You Are Underestimating Organizational Change Management in Your Digital Transformation, and Here’s Why

Written By: Eric Kimberling
Date: December 10, 2018

There are two things I love most about speaking at conferences. First, I learn a ton from other presenters. Second, I always learn from my own presentations, both through audience engagement and in my own internal processing of topics as I present.

Last week’s Digital Stratosphere conference in Denver was no exception. I learned more at this conference than any other I’ve ever training or conference I’ve attended in my career – hands down.

I occasionally realize things as I’m verbalizing them in a conference presentation. In last week’s session, I made the comment that “I have yet to meet a CEO or CIO that felt they had invested too much in organizational change management during their digital transformation.” I meant the words as I said them, but I suppose I never really considered the significance of this point until the words came out.

Our client: overconfident in their ability to handle organizational change management

As I reflected on this point, I thought of a current client that is severely underinvesting in their organizational change management efforts. This is a mid-size client embarking on a Microsoft Dynamics 365 implementation. They have an internal communications team, their employees are relatively well aligned compared to other organizations, and they feel they have this whole change management thing under control.

But I’ve seen enough projects like this one to know that it’s not the case. They, like so many other clients we work with, are underestimating organizational change management in their digital transformation. It is going to be a lot more difficult than they think, so our job is to help them see this before it’s too late. Quite frankly, we’re struggling to do so.

Here are a few reasons why this and most other organizations underestimate organizational change management on their digital transformation:

You are transforming the culture of your organization

Even the simplest of ERP implementations impact organizational cultures in ways that are hard to see, touch, and feel. Regardless of where you fall on the digital transformation vs. ERP implementation spectrum, the changes to your culture will be very real. For example, you may expect less data gathering and more strategic thinking as a result of your new technology. This may be just a single line item on a PowerPoint presentation, but it is a significant cultural change.

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Whether they admit it or not, employees like the way things work today

You probably have an employee or two who really likes that spreadsheet that they created years ago to manage their part of the business. Even though there may be more efficient ways to operate, this tribal knowledge makes them feel valued. You can’t expect employees to simply change for the greater good without helping them through the process. An effective organizational change management strategy can help achieve this.

Your business processes will change more than you think

Executives have a way of oversimplifying how much their business processes will change as a result of technology. Processes will become more efficient. Roles and responsibilities will change. The IT department needs to completely rethink how it will support technology going forward. These are significant business process and operational changes. Without effective organizational change support, you won’t fully realize their magnitude until you deploy the software and see the employee resistance.

You don’t have the bandwidth to listen to their concerns and needs

Listening to employee concerns and needs is one of the key value propositions of effective organizational change management needs. Some executives may not really care – or they think that employees should change because they have to if they want to keep their jobs – but this is a highly ineffective way to manage change. You need an organizational change team to help employees navigate these changes.

You probably don’t have a complete understanding of organizational change management

Most erroneously think of training and communications when they think of organizational change management. These are important components of change, but largely insignificant when compared to other tenets of effective org change. Workstreams like change impact assessments, organizational design, organizational readiness, and benefits realization are just a few of the keys to change success.

Bottom Line: Err on the side of overinvesting in organizational change

How may dollars and hours might help you better manage changes in your digital transformation? Chances are, more than you think.

My advice to anyone about to begin a digital transformation or ERP project of any sort: try to overinvest in the people side of the equation. It probably still won’t be enough, but you’ll be much more likely to succeed than those that completely neglect this critical success factor.

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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