Change Management As a Key Success Factor of Digital Transformation

One common denominator of digital and lean is the consensus around the importance of change management. So what role does change management play as a key success factor?​

Let us know your thoughts in the comments!

Alexander Demmer has spent more than 25 years in operational excellence and business improvement, strategy and implementation, and is one of the pioneers in the integration of lean management, IT practices & corporate culture.

(Transcript)

HANA: Welcome back to Part 3 of our Digitalization vs. Lean series of GBR Insights. I’m Hana Damjan and here with me is Alexander Demmer Research Director of Digital Transformation. If you haven’t checked out our previous conversations, do check them out and give us your feedback.
Now, back to our topic – previously we looked at the relevance of PEOPLE in a digital transformation and the advantages of a Lean Management practicing Company. One common denominator of Digital and Lean is the consensus around the importance of change management. So, Alexander, tell us, what Role does Change Management play as a Key Success Factor?

ALEXANDER: Good point Hana. Every big transformation affecting the organizational structure of an enterprise requires a well thought out change management accompanying process involving all stakeholders. This is not new, we face this situation in transformations like M&A, Divestments, Outsourcing IT Services Offshore, SAP-Introduction…say any Transformation that is shaking an organization.

As confirmed by the results of our research interviews especially companies of type A (say the digital starter who are focused merely on cost reduction) very much endeavor to create a positive image for the outside world. This translates into huge efforts in training or rather indoctrinating (brain washing?) their personnel what to communicate to the external community like customers, shareholders, investors,… governmental institutions, press,… etc…when asked about the upcoming transformation.

HANA: But how are their employees taken into consideration as part of this big plan?

ALEXANDER: Unfortunately, the employees of these companies of type A are often neglected in the process.

HANA: As opposed to company type B (if our viewers remember) who used the increased capacity of the QM in a newly established  “after-sales” service line which of course generated more profitability.

ALEXANDER: Correct, here again we found a fundamental difference in companies of type B (Lean-Digital, companies focused on growth & continuous improvement). They belong to the experienced Lean organizations and they are used to articulate the benefits and risks for every individual stakeholder, especially their own employees. They clearly address, analyze and communicate the “What’s in it for me”, (WIIFM). Associates know that all these initiatives might lead to personnel reductions or depending on the perspective “increased capacity for value-adding activities.”

They know that failing to address the WIIFM and communicating this in transparent and candid manner leads to rumors and agitation into the organization, which is human: if you suspect that you will lose your job would you support a transformation just to make shareholders happy? Probably not.

In an environment of continuous improvement getting rid of monotonous activities equals opening new opportunities to upgrade positions and increase the added value for an organization and not cutting jobs.

HANA: So essentially, they‘re not confronting the reality or issue at hand. Under these circumstances, the many efforts and methodologies around communication and motivation will fail to convince employees to support the change with enthusiasm.

ALEXANDER: Exactly…

HANA: Thank you as always Alexander for having this conversation with me. Next time we‘ll see how Successful Change Management requires top-down support from leadership. Join us next time.

ALEXANDER: Thank you Hana, see you next time.

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