Change Management in Digital Transformation Process
Change Management in Digital Transformation Process
Introduction
George Bernard Shaw once said, “Progress is impossible without change, and those who cannot change their minds cannot change anything.” This quote positions change as the epitome of growth, development, and progress. And if change equals growth, then organizations must welcome change. According to Davidson (2018), change management is the process, tools, and techniques used to manage or oversee the people aspect of implementation if an organization requires the change. According to Harvard Business Review, 60-70% of change by organizations fail because they do not embrace change management correctly. Digital transformation searches for agile and innovative business models (Solis, 2018). In digital transformation, organizations fail because they use outdated change techniques and models. This research essay aims to demonstrate the importance of change management in digital transformation by first understanding change from the employee perspective and applying change models in a business environment. This research is justified by digital transformation being integral for business success in this technological era. Therefore, if digital transformation is imminent, organizations must manage this change most effectively and efficiently.
Employees’ Fears of Change
Change takes an emotional toll on everyone. Even the positive and logical changes involve a give and take and some loss and uncertainty. Therefore, it is understandable that employees have fears and concerns where organizational change is involved. Employees fear change for different reasons, each unique to their circumstances (Godbole,2017). Some of these fears include:
Fear of underperforming and Job Loss
Being laid off is a significant fear for employees (Young & Dees, 2017). Change in an organization may require employees to change their approaches to work. Change may also bring new objectives and targets that might make employees question their ability to meet those targets. They know that poor performance will bring about termination in the back of their minds. Moreover, when there is a change in an organization, it often involves restructuring roles and reallocating resources, which might require new talent or more significant cost savings. This may lead to redundancy. From the employee’s perspective, change is harmful and may resist it.
Uncertainty About the Future/ Fear of the unknown
The fear of the unknown makes employees unresponsive to change (Young & Dees, 2017). This is why two-way communication is an essential part of change management. When employees are in the dark about their future and the organization’s future, they are likely to speculate and fear being caught off guard. Such an environment creates room for office rumors to spread. Those in charge of the change or project must find appropriate communication with the team.
Fear Due to Lack of Trust
Trust is vital when a team is involved, and meaningful change and growth cannot occur in an environment of mistrust (Ahmad et al., 2017). When employees have little or no trust in management and among themselves, they lack confidence in the process and prepare for the worst. Their mentality throughout the change will be harmful, and they will not give it their best. Businesses must recognize that trust is a crucial tool for change management and should be weaved into the nature and existence of an organization.
Change Management Models
These models help organizations navigate through changes, and understanding them is a valuable skill. There are eight main models for change management. Organizations choose to choose one model or an amalgamation of two or a few desirable models to help them create a change management methodology that suits their current issues. There is no specific change management style that the business world can deem the best. Instead, one has to understand all the models and relate them to their needs, and whichever aligns with the organizational change management needs becomes the ideal model to use (Hicks, 2020). The eight models include:
- Lewin’s model
- The McKinsey 7-S model
- Kotter’s change management theory
- The Stir methodology
- ADKAR model (Awareness, Desire, Knowledge, Ability, Reinforcement)
- Bridges transition model
- Nudge theory
- Keebler-Ross framework
All these models have in common the need to center employees in the planning and implementation of change management.
This research will explore and examine the first two models:
Lewin’s Change Management Model
This model was named after Kurt Lewin, who developed it in 1947. It involves three steps in the change management process: Unfreezing, Change, and Refreezing. The model has presented a comprehensive but straightforward approach to change management. It is still widely used as a basis for organizational change (Lewin’s 3-Stage Model of Change: Unfreezing, Changing & Refreezing, 2012). Below is an illustration of the change process according to Lewin:
Unfreezing
It is reasonable that before any change is implemented, there is a need for preparation, which is what the unfreezing stage is for. Awareness about the change is created. Employees and all other relevant parties are informed about why the change has to occur and how it benefits and affects everyone. At this stage, an analysis of the status quo (organizational behaviors, processes, structures, way of thinking, etc.) is conducted to understand what exactly needs to be changed and to what extent. This analysis helps to show employees why the change is crucial. If it involves introducing new technology, everyone must understand the idea. In this stage, communication and smooth information flow are crucial. Employees also need to know what to expect and how to prepare themselves.
