So, you started a Digital Transformation initiative and hopefully stood up your agile team(s) with the right resources and skillsets, including change management. You collaborated with your end-users to understand their needs and rolled out a top-notch digital tool. However, a few weeks go by, and you are still not getting the value you promised your stakeholders.
Assuming you have built or acquired the right digital tool for your business problem [1], and you have provided enough communication and training on why and how to use it, you realize that your end-users have still defaulted back to their spreadsheets or old ways of working.
What went wrong?
There are two sides to any Digital Transformation: The Technology and the People.
Technology alone doesn’t create value for an organization. The value comes from the people who use the technology to generate new value streams. This is what user adoption is all about.
The question is can change management effectively drive user adoption in Digital Transformation?
Change management has been around since the 1940s — with Lewin’s model, also known as the unfreezing-change-refreezing model. It is considered a key success factor for major initiatives that have a medium to high impact on the organization.
At its essence, this practice aims to ease people into a new organizational state resulting from a change in culture, business processes, and/or technology. Change management is an effective practice, under appropriate conditions and in the right context.
Let’s examine these conditions and whether they apply to Digital Transformation.
1. Framing the technological change as “required change”
If we take a closer look at what goes on during a new technology implementation, change management practitioners will:
- Conduct an impact assessment of the new technology and related processes on existing jobs
- Develop and execute a communication and training plan to get the end users ready
- Provide post-go-live support during the transition phase where the users get accustomed to the new working environment
With most non-digital technologies, users are required to replace their legacy systems with new technology. Required is the important term here.
Within the realm of Digital Transformation, the transition phase is more exploratory in nature, particularly with the deployment of Artificial Intelligence/Machine Learning (AI/ML) technologies. You typically deploy a Minimum Viable Product (MVP) that partially replaces legacy tools, and the users are asked to experiment with it while maintaining their legacy systems. Experiment is the key term here.
Reflection Point
Knowing that people already suffer from cognitive overload, how can you convince them to be part of enhancing your MVP while new features are being developed?
2. Having a well-defined end state
Change management is best suited for initiatives with a well-defined end state, where the emphasis is on closing the gap between the current state and the future state.
However, Digital Transformation is not a project with a clear end state. Transformation is an evolving journey that touches every aspect of the organization and requires a coordinated effort of multiple initiatives at once. Everyone involved agrees that digital is the way to move forward, but the destination is never clear from the beginning. When the aim is to move beyond digitalization [2] towards Business Model Innovation (BMI), it may take years before the new value-creation channels take shape.
The Digital Transformation journey of Codelco is a perfect illustration of how a vision evolves through time to take advantage of the rapid pace of technological change and its capabilities. In 2012, Codelco -a Chilean state-owned copper mining company — began digitizing its operational processes to enhance safety and efficiency. Their initial vision was to transform mining operations, moving from a physical model to one powered by digital. As the transformation took shape, Codelco harnessed the possibilities offered by mobile technology, analytics, and embedded devices to move toward an intelligent mining model. This meant that miners may never need to work underground again.
Codelco Digital Journey
This BMI allowed Codelco to design mines to different specifications, leading to a cheaper and faster process and enabling access to caches of ore that weren’t economically feasible prior to the transformation [3]. For this to be possible, miners had to adopt new ways of working fueled by their digital knowledge instead of their physical strength. Combining digital tools with new ways of working allowed for Codelco’s Digital Transformation to occur.
Reflection point
How can you keep people fully engaged throughout the transformation journey if your end state is constantly evolving?
3. A clear process-driven scope
If you have been part of any major Enterprise Resource Planning (ERP) software, then you are familiar with the tedious work of mapping business processes to all the tasks that can be executed in the system. The users are then provided with process-driven training that will allow them to use the system to execute their day-to-day job. People are expected to use the technology within the parameters of operational processes.
