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Change Management is Essential for Successful Digital Transformation

December 29, 2022


The Digital Age requires companies to transform both their Industrial Age mindsets and their organizational frameworks. Many Industrial Age organizations are characterized by functional silos that may have worked well in the past but struggle to keep pace in today’s business environment. Ravi Vasantraj, Senior Vice President, and Global Head of Business Process Services at Mphasis, insists, “It is absolutely necessary to break away from the traditional mindset of viewing applications and operations as siloed services.”[1] One of the first challenges leaders face when trying to break away from siloed organizations is getting C-level executives to collaborate rather than compete with one another. For some executives, true collaboration could prove unnerving. As Niccolo Machiavelli wrote centuries ago in his classic The Prince, “There is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things, because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new.” Executives who have advanced their careers by competing successfully against others, will have to be convinced that they can continue their advancement through collaboration.


Vasantraj elaborates, “Digital disruption is changing the way services are rendered and consumed. Business leaders must be aware of this disruption and how it might impact business models and customers. Experiments to shorten business cycles and discover new models are essential for business.” We all know, however, that change is never as easy as it first appears, including its timing. Good leaders, Vasantraj insists, recognize the need to change before events force them to make changes. However, as Machiavelli pointed out so long ago, successful transformation requires exceptional change management skills. Even executives who should be leading transformation efforts can find themselves resisting change. McKinsey & Company analysts call this “the adaptability paradox.”[2] They explain, “Just when leaders need fresh thinking and decisiveness, they tend to fall back on tried-and-true ways.” To counter this paradox, McKinsey analysts insist leaders must become more adaptable. They write, “By becoming aware of and open to change now, we can maintain control over uncertainty before pressures build to the point where altering course is much more difficult, or even futile. Our research shows that adaptability is the critical success factor during periods of transformation and systemic change. It allows us to be faster and better at learning, and it orients us toward the opportunities ahead, not just the challenges.”


Strengthening Change Management Leadership


Analysts from the Boston Consulting Group (BCG) observe, “Large-scale transformation is hard even under ideal circumstances, but in the current business environment — with an ongoing pandemic, supply chain issues, macroeconomic uncertainty, and other complicating factors — the margin of error has gotten even smaller.”[3] Their research into how to strengthen change management leadership uncovered “three key elements [which] closely correlate with better performance: holistic management of change journeys, consistent leadership alignment, and employee-centric change management.”


Holistic Management of Change Journeys


As noted above, change is generally difficult. As a result, the more convincingly a leader can make a case for why change is necessary the more likely that change will be successful. The BCG team notes, “90% of [companies that successfully transform have leaders who] articulate a clear case for change, compared with just 74% of companies with failed transformations.” They go on to explain, “Successful transformation leaders don’t just define a clear case for change for the transformation and explicitly emphasize how the effort will unlock value for shareholders and other stakeholders; they also embed it effectively in the organization.” In my mind, embedding change throughout an organization means simultaneously changing how people work along with the processes and technologies used to run the business. Bhushan Parikh, a partner at Catalincs Partners, agrees. He writes, “Every digital transformation requires the transformation of a combination of people, processes and technology.”[4]


Consistent Leadership Alignment


Although devil’s advocates have a role to play in any organization, there is a difference between individuals who question certain decisions (while pointing out what they believe are better options) and individuals who try to sabotage change. Parikh notes, “The path to successful digital transformation is paved by brave decisions by leaders. This may include removing some superstars who are blockers, identifying and empowering people who have the knowledge needed to streamline changes as they surface and bringing in external talent to augment internal capabilities.” The BCG team adds, “The senior team, including the C-suite and the board, must articulate the case for change — clarifying what needs to change and why in a way that sets the tone for the rest of the organization. They must use different communication channels, particularly digital ones, given the sprawling nature of large organizations and the fact that a significant portion of the workforce now works remotely. Using digital channels also enables companies to personalize key aspects of their communication, crafting messages that resonate with individuals, rather than issuing a single blanket statement.” They go on to note that “consistent” (not necessarily “complete”) leadership alignment significantly improves chances of successful transformation.


Employee-centric Change Management


Vasantraj notes, “Organizational culture is vital in fostering leadership and enabling enterprises to adapt. Successful teams are built on trust and the ability to put aside self-interest and work together. Teams must think of organizations as a single entity and keep a growth mindset.” This type of collaborative culture doesn’t emerge without a lot of effort. Amy Ericson, a Senior Vice President at PPG, suggests one way a great change management leader can make their efforts employee-centric is to lead with empathy. She makes three helpful recommendations, “First, ask how your people are. Really ask them. Then, listen. You may find that they’re struggling, and your interest in how they are doing and genuine concern will help them move forward productively. Second, acknowledge their situation and ask how you can help. Do they need access to new tools or resources? Do they need a different schedule? Third, thank them, and follow through. Praise their courage to be honest, and deliver on your promises to help them succeed.”[5] Beyond being an empathetic leader, the BCG team highly recommends getting employees involved from the beginning of the change process. They explain, “Transformation leaders don’t just hand down a finished plan for employees to carry out; they explicitly engage employees in developing the plan. This approach empowers employees to contribute to identifying problems and designing solutions at a granular level, which leads to the formulation of measures that are grounded in real-world experience and, therefore, more likely to succeed.”


Concluding Thoughts


Parikh concludes, “Transforming into a digital enterprise is not a one-off project; instead, it is a journey. This journey has no finish line. The changes you will address span across people, processes, and technology. These three pillars require transformation, but they must also support the transformation as it comes. Without their involvement, you will not be successful in your transformation.” Tim Ryan, U.S. Chair and senior partner at PwC and the founder of the Trust Leadership Institute, adds, “It takes time, intentionality, and focus for a CEO and leadership team to become highly skilled in leading change and creating differentiation. … Change is difficult — managing through it might even be more challenging. Yet, CEOs have no choice but to be even more aggressive with change efforts in their companies to simply stay competitive. This is the time to lean into change to drive more differentiation and thrive.”[6]


[1] Ravi Vasantraj, “Leadership in Times of Digital Disruption,” CIO, 9 May 2022.
[2] Jacqueline Brassey, Aaron De Smet, Ashish Kothari, Johanne Lavoie, Marino Mugayar-Baldocchi, and Sasha Zolley, “Future proof: Solving the ‘adaptability paradox’ for the long term,” McKinsey & Company, 2 August 2021.
[3] Jens Jahn, Reinhard Messenböck, Julia Dhar, Saskia Schneider, and Leonie Ruether, “What Works—and What Doesn’t—in Transformation,” Boston Consulting Group, 9 December 2021.
[4] Bhushan Parikh, “Digital Transformation: Start With Strong Leadership,” Forbes, 22 November 2021.
[5] Amy Ericson, “Four Tactics for Leading Through Change and Uncertainty,” IndustryWeek, 22 November 2021.
[6] Tim Ryan, “CEOs, Here’s How to Lead in an Era of Constant Change,” Harvard Business Review, 16 June 2022.

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