Change /Transitioning/Moving
The people are now unfrozen, and now the implementation of change begins. Changes that were an idea on plans become a reality. The stage has a lot of uncertainty, risks, and fear among employees, and it is often the hardest to push through. Strong leadership comes in here. The leader has to calm the group, provide assurance, and ensure that the change goes according to plan.
People develop new behaviors, processes, habits, and ways of thinking in this state. Communication is also crucial in this phase, and employees should be reminded why the change is necessary and how they stand to benefit (Barrow, 2017)
Refreeze
This stage ensures that the team does not return to old behaviors and ways. Strategies for rewards, incentives, monitoring, evaluation, control, reviews, and measuring performance are created for this purpose.
Developed in 1980 by McKinsey & Company and has proven to be an effective strategic planning tool (Channon & Caldart, 2015). It involves breaking down change into seven essential elements of focus to avoid missing essential components of change. The seven elements include: Change strategy, Structure of your company, Business systems and processes, shared company values and culture, Style or manner of the work, Staff involved, and Skills your staff have. The model shows how effectiveness can be achieved through the interaction of these seven elements.
Structure: This is an organization’s chain of command or hierarchy of relationships and responsibilities.
Strategy: this is a business plan based on vision, mission, and organizational values that allow an organization to achieve long-term goals.
Systems: technical infrastructure, procedures, workflow, and the decision-making flow on the organization’s operations.
Skills: Competencies of the company. They contribute to the achievement of objectives.
Style: this is the approach that management takes to lead and how they influence performance and culture.
Staff: This element covers personnel in the organization and aspects such as size, training, levels of skills, motivation, etc.
Shared Values: Norms and behavioral standards in an organization.
Lewin’s Approach to Employee Fears
The three phases in Lewin’s approach describe how people respond and adapt to change (Endrejat et al., 2017). Each step describes how one should deal with employees’ potential resistance, fears, and uncertainties. This model will help managers address the fears mentioned earlier in the following ways:
Through transparent and clear communication with employees about why the change is happening and where the organization is headed. This eliminates the fear of the unknown and increases the level of trust between management and employees.
Educating and training them and making their responsibilities clear to eliminate the fear of underperformance and eventual loss of job from it.
Personal counseling, especially in the second phase, may be needed where the change is too big. This program is a Human Resource initiative and discomfort about change and gets the employees back to the total energy.
Application of Change Management Models Within a Business Environment
Netflix
In this research, I will use an example of how Netflix used Lewin’s Change Management Model to adjust to the digital world. The company is now a global success, proving the results of quality change management (Meiseles, 2017).
Unfreezing: Netflix used this stage to educate their employees about the new digital world and why it was crucial to make the organizational change. Management maintained strong interactions with the employees through communication. They also introduced motivations and persuaded various stakeholders that digitization would benefit everyone. Communication acted as a bridge between the actual and desired outcome for this company. The origin of information was always the top management to avoid distortion.
Change: here, new technologies and systems were brought in. Training and support for employees were also necessary. Organizational structure also had to be updated. Communication aimed to reduce uncertainty and clarify what the new objectives and responsibilities were. By the end of this stage, everyone was practicing new ways.
Refreezing: the new culture on 100% digital services and operations was adopted. The company’s management worked on helping the team get accustomed to the new way. This is a crucial stage in which management could not risk the team going back to old ways. Communication in this phase should provide information about controls, system updates, relationships, rewards, and efficiencies.
Application of McKinsey 7s Model in McDonalds.
