Change management for digital transformation: The three best strategies

Digital transformation is “the single most important investment now and into the future that organizations can make to drive enterprise value.” At least, it is according to 68% of the business leaders that took part in a Deloitte survey about digital transformation value.

The meaning of digital transformation has evolved over the years. Its focus used to be on replacing outdated legacy systems with more modern technologies built around developments like cloud computing, artificial intelligence and the Internet of Things. But its definition has expanded to encompass not just technologies, but also people and business processes.

Today, digital transformation means building an organization that is digital at its heart, and able to continually adapt to the emergence of new technologies in the digital age. It requires deeper organizational change and a shift in mindset towards agility, innovation and delivering the best possible customer experience.

That’s what makes effective change management in digital transformation such a challenge. 

The challenge of change management in digital transformation 

A traditional change management plan is designed to take organizations from one state to another, as part of a discrete change initiative. There’s a planning phase, an implementation phase, a chance to embed the change, and a post-change analysis to measure its success.

With digital transformation there is no beginning and no end. No steady state for organizations to look forward to once the project is complete. There’s just continuous improvement and digital change that's only getting faster.

In addition, the change management process is usually set up to reward success, and celebrate milestone achievements along the way. With digital transformation, change management has to account for a degree of testing and experimentation. Failure shouldn’t be seen as negative, but something businesses need to get comfortable with and learn from to create adaptability and resilience. The digital change management reward system has to be adapted accordingly.

Here are three tried and tested strategies to help your business overcome the challenges of change management in digital transformation. 

Change management strategy 1 - Implement considered communication

A well thought through communication plan is vital to any form of change. It helps employees and stakeholders understand the purpose and context of the change, and the impact it will have on them, as well as what they are supposed to be doing and when.

For successful digital transformation, considered communication is even more important. As it’s an ongoing process, there’s a danger employees will simply block out repetitive, outbound communications that aren’t meeting their needs or addressing their individual concerns about new technologies.

To maintain a continuous flow of relevant information, ensure stakeholder engagement, and adapt your communication to individual needs as the digital transformation initiative moves forward, you can:

• Make it a two way conversation: Communication during digital change is as much about listening to employees as it is talking to them. Make sure each employee can ask questions and openly share feedback, then tailor your communications strategy to keep those conversations moving.

• Connect on a personal level: Everyone has different concerns around digital transformation. They need to know what it means for them on an individual level and where they fit into the plan as it evolves. The more you can personalize your communication, the more effective it will be.  

• Review communication channels: There are multiple ways to communicate with employees, from in-person and virtual meetings to emails and internal messaging systems. Consider which channels will be most effective at reinforcing your key messages, without making employees feel they are constantly being bombarded from all angles. 

Just as digital transformation is a continuous process, so must your communication strategy adapt and evolve to meet the changing needs of those it will affect.

Watch our on-demand webinar about Change Management for Business Transformation, to discover how you can look, listen and act to drive change.

Change management strategy 2 - Embed a culture of continuous learning

At a time when new technologies are constantly emerging, and existing ones are continually evolving, digital fluency is no longer just for the IT department. Employees across all departments need to acquire digital competency and the ability to adapt to changing technological demands. This requires a culture of lifelong learning.

Encouraging employees to enhance their digital skills and acquire new ones requires investment in ongoing training programs. Upskilling or reskilling isn’t just a one-and-done task, it’s a continuous process. Ways to make your digital technology learning program more effective include:

• Leading by example and ensuring business leaders take part in the program.

• Providing opportunities for experimentation, perhaps through hackathons or similar. 

• Gamifying the program with incentives and rewards for completing milestones.

Digital transformation depends on businesses cultivating an environment where curiosity, experimentation, continuous learning, adaptability, and embracing change are an ingrained part of the company culture.

Celonis is supporting global energy company EDP with its digital transformation effort. As Allen Vasconcelos, Head of Digital Hub, explains, "We realize that the world is changing and if we don’t create flexibility to prepare for the uncertainty of the future, we’ll be in trouble. Our main goal is to prepare the company for a very different future where digital plays a key role.” 

Change management strategy 3 - Adopt a Center of Excellence model

For many enterprises, the most effective change management strategy for digital transformation is to use a Center of Excellence model.

A Center of Excellence, also known as a CoE or a capability center,  is typically an internal team of skilled knowledge workers, managed from a central point, with a mission to provide the organization with support and best practices around a particular area of interest. A Center of Excellence often takes the lead in exploring and adopting new technologies, tools, techniques or practices. When its main purpose is driving digital transformation, it is sometimes known as a Digital Center of Excellence. This related article explores how to scale Centers of Excellence to grow value.

As mentioned earlier, successful change management in digital transformation is challenging because it is an ongoing process rather than a one-and-done initiative with a clear time frame. A Center of Excellence that is focussed on digital transformation enables the enterprise to bring together a team of dedicated specialists with all the critical capabilities – including change management – that are needed to maintain the ongoing effort.

A digital Center of Excellence should:

• Help to embed technological agility into company culture

• Lead effective communication around the digital transformation journey  

• Support ongoing learning and training in technical skills 

• Establish digital transformation best practices for the organization

• Monitor the effectiveness of digital transformation initiatives 

• Conduct ongoing research into new technology to inform future digital plans 

At Celonis we see the effectiveness of the Center of Excellence model every day. In fact, a study conducted in partnership with Fraunhofer FIT revealed customers with a Center of Excellence are almost nine times as likely to report positive return on their investment as those without one.

Find out how Celonis customer Siemens used a Center of Excellence to manage its migration to the cloud. This was an eighteen-month process that was a huge undertaking given that, pre-cloud, Siemens’ on-premise data lake in SAP/HANA was the second largest on the planet. Siemens Center of Excellence is still going strong, and is used to embrace continuous innovation. It is staffed by a team of 30 people committed to helping Siemens make the most of their tech investments.  

Mastering change management for digital transformation 

Change management for digital transformation needs to be viewed in a fundamentally different way from a standard change management model. It’s not about taking an organization and its employees from one steady state to another, but about supporting continuous evolution in the digital era. It requires thinking of change not as a problem that must be overcome, but as a vital skill that is necessary for the business to succeed in a fast moving environment.

Watch our conversation with Constellation Research CEO Ray Wang, where we discuss the importance of change management in getting transformations to stick.

Bill Detwiler

Senior Communications Strategist and Editor Celonis Blog

Bill Detwiler is Senior Communications Strategist and Editor of the Celonis blog. He is the former Editor in Chief of TechRepublic, where he hosted the Dynamic Developer podcast and Cracking Open, CNET’s popular online show. Bill is an award-winning journalist, who’s covered the tech industry for more than two decades. Prior to his career in the software industry and tech media, he was an IT professional in the social research and energy industries.