Digitisation and change are not new phenomena. The transformation from analogue into digital dates back to the 80s – think digital watches and CDs. In the 90s, we had the emergence of e-commerce sites and marketplaces, followed more recently by digital content distribution, social media, the cloud. Companies have always had to adapt to new business environments and change management has been an important part of these transitions, helping drive and execute change.
But now in the age of digital disruption, the spill over effects of change are much more profound and affect the entire organisation and the fast pace of change demands high implementation speed. Traditional change management activities (like training, communication, impact assessment) can no longer keep up with the pace and scale required to meet today’s challenges. No wonder 44 percent of corporate executives say that their big changes don’t stick, according to a study co-sponsored by the Economist Intelligence Unit and the Project Management Institute. Almost half of the respondents also said that their organisations lack change management skills.
So, what is the change management that is required today?
A constant state of change is the ‘new normal’ and to thrive in this environment, organisations need to put the right conditions in place to be able to continually transform. Korn Ferry call this ability to continue respond to market disruption, digital sustainability. Digital sustainability requires new skills, competencies and ways of working and significant investment in effective change management to embed the ‘new normal’ into the organisations’ culture, ethics, values, beliefs, processes, and practices. It demands a shift from technology and processes as the primary enablers of change, to encompass the significantly broader and deeper people impact associated with digital transformation.
Success today requires a shift from technology and processes as the primary enablers of change, to encompass the significantly broader and deeper people impact associated with digital transformation.
Technology and the human capital blind spot
Organisations tend to obsess over technology and its promises. However, economic analysis commissioned by Korn Ferry and conducted by the Centre for Economics and Business Research finds that human capital represents to the global economy a potential value of $1,215 trillion. It is 2.33 times that of physical capital, which includes tangible assets like technology, real estate, and inventory. The analysis indicates that physical capital should be valued at $521 trillion today. Human capital remains the greatest value creator available to organisations. Korn Ferry research and economic analysis into the future of work demonstrates that for every $1 invested in human capital, $11.39 is added to GDP. This return clearly illustrates that investing in people can generate value for the organisation over time that significantly exceeds initial investment. Those organisations that do invest effectively in change management prove this research time and time again.
Technology and processes alone might enable but will neither differentiate nor make change stick. Organisations that achieve digital sustainability are those that embed change throughout the employee lifecycle and engage and enable the organisation through the process. They invest in the right capabilities to lead and implement digital sustainability and they know it is likely that capability may not currently reside within the organisation.
Every single business sector has gone through strategic shifts, reorganizations, business model reviews and other transformations, usually more than once, in the last 15 years. Coca-Cola reimagined itself as a beverage company, not just soda, and has grown profits by nearly 50 percent over the last decade, even as people in many parts of the world have cut back on drinking Coke. GE wanted to become more of a global industrials business, so it successfully shed its finance, media and other divisions, and now 70 percent of its business is outside the United States. At a basic level their leadership have been able to outline a strategy, motivate others to embrace the strategy and put the systems in place to help everyone successfully implement the change.
Digital sustainability requires a similar response. To get the full value of change management that will make your organisation truly digitally sustainable requires your program to include:
Right leadership capabilities
Organisations that are successful at transformation work through who are the right leaders to lead change and are very clear on what is expected of them. Korn Ferry analysed the traits, competencies and drivers against population norms from our 4.5 million data point assessment database to create a distinctive profile of the leadership qualities needed for the digital age. For example, the most sought digital leaders have the following traits: curiosity, risk taking, adaptability, tolerance of ambiguity and confidence.
Structure and roles
They ensure their organisation is fluid enough to allow and sustain ‘digital’. The traditional hierarchies and command and control matrices do not support a connected business. They bring multidisciplinary teams together from across the organisation with shared objectives and metrics to deliver on specific projects. Ideas and input come from a variety of stakeholders and they actively collaborate with clients, partners and even competitors.
People, skills and behaviours
What skills and behavioural patterns sustain a digital culture? Fast decision making and innovation and an environment where to try and fail is accepted and expected, underpins digital sustainability rather than the traditional hierarchical ways of working. Frontline employees are empowered to solve problems in the moment, providing more rapid and improved customer service and a reduced cost of sale. Digitally sustainable organisations have invested in people with a broad set of skills. A balance between technical and generalist skill are required to meet the demands of flexibility, agility, collaboration and customer centricity including attracting employees from different backgrounds, such as digital startups. In addition, the more customer centric an organisation becomes, the more diverse your workforce will need to become. Your workforce needs to reflect the diversity of your customers including multi-generational engagement across multiple channels.
Employee engagement
Korn Ferry studies have shown how organisations with higher levels of engagement can achieve up to two and a half times more revenue growth. Digitally sustainable organisations have a very clear vision for what digital means for their industry and organisation. There is a difference between engaging in digital versus becoming a digital organisation. Those who have successfully made that shift have been able to articulate what that means for their people and their role in the change. One of the biggest challenges they face is to balance the needs and motivations of the legacy workforce versus new employees who bring digital capability. Digitally sustainable organisations also tend to be deliberately transparent with their customers and employees about their ethics, responsibilities, decisions and practices.
Processes, systems, measures and rewards
Digitally sustainable organisations that empower their frontline to solve problems, aim to provide their frontline supporting systems and processes such as real-time data and single view of the customer. This requires strong leadership of the executive to remove road blocks, the need for escalation and approvals, comfort with risk taking and a change in focus from process to outcome.
In addition, many digital professionals place a strong emphasis on finding work that’s personally fulfilling. They want to work for a passion and a purpose but they still need to get rewarded for it. Organisations have to think broadly and tailor a package of reward options that meet their needs while concurrently catering for the needs of the entire employee population.
Transition support and planning
Whilst digitally sustainable organisations are agile they are also disciplined about execution. They decide quickly what to invest in and then draw on their current strengths to implement it efficiently, effectively and repeatedly at scale. They know what else is being delivered in the organisation at the same time or in the future and understand the impact that this will have on business as usual and their people.
Those organisations that succeed in digital sustainability have made the connection between the investment in technology and innovation and the value humans bring to embedding and maximising that investment. They know a supporting change management program must be more than drafting communication, organising training courses or implementing a new technology. Change management must be a comprehensive approach and plan to embed the ability to continually transform throughout the employee lifecycle.
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