In the context of Digital Transformation, technology is an enabler of process innovation led by the business. Transactional data is supplemented by smart, real-time data that can be quickly turned into insights by applying analytics techniques to detect patterns, diagnose pain points and improve outcomes.
There are infinite possibilities that flourish with ambiguity and people must “collaborate” with the technology to be able to unlock its full potential. Sometimes, there is merit in starting your transformation without a well-defined scope for what processes and parts of the business will be impacted. No matter how brilliant your development team is, only your end-users will be able to uncover new and creative ways to use digital that were never accounted for in your initial value case.
Simply put, this is what user adoption is all about. You are not using the tool to execute a task within a process. Instead, you are tapping into technology to unlock its potential for your organization.
Digital technology is human-powered and its value increases through its adoption, not just its usage.
We can all learn something from the creative power of our kids when faced with new technology. Think about how quickly they figure out that devices such as Alexa can help answer quick math questions, not just stream their favorite music.
Reflection Point
Reflection point: How can you help people embrace ambiguity to unleash their creative power and help you truly transform your business through digital?
4. A set of well-defined training requirements
Training the users on how to use a new system is crucial for a successful implementation. Learning how to execute a task in a new system requires navigating screens and tasks. When you are training users on new digital tools, your focus should be on how to give them the ability to go from usage to adoption. This is because their level of engagement is highly influenced by their mindset toward technological change and their ability to adopt it.
It’s about acquiring a digital mindset, i.e. “a set of attitudes and behaviors that enable people and organizations to see how data, algorithms, and AI open up new possibilities and to chart a path for success in a business landscape increasingly dominated by data-intensive and intelligent technologies [4]”.
Neely, T. and Leonardi, P A. (2022) explain that establishing a digital mindset is like learning a new language: “You only need about 30% fluency in a handful of technical topics to develop your digital mindset [5].”
Reflection Point
How do you design a learning experience that provides enough understanding of the technology to empower people not only to use it but adopt it without feeling intimidated?
5. Resistance to change
Fear of the unknown is a common human reaction to change. When people are faced with change, they often feel uncertain about what the future will bring, and this uncertainty can lead to anxiety, stress, and resistance to change.
In the context of Digital Transformation, fear of the unknown is not the main driver of resistance to change. There are other barriers directly related to the complex nature of the technology itself and are attributed to cognitive biases. The term cognitive bias was introduced in the 1970s by Amos Tversky and Daniel Kahneman and is defined as a “systematic error in judgment and decision-making common to all human beings which can be due to cognitive limitations, motivational factors, and/or adaptations to natural environments [6].”
Have you ever introduced an AI/ML-based output to a group of users only to hear them say: “Where did you get that data from?” and “That’s not how we calculate this value!”
That reaction is due to what is known as confirmation bias, and it highlights people’s tendency to interpret or seek out information in a way that confirms preexisting beliefs. In this case, the belief is rooted in the spreadsheets that end-users have spent time and effort building and perfecting before the digital tool was introduced. The black box effect is another major barrier that must be addressed upfront.
The black box effect refers to the inability to understand the internal workings of a machine learning model, particularly deep learning models, which can be complex and opaque. This lack of transparency can make it difficult for humans to interpret how the model arrives at its decisions or predictions. The transparency issue directly impacts organizational behavior, such as trust and the perception of the solution’s accuracy and benefits. Understanding how AI works is a prerequisite for confidence in the solution [7].
When users are faced with the complexity of digital technologies, we are most likely to mistake cognitive biases for change resistance. While they are both considered barriers to user adoption, they can’t be resolved in the same way.
Now that we have examined the ideal conditions for change management to be effective, let’s look back at the original question.
Is Change Management the right discipline for your Digital Transformation?
While change management is critical for the execution of certain initiatives within a Digital Transformation, it does not guarantee its overall success. This is because Digital Transformation is dependent on user adoption and the level of comfort people have towards the technology. As the level of technological complexity increases, there is a need to shift from managing change to designing user adoption.
While change can be managed, user adoption must be designed.
