What is change management and why is it essential for digital transformation

August 17, 2018
8 mins

When it comes to change management, “implementation” isn’t the end—it’s just the beginning.

–Beth Banks Cohen

What is change management?

Change management may be defined as a structured process that ensures that required changes are thoroughly and smoothly carried out, and that the long-term benefits of the change are realized. The “change” may be a simple process change or a major change in company strategy or policy.

The focus of change management is usually on people and how they, as individuals and as teams, make the shift from the current situation to the new one. Change management draws from a wide variety of disciplines, such as behavioral science and psychology, and the underlying rationale is that change does not happen in isolation—it affects the entire organization, especially the people and the way they carry out their roles.

The different levels of change management

Change management may happen on three different levels:

1. Individual change management

People are at the core of every change management effort. This level of change management requires an understanding of what helps people change and how they experience the change. Disciplines like neuroscience and psychology help with framing the individual change management plan.

2. Organizational change management

It is often not feasible for a project team to manage change on a person-to-person basis. Organizational change management provides support at the project level by outlining steps and actions to be taken that affect the many individuals impacted by the project.

  1. Individuals impacted by the change are identified. The ways in which these people need to change is described.
  2. A customized plan is created to help the affected individuals receive coaching, training, leadership, and awareness needed to change successfully.
  3. Whereas project management ensures the design, development, and delivery of project solutions, organizational change management ensures that the project solution is effectively adopted.

3. Enterprise change management

 An organization has developed enterprise change management capabilities when change management becomes an integral part of its structures, roles, processes, leadership, and projects. Thus, the organization can respond to market changes faster, adopt new technology quickly with minimal impact on productivity, and take up strategic initiatives better.

How does the change management process work?

Change management process

Source: eba

Broadly, the four phases of the change management process are:

  • Prepare
  • Design
  • Execute
  • Sustain

The preparation phase involves the identification of the issue(s) and the environmental factors that affect the business.

  • The phase ends with an understanding of one’s current state, the root causes of current problems, and a vision of the ideal state.

In the design phase, a clear project plan is developed.

  • Since change management primarily focuses on the change in the way in which people will carry out their roles, a transition plan/change path is formulated which is based on an understanding of the cultural barriers in an organization.
  • The appropriate change management model is also selected, using which a change management plan is chalked out.
  • Finally, a deployment plan is created, which connects all these plans within a change project plan.

Proper communication is vital during the execution phase.

Reinforcement mechanisms must be put in place to allow regular coaching and feedback and handling of barriers and issues that were conceived during the design phase. Corrective action plans should also be drawn up to address questions like:

  • Is the transition plan working?
  • What barriers to change have come into sight?
  • What is working well and what needs to be investigated?

During the sustenance phase, correct behaviors and practices are supported to drive change through the business, using the people as change agents.

  • Throughout the change management process, cultural requirements should not be ignored as it has the potential to cause the entire project to fail.

Although the change management process has been linearly described, it is essentially a cycle. It is not easy to deal with cultural change and it may be necessary to return to previous phases when new challenges crop up. However, at no point should change be forced on people—it harms the business in the future because unwilling employees refuse to take ownership.

Popular change management models

To execute a change management plan, an appropriate change management model is chosen. Some commonly used models are

ADKAR Model

Developed in 1998 by Jeff Hiatt of Prosci Research, the model focuses on creating the right conditions for people affected by change to help them adapt to new ways of working. It has five sequential steps:

  • Awareness of the need for change
  • Desire to participate in and support change
  • Knowledge about how to change
  • Ability to implement change
  • Reinforcement to sustain change

Phases of Change management

Source: Prosci

Kotter’s 8-Step Process for Leading Change

Harvard University professor John Kotter (1995) summed up eight steps for successful organizational transformation:

  • Establishing a sense of urgency
  • Creating a powerful coalition for change
  • Creating a vision for change
  • Communicating the vision
  • Removing obstacles to change
  • Creating short-term wins
  • Building on short-term wins
  • Anchoring the change in corporate culture

Kotter’s 8-Step Process for change management

Source: Kotter International

McKinsey 7S Model

Robert H. Waterman Jr. and Tom Peters of McKinsey Consulting created the 7S model to holistically describe how change can be brought about:

  • Shared values
  • Strategy
  • Structure
  • Systems
  • Style
  • Staff
  • Skills

Mckinsey's 7s model

Source: eba

Bridges’ Transition Model

Described by William Bridges, it focuses on how people adapt to change. It has three stages:

  • Letting go
  • Uncertainty and confusion
  • Acceptance

Source: Sanders Consulting

Lewin’s Change Management Model

Kurt Lewin’s three-step model is also known as Unfreeze-Change-Freeze (or Refreeze) model.

Lewin's change managment model

Top 5 change management tools

Digital transformation necessitates the use of change management software to reduce uncertainty and confusion and communicate changes throughout the organization.

  • Whatfix: This tool guides organizations through the change process and encourages increased adoption rates for software products without risking productivity gaps.
  • Remedy Change Management 9: BMC Software offers this tool to IT service management companies to address potential risks, uncertainty, and confusion when handling organizational changes.
  • Intelligent Service Management: Offered by Serviceaide, this tool helps in rollouts and change execution planning using best practices to deliver accuracy and speed.
  • Gensuite: This tool aims to help teams identify and manage risks when people-related changes, operational changes, and equipment changes occur.
  • Freshservice: This is a cloud-based change management tool that helps organizations have greater control over approvals, manage daily tasks better, and reduce redundancy.

