Transforming into a Digital Organization

by | Jan 31, 2023

Digital Déjà Vu

In the 1980s, the West tried to replicate the Japanese success in manufacturing performance by investing in factory automation. All attention was on the technology, into which was invested vast sums. It took almost a decade before it became apparent that the Japanese success was more about changing how they operated than how they deployed technology. Ultimately the West learned that investment in technology, without the associated organizational shifts, actually results in a negative return.

Today’s efforts in digital transformation are following the same path as did factory automation. Migration to the cloud, expenditures on new software and architecture, and even analytics will not provide a return until we remember the lessons of three decades ago: technology is most valuable when not shackled by obsolete processes and practices.

Organizational Change Management, properly executed, can greatly facilitate the foundational shift required to realize Digital Transformation. Our experience in the organizational support of implementing Digital Transformation can be boiled down to ten key lessons learned:

Vision Requires more than a Vision Statement

Transformation is painful. Why should your organization willingly endure the necessary pain of change? The answer is a compelling and powerful vision. While most leaders understand the power of a vision to draw the organization toward the digital future, too often they confuse a vision statement with a vision.

Effective OCM helps to clarify, translate, and communicate digital vision. It must be clear, compelling, and relevant to all employees. Otherwise, it is your vision, not theirs.

Don’t Rely on Top-Down Communications

Digital transformation requires effective communication. You’re no doubt thinking, “easier said than done.” There are many obstacles to establishing clear communications in this information-overloaded environment. We find the biggest challenge, however, is in an organization’s reliance on top-down.

In theory, top-down communication is intuitively obvious and compelling. The message is introduced at the top, and each subsequent layer communicates that message to the layer below them. The reality is that over 90% of top-down communications fail miserably. Once the message is disseminated, instead of one-to-many distribution, we find one-to-few or one-to-one. Most of the organization remains uninformed.

Equally challenging is the communicator’s level of competence. If all communication was simply information exchange, this might not be such an issue. Because transformational communication must be as much visceral as clear, however, top-down tends to increasingly strip the message of passion, empathy, and attraction. The key is to professionally integrate Digital Transformational into your organization’s existing communication networks. Vehicles such as status meetings, town hall sessions, and Change Networks are typically far more successful and sustainable in getting the message out.

Silos are Kryptonite to Digital Transformation

Every organization has silos, and each silo is both a blessing and a curse. They enable optimized performance, whether vertically (HR, Finance, Sales) or horizontally (business unit, regions). Because that optimization is typically limited to the silo’s borders, however, organization-wide performance is inevitably compromised.

In the digital world, organizations need to prioritize speed, agility, and transparency. Silo-ladened organizations, no matter how well-intended, will increasingly impede and ultimately defeat efforts around digital transformation. Ironically, it’s the perceived “success” of silos that creates the biggest obstacle in overcoming them. From the view within the silo, digital imperatives are asking employees to act against what they “know” to be in the best interests of their group. The priority becomes their productivity, their costs, and their autonomy. This certainty runs deep, reinforced by existing performance metrics, processes, and structures.

Effective OCM recognizes that overcoming silos requires more than simple clear communications and rah-rah messaging. Communications must be persuasive, while empathetic of existing perceptions. Change efforts need to be deeply informed by the implications of proposed changes, especially the unintended consequences. And training must reinforce not only the technologies but also the power of new roles, processes, and KPIs. Most critical, we need to actively involve those support we’re most dependent on. As long as they perceive this as your initiative and not ours, progress will be slow.

Cross-Functional Collaboration

Traditional IT projects are functionally defined. While they may solicit input from other functions, the team structure remains functional. Successful digital teams must be cross-functional teams. This requires transition from information sharing to one of collaboration. OCM not only ignites cross-functional collaboration, but works with cross-functional teams to maximize their efficiency and effectiveness in supporting your digital transformation.

Abandon Dysfunctional Legacy Work Practices

Not all work practices are dysfunctional. In fact, the majority of your organization’s practices are both productive and efficient. The trick is not to abandon what has historically served you well, but to learn which are actively working against your new digital direction. Those should be your priority, and the solution is deceptively simple.

Ask yourself: “If we do more of what we’re doing today, will it move us closer to or further from our digital direction?” If the answer is neutral or closer to your objectives, those processes are functional and should be continued. If, however, you answer that a process moves you further from your digital journey, you need to either modify or abandon it, regardless of how effective it’s been in the past.

