Applying Change Management to Change Management in The Digital Era

Change management programmes have a bad image. Ever since Kotter pointed out their massive failure rate (70% to 80% depending upon whichever source you consult) and identified his 8 principles for change management, little appears to have changed.

Leaders still don't understand their role in change management; over long top down programmes get foisted on the business; if the programme gets There, There has already changed when it arrives and the world has moved on. In the process organisations often she up to 20% of their talent and the whole enterprise can get distracted from its day job, hitting organisational performance badly. So the only remedy becomes, launching another change programme.

Change is fundamental to Digital Transformations since not only is a business trying to adopt new technologies to support innovation, it also has to change its business model, organisation and skills to do this. So how do businesses cope? A great quote is by George Westerman of MIT's Sloan Business School “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”

So what's new? Gartner reckons that 66% of Success Factors are related to talent. Yet the Scrum Alliances recent survey of global CxOs indicates that HR is one of the least Agile functions in most businesses. So its time for leaders to be leaders and work with both each other and their teams. As there's a fundamental signal coming from so many sources that Culture is the over riding discriminator in success. Getting the balance right between direction setting and team driven empowerment and innovation is fundamental.

Secondly, whilst having a clear vision of what the destination looks like, the trend is to break the journey down and only attempt the first few steps before re-calibrating. As the famous Chinese proverb quoted in Chairman Mao's little red book says, "Even the Journey of a Thousand Miles starts with a few small steps". 

Looking for small wins and business along the path of massive change, allows for experimentation, learning and course correction. So that a business navigates to a desirable destination and does not just follow a mirage.

Finally there is a heavier trend towards Data and Insight. Many innovation efforts rely heavily on data to validate (or otherwise) hypotheses and experiments, as well as to provide new insight. This has to be set against deep industry knowledge and intuition. Change involves both art and science to deliver effectively.

Business Leaders need to understand that Innovation and transformation means doing things which have not been done before (not just the same old things faster and better). So they need to be enquiring about the art of the possible, challenging about what really is the nature of value and how actions align with them, and liberating in the way that they encourage their teams to be part of the solution (rather than the unwilling victims of good intentions).

Aligning Digital Exploitation with Operational Capability

All Enterprises Are Not the Same

One of the tenets of Digital As Usual (DAU) is that most businesses are not pure play digital organisations. In almost all cases there are operations and activities which are essential to either fulfilling service or delivering a product which need to be managed as well. The Digital Adoption Framework assumes an Industry Categorisation Model as illustrated below.

The Industry Categorisation Model identifies 5 Categories along a continuum of Industry Product Nature. At one end of the continuum are “pure play” digital organisations, whose products are Information and Content based. These consist of Market Platforms like eBay and Compare the Markets.com who provide a platform, through which other organisations and people sell their goods and services, as well as Publishers and Providers of Content who provide videos, e-books, podcasts, news, music etc. At the other end are Extractor and Grower type businesses, such as coal mines and cocoa growers who provide natural unprocessed products. Off course not all businesses fall neatly into just one category. A major energy company such as Shell or Exon may straddle several categories along an Upstream (exploration, drilling and extraction) to Downstream (transport, refining and distribution) activities.

So why is this important when thinking about digital businesses? Well each different type of business operates in different ways, has a different level of dependency on capital assets and has different opportunities for exploiting digital technology to augment its business model. Additionally, the whole concept of Lean Delivery via Design Thinking, Agile Delivery and DevOps may have different opportunities and constraints as well as nature of delivery in each category.

Some Examples of Exploitation

The diagram below looks at the potential for exploiting Artificial Intelligence (AI) technologies according to Industry Category.

The “X”s in the table represent significant opportunity for exploitation against a generic type of Use Case. So for example AI technologies (machine learning, visual recognition, natural language etc.) can be used to provide insight and learning in every type of organisation, but there is very little opportunity for them to add to “customer experience” in say mining or farming. Again there is huge potential to build AI capabilities into consumer products, e.g. Alexa in Amazon’s Echo, but there is little opportunity to enhance a product such as iron ore or tree trunks produced from a Natural Product Extractor or a Grower. 

Alternatively for IoT, see diagram below, the opportunities are pretty limited for an Information publisher, but there are many areas where a farmer could use it to track livestock and monitor soil conditions and crop conditions, as well as control assets such as vehicles and trailer equipment.

This moves us onto exploiting iterative approaches within an organisation. The other night I was talking to someone from a major pharmaceutical company. Drugs take years of research to identify promising candidates for a problem and to test for efficacy and safety, as well as meet regulatory demands. There is little opportunity to exploit Iteration in this type of product development. But for the company overall, there are opportunities around internal processes and with Agile Marketing.

Agile Marketing is a growing area of adoption within industry and works well for consumer driven businesses. At its core is the use of small integrated product teams which focus on market research, product promotion, delivery of marketing and promotional materials, advertising and the information analysis systems used to support marketing data analysis. These teams tend to work in multiple sprints testing out marketing promotion hypotheses and rapidly identifying which approaches produce optimal results, to improve overall revenues. 

Iterative development also its quite different for delivering an oil tanker or a film, to the development used to support a consumer service. In the case of the former, iterative design, development and continuous testing techniques are used to deliver a single integrated complex product over a period spanning many months if not years. In the latter they are used not just to deliver the product, but to continuously keep it fresh, up to date and moving ahead of competition that is playing catch up.

So it's important not to adopt a one sized fits all approach, but to really get down to what can work for your organisation. This is part of what I talk about in my book.