally enabled business environment, your business will be able to predict challenges and create solutions in advance to remain viable in years to come.
Image used under license from Shutterstock.com