Strategy: Is the structure clear and defined? McDonalds focused on a cost leadership strategy. The strategy, goals, and action plans were communicated to employees to ensure they understood the organization’s direction.
Structure: Is the structure flexible, centralized, decentralized? etc. The company currently uses a flat structure instead of a hierarchical organizational structure where the manager at each outlet manages the employees whom all work together as a team. This structure ensured a close relationship between management and employees.
Systems: What are the objective of the system? Does the system align with modern management? The use of innovative systems which aim to maximize efficiency. Employees are aware of their responsibilities in the system and work seamlessly to improve efficiency—for example, shorter drive-through times.
Shared values: the companies’ values are integrity, inclusion, family, community, and service, which they commit to.
Skills: Employee’s competence is guaranteed regularly through education, training, and workshops.
Style: participative leadership is used. Management values employee feedback and engagement. This creates a healthy work environment.
Staff: has over 200,000 employees worldwide who work together as a global family trained to meet the organization’s quality standards.
Relevance of Change Management in Digital Transformation
It ensures the organization keeps up with technological advancement and globalization. For example, Nokia was one of the biggest phone companies in the world. However, they were not fast enough to adopt the industry’s technological changes, which led to a significant decline in market share.
It reduces resistance throughout the change. People fear what they do not understand. With change management, employees and stakeholders see why the digital transformation must happen and how everyone will benefit. This reduces fears and resistance among the employees.
Reduces costs. Adopting change without a strategic approach (Change management) results in failure and wasted resources. Change management improves the efficiency of the change process.
It enables cross-functional growth. Change management improves the organization as a whole, not just one department. It helps every functional unit align its change with organizational strategy, improve internal and external interactions, and monitor and resolve issues.
Change management encourages continuous innovation. A large part of the change process is helping the employees see and relate to the benefits and potential of digital transformation. Once this is achieved, they are more likely to be innovative and visionary. Moreover, when management shows appreciation through awards, bonuses, recognition, employees become more willing to help the organization grow through innovative ideas and suggestions.
Conclusion
Change management is crucial in the digital transformation process. This is because change is inevitable, and so is technological advancement. Therefore, digital transformation is something organizations cannot avoid if they want to survive. The most valuable resources in an organization are the people. For efficient and sustainable change, management needs to address their fears and concerns. When implementing change, organizations should choose a change management model that feels right and optimize it. Adopting changes becomes tedious, expensive, lengthy, and complicated without effective organizational change management. On top of that, low employee morale also challenges the success of the transition.
References
Ahmad, M. H., Ismail, S., Rani, W. N. M. W. M., & Wahab, M. H. (2017, October). Trust in management, communication and organizational commitment: Factors influencing readiness for change management in an organization. In Aip conference proceedings (Vol. 1891, No. 1, p. 020019). AIP Publishing LLC.
Barrow, J. M., Annamaraju, P., & Toney-Butler, T. J. (2017). Change management.
Channon, D. F., & Caldart, A. A. (2015). McKinsey 7S model. Wiley encyclopedia of management, 1-1.
Endrejat, P. C., Baumgarten, F., & Kauffeld, S. (2017). When theory meets practice: Combining Lewin’s ideas about change with motivational interviewing to increase energy-saving behaviors within organizations. Journal of Change Management, 17(2), 101-120.
Godbole, P. (2017). Why Do People Resist Change? In Why Hospitals Fail (pp. 119-122). Springer, Cham.
Lewin’s 3-Stage Model of Change: Unfreezing, Changing & Refreezing. (2012, September 12). Retrieved from https://study.com/academy/lesson/lewins-3-stage-model-of-change-unfreezing-changing-refreezing.html.
Solis, B. (2018). The State of Digital Transformation, p.4.Altimeter Group.
Young, B., & Dees, A. (2017). From Saboteurs to Change Management: Investigating the Correlation between Workplace Behavior and Change Resistance.