November 11, 2021

Effective Change Management During Digital Transformation

3 Tips for Effective Change Management During Digital Transformation

Enterprise spending on digital transformation technologies was already increasing across almost all sectors prior to the pandemic. Now, the race to modernize legacy IT systems has become an all-out sprint ÔÇö and no organization wants to be left behind.

Although the heightened sense of urgency is indeed warranted, it has caused some leaders to forgo the critical planning that drives successful business transformation projects. But neglecting to plan for change management throughout the digital transformation process can be a recipe for failure.

The Cost of Failing to Plan

Problems with digital transformation begin when companies commit to implementing solutions that arenÔÇÖt aligned with their overall business goals. Leaders who feel that theyÔÇÖre a part of a technological arms race want to move fast. However, without a clear agenda linking initiatives to corporate priorities, they risk moving in the wrong direction. A sound digital transformation strategy is the most effective tool for preventing this scenario.

In general, the best strategies identify the objectives that, if met, will deliver the most value to an organization over time. They can help leaders prioritize digital transformation efforts by highlighting the actions and investments that add immediate value and present opportunities for collecting feedback to inform future progress. Even the most powerful digital transformation technologies canÔÇÖt deliver value without a plan for implementation, and a sound strategy will also strengthen enterprise readiness by outlining the personnel, skills, processes, and other components necessary to ensure solutions yield the most favorable results.

The Importance of Purpose

Every company has unique goals, which means identifying an optimal outcome isnÔÇÖt always straightforward. If youÔÇÖre struggling to define your end goal, start by defining the problem.

Jay Ferro, CIO of Quikrete, recommends creating a problem statement that reveals the ultimate purpose behind your plan. ÔÇ£The ÔÇÿwhyÔÇÖ of your organizationÔÇÖs digital transformation might be around improving customer experience, reducing friction, increasing productivity, or elevating profitability.ÔÇØ By succinctly articulating why this transformation is necessary, you can ensure that a clear purpose guides your subsequent actions and technology investments.

Digital transformations are complex and often require you to make wholesale changes to various components of your operations simultaneously. These might include process transformations, business model transformations, organizational transformations, or other changes that must occur to facilitate the successful integration of new technologies and capabilities. These and other changes must occur to facilitate the successful integration of new technologies and capabilities. Below are a few steps you can take to manage these effectively over the course of a digital transformation project:

  1. Map out the full impact of change.

Your problem statement can help pinpoint where change is needed most. As you reach the tactical planning stage, start thinking about the smaller changes that will occur during the transformation and their potential effects.

Ask yourself what outcomes they support and whether those are aligned with your larger goals. Does a change improve regulatory supportability or expose you to compliance risks? If itÔÇÖs the latter, are you prepared to manage those risks? Does the change improve the security and operational profile of your company? Will it lead to new revenue streams or result in unnecessary fragmentation? Is it necessary to remain competitive or maintain market share? Is it a reaction to imminent threats or a response to long-term predictions?

The status quo might be unsustainable, but itÔÇÖs also unwise to initiate change for its own sake. Understand the potential consequences of each change youÔÇÖre considering, and weigh those carefully against your larger goals before moving forward.

  1. Address skill gaps promptly.

Most companies in the early stages of digital transformation have some knowledge and skill deficiencies to be addressed to ensure effective change management. So once youÔÇÖve mapped out the scope and impact of your various business transformation projects, decide how youÔÇÖll fill existing gaps.

Hiring additional in-house talent is an option, though it could be expensive given the unprecedented demand for technical talent in the current labor market. Otherwise, you could partner with experienced consultants to help you coordinate and manage your processes, which will both help you fill the skill gaps and provide additional speed and flexibility.

All in all, make sure the team you choose to oversee the transformation has the necessary skills to make the important decisions that will determine your success.

  1. Keep communication open and ongoing.

Ongoing, transparent communication is essential for ensuring overall readiness prior to implementation and for securing organizational buy-in once itÔÇÖs completed. Moreover, it can help you prevent unnecessary turf wars among business units and minimize disruption during the transition.

You should regularly meet with the team responsible for administering your initiatives and give frequent updates to the employees, customers, and other stakeholders ultimately impacted.

By making effective communication one of your highest leadership priorities throughout your businessÔÇÖs transformation, you can foster a digital transformation-ready company culture that embraces continual evolution. In todayÔÇÖs fast-paced business world, thatÔÇÖs exactly what it takes to win.