Author: Sven von Osten

Digital Transformation

Digital transformation marks a rethinking of how an organisation uses technology, people, and processes in pursuit of new business models and new revenue streams, driven by changes in customer expectations around products and services.

Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models. The term is widely used in public-sector organisations to refer to modest initiatives such as putting services online or legacy modernization. Thus, the term is more like “digitization” than “digital business transformation.”

From the perspective of organisational transformation, true digital transformation requires leaders to go back to the fundamentals. They need to focus on changing the mindset as well as the organisational culture and processes before deciding what digital tools to use and how to use them. The future of the organisation should drive the technology, not the other way around.

Pros

  • Makes business more competitive.
  • Makes employees more productive.
  • Allows for a better customer experience.

Cons

  • Never-ending change.
  • Takes time for effective implementation.
  • Can cause upheaval & uncertainty.

Recommended resources:

Gartner Glossary, Digital Transformation

Harvard Business Review, Digital Transformation is Not About Technology

Design Thinking

Design thinking aims to develop innovative ideas and solutions for diverse problems, which applies a high level of creativity to the problem solving process. Beginning with an analysis of the users needs to understand real problems and expectations, it then applies different creativity techniques to develop, test and validate prototypes to solve the problem at hand.

Promoted by the Stanford d.School, Design Thinking has been adopted in recent years as a reference methodology in various fields, such as corporate, industrial and healthcare, used in educational, political and social innovation.

From the perspective of organisational transformation, design thinking can be a very effective way of developing a culture of growth and innovation within the organisation.

Pros

  • It is highly structured with well formatted tools to aid the creative process.
  • By asking less conventional questions, teams can discover more original ideas, leading to innovative solutions.
  • It can foster strong engagement  and help organisations to get their employees onboard to collectively meet the challenges they are facing.

Cons

  • The involvement of many people in the idea generation process can lead to chaos and incoherence.
  • As it requires the direct involvement of users it can be resource intensive.
  • The application of the methodology for the design of corporate digital solutions could clash with restrictions imposed by integrations with systems already in use.

Recommended resources:

Creative Confidence, Tom Kelley, David Kelley, IDEO 2021

Cultural Transformation

Organisational culture, the set of shared values, beliefs, and assumptions of the organisation, plays a large role in organisational effectiveness and performance. One of the main barriers to successful organisational transformation is the culture of the workplace.

Over time, organisational cultures generally evolve along with business strategy, and they become mutually reinforcing.  The problem comes when the organisation’s leadership decides to implement a new strategy or change of direction that requires changes to the way people think and act at work. 

From the perspective of organisational transformation, neglecting cultural change is one of the factors known to contribute to the high rates of transformation project failures. However, a cultural change program should support strategic objectives. If culture becomes the main focus and doesn’t add value to the strategic objectives of a business, then the costs may outweigh the potential returns.

Pros

  • It can create a better work environment by improving employees’ day-to-day interactions.
  • Culture fuels the entire organization; individual performance gains translate into gains across the entire business.
  • It can increase organisational agility and resilience needed to adapt to continual change.

Cons

  • The time it actually takes to break-through and change existing attitudes and behaviours.
  • The potential negative impact on engagement and performance when efforts stall and fail.
  • Processes and systems must also be updated to reward the expected new cultural norms.

Recommended resources:

 The International Council of Management Consulting Institutes

Continuous Improvement

Continuous improvement focuses on increasing the effectiveness and/or efficiency of an organisation to fulfil its policy and objectives. It is not limited to quality initiatives. Improvement in business strategy, business results, customer, employee and supplier relationships can be subject to continual improvement. Put simply, it means ‘getting better all the time’.

W. Edwards Deming, a pioneer of the field, saw it as part of the ‘system’ whereby feedback from the process and customer were evaluated against organisational goals. The fact that it can be called a management process does not mean that it needs to be executed by ‘management’; but rather merely that it makes decisions about the implementation of the delivery process and the design of the delivery process itself.

From the perspective of organisational transformation, identifying what needs to be improved as opposed to what needs to be disrupted allows for a balanced approach to maintaining delivery flow and the required innovation. It also allows leaders to direct dedicated teams to both efforts to avoid overheating the organisation by focusing the same teams on both simultaneously.