While the process required to identify obsolete practices is simple, it is far from easy. The closer you are to the practice, the greater your expertise, and the harder it is to see. OCM can help, both by holding a mirror to those closely held beliefs and by accelerating the transition to the new digital reality.

Concentrate more on Behavioral Changes than moving Organizational Boxes and Lines

Leadership too often defines digital transformation as structural changes to the organization’s reporting structure. No question, creating an aligned and streamlined structure in support of the customer’s voice is critically important. No amount of organizational redesign, no matter how brilliant, can ever hope to support your digital transformation. Why? Behavior is the glue that binds your organization to your current practice. When you require a new direction, however, it’s far easier to adopt the future façade than future behavior.

To facilitate this change, leaders must spend at least as much time communicating to their employees the expected new behaviors as they do the desired outcomes. Our experience reinforces that leadership is far more inclined to share the reasons for the change. They rarely, if ever, share how their associates are expected to get there. Effective OCM will help leadership to craft, not just to destination, but the journey required as well.

Establish a “Test and Learn” Mentality

Few things are as ingrained in the corporate psyche than the concept of ROI. While effective for large, well-defined, and long-term projects, digital transformation can only succeed with some more explorative approaches. The challenge is that ROI can anchor your organization, becoming a drag on its transformation journey.

We are not recommending abandoning your ROI culture. For most of your technology investments, this is still an appropriate criterion for success. The Digital challenge is to free those charged with digital success from the control of old KPIs’ governance and processes. OCM can help you identify the required changes, and more importantly, communicate and inculcate the digital desired behavior.

Establish a Project-Based Work Model

The chances are good that most work in your organization is executed based upon function. To support a “test and learn” mentality, however, work is best organized by project. The good news is most organizations understand that digital success requires an agile development approach, and agile is organized into sprints and projects. Unfortunately, our experience confirms most organizations more easily adopt the trappings of agile than its substance.

Agile requires more than daily scrum meetings and agile tools. It requires changes to processes, roles, responsibilities, and even metrics. Digital transformation thrives in a truly agile environment. OCM can greatly accelerate your organization’s agile transformation, which becomes a springboard toward your move to digital.

Move from Outcome Metrics to Adoption Metrics

Behavioral change is hard. Want proof? You need only look to your most recent New Year’s resolution for confirmation. Change requires more than clear communication, understanding, and desire. If these were sufficient, 95% of our resolutions would have been realized, and behavioral changes would have resulted in the necessary new habits. That 95% of resolutions fail is evidence of the challenges of behavioral change.

Most projects and organizations are judged by outcome metrics, the determination of degree of success. The challenge of standard metrics is that they are strictly rearview mirror indicators. By the time success is measured, many months have transpired, and tracking dependent issues is complex. Just as important, outcome metrics work contrary to timely mitigation.

You can anticipate challenges to digital transformation success. Since we know the greatest challenges are behavioral and not technical, we identify those behaviors most required for change. Rather than track project outcomes, we track behavioral change success. In tracking the success of behaviors on which digital success is based, we can often intervene many months before traditional metrics would support.

Addressing Loss and Resistance

Your functions, businesses, departments, and employees have a huge investment in how they do their jobs today. This investment is not so much financial as one of experience, prestige, training, and success. The greater the transformation, the more likely it will be that your employees must relinquish and lose some of their greatest investment. It is critical to remember that feeling of loss and resistance is rational and to be expected.

One of OCM’s most significant contributions is helping your organization recognize that Digital transformation will trigger a sense of loss and resistance for most. As with any loss, this must be addressed with empathy and support. To do otherwise, we risk adopting the trappings of digital and not the substance.

Averting Digital Déjà Vu

Digital Transformation will give you a competitive edge to the degree you stay ahead of your competition. They understand that they must either transform or perish, and most certainly have digital initiatives in flight. The victors will not be those who ultimately transform, but to those who can realize transformation quickly.

The bad news is that, as we learned four decades ago, it’s far easier to adopt a revolution’s technology and trappings than it is to truly transform. The good news is that overcoming our biggest impediments to success requires minimal investment and risk. Those who quickly transform people and processes will achieve a sustainable competitive advantage that can propel them well into the next decade.


This article was written by Wayne Burkan,

Author and Senior Director of Accelerated Adoption OCM at ArcherGrey

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