Understanding the Change Impact Up Front
Help your digital transformation succeed by mapping out a change management strategy at the beginning. What percentage of your budget should you allocate to change adoption?
In plotting their digital transformation journeys, business leaders tend to focus most of their planning efforts, time, and resources on technology, at the detriment of one critical element: people & organization.
Although IT plays an important role in driving digital transformation strategy, the work of implementing and adapting to the massive changes that go along with digital transformation falls to the impacted organization.
Digital transformation can be described as the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. Apart from the introduction of some cool technology, digital transformation initiatives reshape workgroups, job roles, reward systems, operating models, and business processes. To be successful, enterprises need talent, organizational structure, and culture to be in sync with the new digital environments they create. The Organization Change Management (OCM) work stream or team is responsible for understanding and addressing the impact on each of these components on the transformation initiative.
All too often, change management is disproportionately under-discussed and significantly underfunded. A key reason to why transformation initiatives often fail can be attributed to a lack of appropriate level of focused attention on the people and organizational change impact. Successful transformation requires both managers and employees to work and interact differently within a new organizational construct. Research shows that 70% of complex, large-scale change programs don’t achieve defined goals. The following were cited as some of the common pitfalls: a lack of employee engagement, inadequate management support, poor or nonexistent cross-functional collaboration, and a lack of accountability.
The case for digital transformation is well documented. Research by MIT Center for Digital Business pointed out that businesses that have become digital masters are 26% more profitable than peer organizations. However, as previously stated, the probability of failure is equally high.
According to an Everest Group study in 2018, 73% of enterprises failed to provide any business value whatsoever from their digital transformation effort and a mere 22% achieved their desired business results. So, what can you do to improve the probability of success of your digital and business transformation efforts?
Seek to understand and quantify the likely impact and implications of the transformation on your people and organization.
Addressing the organizational change implication of your transformation
When planning for any type of business enhancement or transformation, we recommend leaders take the following steps:
- Understand that digital transformation is a journey and not a destination; plan accordingly to find the balance between momentum and organizational fatigue.
- Orient your design with this perspective and belief as a guiding principle; people are the real key to transformation. Evaluate the people dimension of the initiative regardless of the size.
- Conduct an Organizational Change Management (OCM) due diligence exercise upfront to help size the effort required from a people and organization perspective to ensure success.
- Adequately fund the OCM work required based on the results of the due diligence exercise.
Performing an OCM due diligence
OCM due diligence is like an environmental scan preceding a business initiative. Think of it as the reconnaissance lap prior to a race. Using only the vision and desired business outcomes as input, an organizational change management due diligence exercise helps illuminate a typical leadership blind spot, understanding changes required outside of the enabling technology necessary for success.
The value of an OCM due diligence exercise includes the following:
- Helps the program planning team understand what it is going to take to successfully transition employees, partners, and customers to the new environment
- Provides insights necessary to inform adequate funding allocation for the change management aspect of the program
- Offers leadership a critical risk dimension for consideration in making decisions on how best to proceed
- Includes a quick turnaround report typically delivered within 6–12 weeks, thus enabling rapid integration with the overall plan
A well-designed OCM due diligence plan should include the following elements:
- Business case for change including the drivers, value to the organization, and risk of doing nothing
- High level persona and journey maps of impacted groups
- Leadership alignment and stakeholder engagement
- Change impact and anticipated resistance
- Change risk and recommendations
- Change strategy, which includes cultivating buy-in, communication and engagement, training, adoption, and change sustainment
- Roadmap, including timeline, engagement cadence, and change management team structure
An OCM due diligence activity is a quick way to gain visibility into change impact for any proposed business change activity. By leveraging its insights and recommendations leaders can make smarter decisions on the appropriate level of funding allocation for the change management component of their business transformation initiatives. Your ROI on OCM due diligence is the increased probability of success for your business or digital transformation initiative.
Slalom is a modern consulting firm focused on strategy, technology and business transformation. Learn more and reach out today.