Pros

  • A continuous improvement in efficiency.
  • Higher employee engagement as they are expected to do more than just show up for work.
  • Higher customer satisfaction through higher quality and response to their feedback.

Cons

  • Improvements are made in small, incremental steps.
  • It can stifle rather than reward creative thinking.
  • Improvements can become disconnected from achieving business objectives.

Recommended resources:

The W. Edwards Deming Institute

Change Curve (Elisabeth Kübler-Ross)

In 1969, Dr. Elisabeth Kübler-Ross wrote about the “5 Stages of Death” also known as the “5 Stages of Grief®” , “5 Stages of Loss®” , or just “The 5 Stages.” She identified these stages as defence mechanisms or coping mechanisms to change, loss, and/or shock. The stages were not meant to describe a linear or step-by-step process.

Nonetheless, these 5 stages have been laid out as Denial, Anger, Bargaining, Depression, Acceptance, as this is a common path in understanding how people react emotionally to significant change or loss. It is one of the most widely used models in organisational change efforts.

From the perspective of organisational transformation, this model provides a good basis for managers and leaders to understand how their teams will react, and to identify and react to problems early before they escalate and become real issues.

Pros

  • It is objective as it focuses only on people’s natural reactions to change.
  • It is unbiased by any industry or organisation and can therefore be applied to any change.
  • It is easy to understand and use.

Cons

  • It does not take into account that individuals may react differently.
  • It is based on observations and can be considered to lack empirical evidence.
  • It is unclear how the stages are affected by each other as they are non-linear and some individuals may not experience all stages.

Recommended Resources:

Elisabeth Kübler-Ross Foundation

Change Agent

A change agent in the context of organisational transformation is an individual who knows how to get people in an organization involved in solving their own problems. They can be internal or external to the organisation.

Internal change agents are individuals who are skilled at understanding human behaviour and have some form of expertise in the behavioural sciences and the intervention technology of Organisational Development (OD). While this type of expertise is most common within the staff function of HR, it is also increasingly common practise to train people from the line in OD. This can prove a more successful approach as it provides a more natural evolution in the change mechanism of an organisation.

From the perspective of organisational transformation, while external support is often necessary to create the initial momentum, it is imperative that the sustainability is assured through internal change agents at different levels of the organisation.

Pros

  • Existing credibility of change agents within the organisation.
  • Internal knowledge and network facilitates rapid detection of political issues that can derail efforts.
  • Development of internal OD capabilities beyond HR to train future change agents.

Cons

  • Line resistance to give up the high-performers who tend to be the most obvious and successful change agents.
  • Additional investment necessary to resource and fund the development of dedicated change agents.
  • Skilled change agents become highly poachable and may leave unless a formal career program is put in place to provide perspectives beyond their immediate role as change agent.

Recommended resources:

McKinsey & Company: The Change Agent Challenge

BE-DO GAP

A “Be-Do” gap is the gap between being and doing. It is the gap between core aspirations and actual behaviour and responses.

Individuals, teams and organisations can suffer from “Be-Do” gaps. At an individual level, people with a wide ”Be-Do” gap live with contradictions, which can negatively impact mental and physical health. At a team or organisational level, the “Be-Do” gap is the gap between the defined culture or values and the ‘actual rules of the game’, that is to say, the behaviours which the team or organisation define as acceptable or not through their daily interactions.

From the perspective of organisational transformation, identifying and closing ”Be-Do” gaps pro-actively is at the core of reinforcing the new cultural norms that enable people to think differently, act differently, and achieve different results.

Pros

  • Identifying “Be-Do” gaps increases the probability of people understanding what needs to change in the day-to-day behaviour of the organization
  • Closing ”Be-Do” gaps pro-actively reinforces the new cultural norms
  • Leaders who are willing to lead at this level become multipliers of the desired culture

Cons

  • Leaders must be prepared to address systemic changes in their organisation to support the desired behaviour
  • Leaders themselves must be prepared to address “Be-Do” gaps at the highest level of the organisation

Recommended resource:

Navigating in Times of Change: The N.E.W.S.® Navigation Journey, Goz Aviad, 2020

Bias

Bias is a disproportionate weight in favour of or against an idea or thing and can be innate or learned. Biases can be cognitive, statistical or contextual. Biases should not be confused with logical fallacies, which are errors in reasoning which weaken or invalidate arguments.