Change management is essential for digital transformation

Digital transformation requires appropriate rate of change it can absorb, enabling progress without doing serious harm to the company or its employees. A successful digital workplace is unlikely to have emerged by chance if people, process and products are not aligned. Change management helps successful digital transformation where we assess people of their capability and competency, processes on their complexity and criticality and products on their customizations and configuration. Based on the assessment we look at the gaps and make the organization ready from political, emotional and rational perspective by addressing the transformation wholistically instead of Silo. Vijay Karna has developed a digital tool BPCM (Business Process Change Management) which helps in successful digital transformation including, industrialization & innovation with business requirements complexity assessment for end to end processes.

Vijay Karna
Senior Director – Business Process Change Management Leader, Capgemini

 

The most challenging bit about digital transformation is not the technology—it is getting people to effectively embrace the change. Research conducted by Mckinsey in 2017 shows that companies that adopt digital transformation successfully are able to win greater market share, whereas companies that are not successful actually see a negative ROI for their investments. According to “Executing Digital Transformation,” a report published by PointSource in 2017, only 44 percent of IT decision makers are confident about their ability to achieve their vision. Most of the barriers relate to corporate culture and organizational structure.

The key drivers as well as goals of digital transformation are operational flexibility, end-to-end customer experience optimization, and innovation. In addition, businesses look for development of new revenue sources and creation of valuable ecosystems powered by data. This leads to the creation of new forms of digital processes and transformations in business models.

change management projects and research findings

Source: Prosci

Today’s business environment has the characteristics of a VUCA (volatility, uncertainty, complexity, and ambiguity) world, which can aggravate the effects of digital disruption on a firm’s operating model. Indeed, many companies are struggling with the impact of digitalization on its people, processes, and systems.

The problem cannot be solved by simply identifying change management strategies—firms should pay attention to how these strategies will be implemented because there is a social angle to it. Unfounded fears, employee resistance, and behind-the-scenes power play between departments have the potential to unravel change management efforts.

In such an environment, the change management process is important because commitment is required throughout the lifecycle of change for results to be seen. It is not a quick-fix solution to a project that isn’t progressing as desired. With proper understanding and implementation, the right change management strategy enables successful change during times of digital transformation and disruption.

 

In the Digital age gone are the days when people could get away with limited knowledge today employers expect employees to be well versed with lot more. With so many distractions around us learning through Art and stories is a good way to be a continuous learner ensuring we are able to change with changing times.

Manish Advani
Head- Change Management and Marketing, Mahindra Special Services Group

Why do change management efforts fail to materialize?

Three reasons why change management strategies fail to work are:

  • Lack of focus on behavioral change

Holistic change management does not involve only milestone tracking and reviewing the progress of implemented changes—it must include focusing on bringing about behavioral change as well. Firms expect middle management to intuitively know how to communicate the required changes to their teams. However, to prevent failure of project progress, organizations should explicitly define and address the required behavioral changes of the parties involved.

  • Is considered risky

Change management requires a big upfront investment in terms of people and time, especially from the leadership team. Also, the effects are seen in the long term and thus conflict with short-term goals. Hence, the operation is considered a risky effort.

  • Is seen as low priority

In the minds of senior management, the process of change has already taken place and they have spent enough time on the subject. Thus, they tend to deprioritize change management during meetings. Unfortunately, this happens at a time when the rest of the organization has just started coming to grips with the change.

Three change management strategies for successful transformation

As organizations embark on the change management journey, three strategies should be considered:

  • Bold strategies are more likely to be successful

A McKinsey report showed that companies winning at digital transformation tended to invest more than those failing to transform. Simply making incremental improvements, even if you are a market leader, will not help you undergo true digital transformation. The leadership team should recognize the value of making far-reaching changes.

  • Support and leadership from the C-suite is necessary

To encourage people to embrace change, it is necessary to have a top-down approach—the CIO should lead the change management effort. A PointSource study has found that 76% of respondents feel that competition between departments for resources and/or budgets hinders digital transformation. Thus, the CIO has to encourage people to strategically share resources to foster change.

The CIO must be fully aware of the scope of the undertaking—recommending that people stop using their tried-and-tested methods of working and embrace new systems is not easy or quick.

  • Create an environment of learning

The biggest obstacle to digital transformation is the lack of technical talent, according to Gartner. While employees may be willing to embrace change, they often do not have the necessary skills to adopt new software platforms. One way to overcome this problem is to train existing staff alongside the development of new systems. To deal with resistance toward this approach, it is good to demonstrate the opportunities that come with learning new skills and to create a supportive learning environment.

Conclusion

The human element is key in all the stages of transformation (culture, empowerment, collaboration, ecosystems) as well as in the goals of digital transformation. People value face-to-face interaction and may not necessarily want “digital” for everything. However, digital transformation will play a role in non-digital interactions as well, for instance, by empowering customer-facing agents. The digital transformation journey will need a flexible approach with organizations being nimble and agile enough to quickly adapt to change.   

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About the Author

Satabdi Mukherjee
Satabdi Mukherjee is a freelance writer with a special interest in business and technology. She likes to stay informed about the latest developments around the world and considers herself an information junkie.

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