Why a Change Management function is critical in the digital age​

In the past few years, Change Management has been ranking as one of the top challenges that UK companies are facing or expect to face soon. Higher than employee engagement, internal communication, competition or retention.

I consider this datum as the result of a long waited wake-up call to every organisation with a digital component in their business. A wake-up call initiated by the demise of giants like Kodak and Blockbuster, who did not recognise the pivotal role that Change Management plays in any strategic transformation.

Marketing Form’s Research Report 2016/17
Marketing Form’s Research Report 2016/17

Managers finally started understanding that by failing to manage changes properly, they are throwing their teams into the lions’ den, to face alone the burden and the discomfort coming from an ever-changing landscape. Which is also the reason for other critical issues to seem less concerning: by defining a change management strategy, organisations are nourishing their foundations, pulling up scaffoldings on top of which their teams will start building and developing. That will naturally increase employee engagement, streamline internal communication and reduce turnover.

Technology awareness

However, statistics in these reports also highlight the fact that these same companies, in spite of their good intentions, are struggling to find the best change management strategy. It is not going to become any easier for them, considering the importance that digital transformation programmes are gaining in highly commoditised markets.

If you are not familiar with the term, a “digital transformation” is the radical transformation of business, activities, and competencies to fully leverage the opportunities of digital technologies and their impact across society. When it comes to digital, the transformation, fast-paced in nature, is effectively disruption. That conflicts with the vast accumulated legacy landscape of applications and processes typical of any non-startup company.

Startups can significantly benefit from not having to deal with “how things used to work”. However, the tremendous pace of technology change is pressing companies to do more and more in every budget cycle: innovations keep piling up on top of old systems and software, and organisations continue to fall behind the technology migration curve. In a few years, even today’s startups might no longer fit.

No company will be able to keep up to date with technology without integrating technology awareness into their business, establishing a technology committee and providing proof of concept before making significant changes.

Resistance to change

If change management came down to breaking down and planning technology upgrades only, the number of companies struggling with it would be significantly lower. The biggest obstacle to change is the natural resistance that human beings offer to it.

Possibly the best analysis I have read on how the human brain manages changes is the one written by Kahneman. Daniel Kahneman is a psychologist well known for his studies on behavioural economics and for being a strenuous opponent of the concepts of Homo economicus. In one of his most famous books, “Thinking, Fast and Slow“, Kahneman summarises the many decades spent challenging the idea of people being generally rational.

plunkert-nyt-fastslow
Image from David Plunkert

In Kahneman view, two very different engines, what he calls System 1 and System 2, govern our brain. System 2 represents our slow, judicious, analytical and deliberate self, while System 1 is our fast, instinctive, automatic and mostly unconscious mode. One of the critical features of System 2, apart from being rational, is also to be quite resource demanding, so on many occasions, instead of analysing a situation, System 2 considers the instinctive response provided by System 1 to be enough, in spite of any logic.

That explains why it is much easier for our brain (System 2) to maintain the status quo rather than accepting a change, and why people seem to be overly attached to their routine. Changes trigger a general feeling of anxiety, even when they are meant to revert habits that admittedly cause unhappiness. Like if somebody asked you to change the way you cross your arms: it would take some effort, and feel less natural.

Strategies and model

In an attempt to keep up with the fast-moving business environment, many companies try to push quick fixes and rapid changes from top to bottom. However, the old centralised model does not offer any satisfactory answer to the needs of a modern workforce, also considering the increase of millennial leaders at all levels.

Millennials are, by definition, best equipped to embrace change, having grown up in an ever-changing environment, on a constant rollercoaster ride. Nonetheless, they will struggle all the same to accept it.

The best way forward is to build change capability across the company, through distributed models that rely on either a centre of excellence or a community of practice. The distributed model is of course only possible if the higher management has already identified the “line of autonomy” below which teams are empowered to define the how, if not the what.

Some global changes might be still necessary. For example, newer generations seem to appreciate regular feedback way more than the typical annual review and that is a type of change that still requires centralised coordination.

Global changes, however, depend on communication much more than distributed ones. Townhalls and meetings are always useful tools to ensure that as many people as possible are aware of significant changes in the org chart, the structure of the company or the business. For daily changes, companies recently started resorting to social networks and other media that are more relished by millennials.

group of friends hanging out
Photo by Helena Lopes on Pexels.com

Conclusions

A survey from PwC recently provided a glimpse into the future that millennial are bringing inside companies. A future in which the human factor, communication, and emotional intelligence are considered more determining than AI’s and technology.

Whether or not you believe that millennials will reshape our workspace, you will have to admit that companies that cannot get their employees to accept change, will hardly sell it to their customer.

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