Senior leaders are the core factor affecting organisational transformation, and their cognitive bias can have a strong effect on strategic choices.

Overconfidence and overoptimism are thought to be some of the most common forms of managerial cognitive bias affecting organisational transformation. Leaders with a cognitive bias for overconfidence are prone to overemphasize their own abilities, while leaders with a cognitive bias for overoptimism are prone to overemphasize their expectations of positive conditions or results in regard to the external environment.

From the perspective of organisational transformation, the cognitive biases of senior leaders should also be considered when selecting and employing the strategy, as these can directly impact the efficiency of decisions. 

Pros

  • Identifying cognitive biases enables leaders to challenge assumptions and beliefs, and can lead to better decision-making.
  • Being aware of cognitive biases helps to filter any new information through a more objective lens to improve decision-making.

Cons

  • It can be challenging to differentiate between conclusions and decisions being made on the basis of heuristics (a thinking short-cut based on an accurate representation of reality), or a bias (a thinking short-cut based on beliefs or influences).
  • While challenging assumptions and beliefs has many pros, it can also lead to endless discussions and little progress.

Recommended resources:

Think Again, Grant Adam, 2021, ISBN 978-0-593-29874-9

The Art of Thinking Clearly, Dobeli Rolf, 2014, ISBN 978-0-06-221969-5

Sage Journals, Managerial Cognitive Bias, Business Transformation, and Firm Performance: Evidence From China

Agile

‘Agile’ is the ability to create and respond to change. It is a way of dealing with, and ultimately succeeding in, an uncertain and turbulent environment. It focuses on understanding the environment today, the uncertainties, and on finding solutions which can be adapted as they are developed.

An agile mindset can boost transformation efforts, as it places an emphasis on learning from failures and encourages different perspectives and diversity of thought. It does however require that teams are operating within an ecosystem of psychological safety to make the level of collaboration required possible. It also requires that they have a clear understanding of the core vision and strategy to remain fully aligned through each development iteration.

From the perspective of organisational transformation, it would be worth considering whether your leadership is strong enough to maintain the strategic consistency necessary for cohesive action across the organisation.

Pros

  • Breaks down silos and reinforces collaboration.
  • Creates momentum through short-term planning, sprints and rapid delivery.
  • The need for change is implicit in the methodology and so allows for very flexible change management.

Cons

  • The lack of practical boundaries and reactive, ad-hoc nature can make budgeting and working to timelines challenging.
  • The focus on reacting, adapting and improving in real time can be detrimental to structured planning.
  • The overall cohesion required for any transformation can be difficult when using the agile approach.  While it is perfectly possible to be both agile and cohesive, it takes strong leadership and a consistent strategy to keep everyone and every increment working towards the same vision.

Recommended resources:

The Agile Manifesto

The five trademarks of agile organizations; McKinsey & Company; 2018.01.22

ADKAR®

The Prosci ADKAR® Model is based on the understanding that organisational change can only happen when individuals change, and therefore focuses on connecting the human with the business dimension of change.

The word “ADKAR” is an acronym for the five outcomes, according to PROSCI, that an individual needs to achieve for a change to be successful: Awareness (of the need for change), Desire (to participate and support the change), Knowledge (on how to change), Ability (to implement desired skills & behaviours), Reinforcement (to sustain the change).

The model provides a practical, ready-made approach to change management. It has been widely tested and is one of the most popular change models.

From the perspective of organisational transformation, it would be worth considering if a model which, on the one hand focuses on the individual dimension, and on the other with such a prescriptive nature, will meet your organisation’s needs.

Pros

  • It focuses teams on the activities necessary to manage the change.
  • It is action-oriented and measurable.
  • It supports diagnosis of resistance to change.

Cons

  • It is an incremental change management approach less suited to lead large-scale transformations.
  • It largely ignores the role of leaders in addressing the emotional aspects of change

Recommended resources: www.prosci.com

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