Digital Transformation – 5 Reasons why Change Management is absent

By Kishore Shahani

Blockchain, IoT, cloud storage and processing, machine learning, predictive data analytics, augmented reality, data driven supply chain management, data ecosystems, artificial intelligence… the list goes on and on. These buzzwords have discreetly crept into our mainstream discourse and now they are part of our day to day conversations in the business community.

As former CEO of Cisco John Chambers said, “Every Company Will be a Technology Company” and so today we have a trend of companies rushing to embark in their own journeys of digital transformation, some through a well thought out and planned process, some detonating projects just out of #FOMO.

digitaltranschange

Digital transformation projects are costly but if implemented correctly, worth every penny. They usually include implementation of new technologies, platforms and systems and imply changes to critical processes. Anybody tangentially close to change management (CM) practices would immediately identify the need for CM in 99.9% of digital transformation projects and yet, in my experience, most executives tend to minimize and sometimes flat out ignore this imperative, critical factor of success.  I’ve seen cases in which many thousands of dollars could have been saved if the need for change management had been identified and embraced sooner rather than later.

If the need for change management is so evident, why is it that companies keep making this mistake? Typically, the need for CM is recognized once adoption problems begin to appear.  Why are change management activities initiated so late (if at all) in the project? Here are some of the reasons I have identified for this seemingly irrational behavior:

  1. Most providers sell the benefit of the solution based primarily on the system or tool. Specialized IT consulting firms that don’t have a CM practice will often pitch their solutions as a magic black box, without considering the need to manage adoption and use by people who are required to do so. Their sales pitch focuses on things like “this new system will lower your logistics costs and lead times by up to 15%”. But guess what? No, it won’t. At least not on its own. With very few automation project exceptions, what drives the benefits is the adoption and use of the solution by the PEOPLE who need to do things differently as a result of the new system. And to do that people need to be helped to transition from the current state to the future state by using CM methodologies and tools.  In their intent to sell and close the deal, salespeople from the IT companies tend to downplay any additional investment their clients will need to drive adoption and usage.
  2. IT Solutions costs are seldom bundled together with CM services. While more mature IT consulting companies have started to bundle their solutions to include a change management component, most don’t. They’ll offer the service but usually as an addition or a separate, non-essential component. And given the fact that these projects are usually cost intensive, clients all too often sacrifice what is perceived as add-ons so CM is excluded. Customers then believe that change management is not part of the minimum value proposition… and that is an expensive error. The use of new IT tools and processes is understandably faced with resistance. People fear what they don’t know; they are also skeptical about new systems because they finally got used to using the old systems and unless they understand the underlying benefit (for them) of using the new one, they are, more often than not, going to want to stick to the old ways. This is why I stress that the product as a stand alone should not be perceived as an integral solution. It doesn’t even serve the supplier’s interest to sell it on its own. Sure, they’ll get the short term sale and commission but if the system does not deliver on the promise, it will affect the supplier’s relationship with their client, who will not want to buy from them again because “their solution never worked the way we expected and you told us it would do” (reason being, lack of adoption and usage).
  3. Decision-makers are not end users and don’t dimension the complexity of change. This is not exclusive to IT projects and is usually a problem in larger, siloed organizations. Leaders and decision-makers would do well in empathizing and taking the time to understand the implications of the projects they are approving.  A close friend of mine was directly involved in the implementation of a series of new SAP modules in a multinational company. When the project was initially approved there was no budget allocated to change management activities. When he raised the issue to the Executive Board, the CEO told him “Nobody change-managed me into using Microsoft Office the first time I used it. Why do we need anything additional? Can’t they learn on the go? We’re paying millions for this new system, I’m sure it is user-friendly enough.” Luckily, as the opportunity presented itself, my friend was able to actually do a test run with the executive board, placing them directly in front of the new solution in order for them to understand the implications of the change they were making, and it took no time at all for them to give the go-ahead for and additional budget for CM activities. The project was a success.
  4. “Use it or leave” attitude. A step further and more critical than the last reason, this is the case where leaders think they can simply threaten their organization into adoption and usage, so change management is unnecessary. Because the need for digital transformation is so obvious to themg, leaders tend to think it is obvious to everyone else and hence, they expect that everyone will automatically embrace, adopt and use the new model, processes and tools. Under this framework, they might conclude that anybody showing the least amount of resistance is against them and their view of what is best for the company and so they should be strong-armed. Does this sound familiar? “If people don’t start using the new model, they are against the company’s best interest and so they should leave. It’s just the way things are supposed to be done around here and if they don’t like it, the door is wide open.” Having led a number of companies in my professional life, I can understand the leader’s frustration when things aren’t going according to plan and YES sometimes you do have to consider removing a few “bad apples” before they spoil the bunch, but to jump to this conclusion without considering that resistance is natural and that it should be expected and managed, is poor leadership, poor resistance management and will cause unnecessary problems with morale and attrition. Firing people for not adopting the new practices should be the last resort.
  5. Leaders do not understand and therefore do not play their CM role as Sponsor: I constantly urge leaders to understand and adopt their role as “Sponsor” of the projects. This is the most critical success (or failure) factor.  Prosci describes the role of Sponsor as ABC: Actively and visibly involved, Build a coalition of sponsors and Communicate directly with employees. This role requires leaders to empower the teams, be directly involved, be the early adopters of the solution, encourage others to use the solution, explain the purpose of the solution and the benefits it brings to those who embrace, adopt and use, provide resources and, overall, be supportive of the project.

If your company is considering undergoing a digital transformation initiative, I urge you to learn from others’ mistakes and include change management as an integral part of the project as early as possible. Leaders would do well in taking the hint from the name “digital transformation” and understanding that transformation is a synonym of change. Unmanaged change puts benefit realization at risk. Let’s talk about it!

Kishore Shahani is a proven Business & Leadership Development Executive with extensive achievement driving businesses within complex markets and developing value-add cross-functional teams. He is currently bringing his more than 30 years of business leadership experience to action as a Business Consultant, Leadership Trainer and Speaker.  Contact Kishore for more info.

 

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One thought on “Digital Transformation – 5 Reasons why Change Management is absent”

  1. Great to hear from you Kishore on a very relevant topic … coincidentally I am working in the Corporate team driving Digital Transformation in Cisco.

    Any business transformation needs change to be managed, digital transformation is first a business transformation enabled by technology.

    Most people forget the fundamentals …digital transformation is first a way to create additional value to customers through the use of “new” digital tools … to me the fundamentals in the form of why, what and how – from Sinek.

    Digital Transformation fundamentals:
    why: creating more value to end customers
    what: through a transformation of business (model, processes, decisions)
    how: through technology

    If we can spell out the fundamentals in order, the size of change will be more evident so the need for CM …

    Like

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