5 Components of a Holistic Digital Strategy: Change Management

First things first

Haven’t read all previous 4 articles of this series, or could you use a quick refresh? Find a recap of the previous 4 elements in the excerpt below before diving into the fifth and final element of this series.

Excerpt – Recap of previous 4 elements

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• Innovation
  Customer feedback throughout the entire process is essential for successful innovations. Involving your customers at an early stage enables you to tailor your offer to their needs and wishes, maintain momentum and accelerate the rate at which your digital transformation will start paying off. Read more about innovation here.
• Data
  Before you start modelling, you will have to decide which data are essential for the purpose you have in mind. This, in turn, requires a thorough understanding of all business processes involved. Digitization can lead to optimization, but you will have to know what can be improved first, in order to lay the foundation for a long-term boost of the company’s results. Read more about data here.
• Talent development
  Organizations must be willing to train employees to prepare them for any upcoming transformation. Data-driven organizations should not be just dependent on a small number of specialists; the entire organization must be involved in the transition. Read more about talent development here.
• Culture
  Data-driven organizations thrive best in a corporate culture that does not have a strict hierarchy, that puts shared interests above individual interests - to make it easier to implement changes -, and that does not shy away from taking risks. A truly customer-oriented approach and the willingness to engage in long-term planning will also be advantageous. Read more about culture here.

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Business strategy at the core

Digital transformations can rely on two different perspectives. The first philosophy is based on business strategy: this approach branches out how digital resources can be used to realize a strategy. Questions involved would be, for instance: What data can be used for what purpose? Which business processes should be digitized? And can these processes be organized in a smarter way?

The second philosophy, on the other hand, starts from technical possibilities and a desire to experiment and innovate. This approach requires companies to create a team of experts who can come up with innovative ideas. This philosophy can be very successful for companies willing to think outside of the box. Rianne Langenberg, Managing Consultant at ORTEC, has seen that companies often struggle to transition from this ‘technical’ approach to a strategical approach, which will ultimately be needed in order to put innovative ideas into practice. “A transition from push to pull means that you have to integrate innovative experiments in an organization in which hierarchy and governance do play a role and where targets have to be met. It's not easy to make that work”, says Langenberg.

From experiment to integrated strategy
It is advised to collectively apply both of the above mentioned philosophies. A coherent, strategic roadmap can make clear where analytics can contribute to the realization of strategic goals. This will reveal which technologies can play a role and which competencies are needed. Meanwhile, a plan must be made for the required organizational change, says Langenberg, which would answer questions like: Why do we want this? Who should we involve? What should we do? And how should we do it? This approach unites two different processes: creating impact with analytics on the one hand, while consciously building organizational readiness on the other.

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“Even the best models are worthless if
the people using it don’t understand it.”

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Knowledge across the board
A data-driven approach requires analytics. The more advanced these analytics get, the easier it will be for a company to operate digitally and find smart uses for data. “You have to show what you can do with data, whilst tweaking the organization and encouraging it to grow along,” Langenberg explains. She points out that even the best models are worthless if the people using it don’t understand it. “People who know the organization are also in a better position to identify valuable opportunities for additional savings or revenue. Awareness in the organization and knowledge across the board are paramount if you want to make real impact.”

Practical approach
Hans Spaan, Member of the Supervisory Board and Director of Data Science at ORTEC, emphasizes that digital transformations are very similar to other major organizational changes, such as post-merger integration. In both cases, different methods, systems and cultures have to be woven together to form an effective, efficient unity. If you take the lessons learned during similar transformations to heart, you can save yourself a lot of misery. Moreover, it’s recommended to set up an action plan. “This plan should, at the very least, focus on people”, says Spaan, “not on workflows and the like.” He points out the following five elements that should be included in every effective action plan:

1. Create the necessary cooperation
   Changes that affect the entire organization require cooperation. “This can be done by holding orientation meetings with those involved to discuss the nature and scope of the change, choosing how and with whom you communicate the progress and results of the change, and by linking stakeholders throughout the organization in the pursuit of the ultimate goal”, says Spaan. It is important that senior management supports this process and leads the transition to ensure that the old situation makes way for a new one.
2. Focus on change and acceptance
   Changes must be accepted if they are to succeed. To strengthen acceptance, you will need an implementation team with resources, time and a manager to steer it. If the change works as intended, this should be rewarded either materially or symbolically. “Above all, use the organization’s existing customs and habits to celebrate success, as this lets you show that changes do not disqualify the past," Spaan advises. He recommends taking the time to educate and train people, so that they can accept and grow accustomed to the new way of working.
3. Break down barriers
   Digital transformations can be far-reaching and can therefore provoke resistance or run into practical roadblocks. Feedback loops with stakeholders are a way to frequently assess progress in the realization of your objectives and the road towards it, to continuously optimize your approach and to remove any barriers you encounter. If your objective is to boost customer appreciation, measure whether that is actually happening. If appreciation fails to increase, investigate why. “It is up to middle management to discuss and correct everything from attitudes and habits to behaviour,” says Spaan. “Middle managers should be given the time to guide and steer their teams based on the objectives set by senior management, who, in turn, will have to support this process.”
4. Monitoring and support
   To support and monitor the transformation, it is recommended to schedule implementation audits, which can be carried out by internal or external auditors. Different eyes see different things, so an independent auditor can have real added value. At any rate, it is important to monitor the development of the organization’s digital maturity, as it will often take quite some time to lift this to a higher level. This does not mean, however, that you can take your eye off any short-term impact: both developments are key for a successful change, and they may affect different stakeholders. But monitoring alone is not enough, says Spaan: “When you see that people are refusing to adapt, despite investing in capability building, you must have the courage to respond. Break existing patterns. You have to be willing to break up teams that are not performing.”
5. Correct dysfunctional habits and actions
   Keeping habits and actions in check that are diametrically opposed to the underlying ideas of the transformation is a typical matter for company management, according to Spaan. “Things will often go wrong when senior management keeps their distance.” At the same time, attention should be paid to team building. “Successes should be celebrated with the team, and focus groups and surveys are a valuable tool for ensuring that results stick. Keep measuring as long as you need to. Sometimes, you will have to continue for up to two years.”

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“Digital change should always support the business.
It should add value, rather than being a goal on itself.”

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Last but not least, the most important tip that Spaan and Langenberg would like to share: “Remember that digital change should always support the business. It should add value, rather than being a goal on itself. In that respect, it might be more accurate to think in terms of a value-driven organization, rather than a data-driven one.”