Culture: The Most Overlooked Component of Your Digital Transformation’s Change Strategy

Written By: Eric Kimberling
Date: June 26, 2018

When embarking on a digital transformation or ERP implementation, it’s easy to focus on the things you can see, touch, and feel. Things like software configuration, process maps, and training documentation are very real and tangible, so people rarely question their value.

But it’s a different story when it comes to organizational change management strategies. Change is harder to see, touch, and feel, so we sometimes tend to underestimate its importance. This challenge is further magnified by the fact that employees are often excited about potential changes at the start of project. By the time signs of resistance begin developing later in the project, it’s often too late to address those challenges.

The problem: culture is something that you can’t tangibly see, touch, or feel

To add to the ambiguity of change, people often limit their view of change management to things like training or employee communications. Again, these are things that are easier to see and understand. Things like organizational readiness, stakeholder assessment, and culture are more difficult to grasp.

Of all the things that may derail your project, culture is one of the most intangible and hardest things to understand. If you have worked at a company for an extended period, you may not even understand how your company’s culture compares to others. Even if you are new enough to a company to more clearly define it, culture’s impact on your overall digital transformation is difficult to understand.

The reality: your company’s culture should be considered from day one of your digital transformation

Culture is something that needs to be taken into account from day one. It needs to one of the evaluation criteria for your new enterprise technology. For example, choosing SAP S/4HANA vs. Microsoft Dynamics 365 has significant implications on your organization’s culture. If you are trying to standardize operations, an SAP S/4HANA implementation may be a better fit, while a more decentralized culture and operating model might be better enabled by Dynamics 365.

During planning, your culture needs to be taken into account as well. If you are planning for a massive culture change – such as migrating from a decentralized to a more centralized shared services model – you need to account for the time, resources, and change management activities to enable the cultural change. This ultimately needs to be factored into your overall implementation plan, budget, and resource plan.

How to incorporate culture into your digital transformation

During your actual digital transformation, you will want to include an organizational change workstream dedicated to cultural change. Think of this as a critical path activity that will help pave the way for the business process and technological changes being introduced to your organization.

Here are some examples of organizational changes that can help enable the type of culture you are trying to migrate to:

  • Communication to create a vision for the new culture. For example, communicating why cross-company collaboration is so important to the organization’s future.
  • Organizational design for how roles and responsibilities will support that new culture. For example, defining how a new shared services model will be organized.
  • Performance systems and rewards to reinforce the desired culture. For example, paying for more company-wide results rather than individual business unit results.
  • Stakeholder assessments to ensure senior leadership and key stakeholders are aligned with the future state culture. This helps define what activities are necessary to drive cultural alignment within the executive ranks.
  • Validation that to-be business processes and system configuration supports the future-state culture. In other words, not letting the desired culture get watered down by simply automating the way things have always been.

Notice that these factors and examples all affect how your technology and business processes are deployed as well. If you don’t address these key cultural issues, it is quite likely that your project will become misaligned and fail to deliver the future-state expected of your organization.

Next steps for your cultural transformation

You may be thinking, “but I want to change my culture anyway,” or perhaps “but new technology will drive cultural change for me.” These are misguided approaches to dealing with this challenge. Culture needs to be dealt with head on and deliberately. It should be a key component of your overall digital transformation and organizational change strategy.

Learn more by downloading our white paper 20 Lessons from 1,000+ ERP Implementations.

Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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