How can you excel at Digital Change?

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LONDON, Tuesday 10 October 2017 – following on from yesterdays introduction, today Ben Tye, looks at our first question.

How can you excel at Digital Change?

To develop our answers, we’re going to quickly look back at where we’ve come as practitioners of organisational change management.  This is a quick and simplified history to help illustrate and illuminate the developments and trends that Able and How are observing with our own clients and across the wider business community.

Traditional Businesses and OCM 1.0: A quick look back.

The ‘traditional’ business model that emerged in the early twentieth century takes raw materials as inputs, does something with them (the value add bit…) and then sells the outputs. These products and services go to end customers, either individual consumers (B2C), other businesses (B2B) or both.

Most present-day enterprises and the value chains in which they operate all largely function along these lines.  Retail and investment banks, automakers, oil and gas operators, pharma production, accountants, high street retailers, Hollywood studios, law firms, newspapers, airlines, TV companies… you name it. Squint and they can all look somewhat similar.

During the mid to late 20th century, the corporation became the dominant business model for medium to large businesses.  Unfortunately, corporate structures with their hierarchies of control, their functions and procedures to enable economies of scale can often be bureaucratic and inflexible.

Organisational Change Management (OCM) emerged in the 80’s to help businesses transition to new strategies, structures, systems and processes with as little disruption as possible.  When done well, OCM achieved this by:

  • Ensuring that people impacts are considered in any change effort.
  • Encouraging leaders to describe a compelling vision of the future or, a real and present crisis to provide the desire and motivation for change.
  • Acknowledging that jobs and roles were likely to change and that this may be difficult for people to come to terms with.
  • Encouraging managers to engage as people dealt with personal impact and to intervene when resistance manifested.
  • Designing new roles for people then training them in new skills and competencies so they can continue to function effectively and add value once the dust has settled.

Change managers’ methods and tools were aligned closely with programme and project management and often took a top-down and plan-driven approach to execution.  For the purposes of this article to illustrate how OCM is changing, we will call this approach OCM 1.0.

Digital Disruption, Transformation and OCM 2.0: Where we are right now.

After e-commerce arrived in the 90’s, consumers and businesses started buying and selling goods or services online using the internet as a channel to market.  For most businesses, things weren’t that much different to the 1980’s.

However, with the arrival of the mid-00’s, some well-known and successful businesses suddenly found unfamiliar tanks parked on their lawns.  Blockbuster, Borders, Nokia and several other giants all quickly fell prey to new entrants with business models that looked quite different from the traditional enterprise.  When Netflix, Amazon and Apple bulldozered into the DVD rental, bookselling and mobile phone sectors, other businesses woke up and started to ask the questions “Could this happen to us?” and “Can we do the same?”.

Thus ‘Digital Transformation’ was born as traditional businesses began to deploy technology solutions to cultivate much more personal relationships with their customers; to streamline supply chains and improve the productivity of their internal processes and functions.  Digital banking, omni-channel retail, real-time sourcing and HR-as-a-service are all examples of digitized business processes.

This transformation, underpinned by the CASM (Cloud; Analytics; Social; Mobile) technologies also introduced new ways of doing ‘work’ characterised by:

  1. Doing things quickly, at pace and often without a crisply defined outcome
  2. An iterative, experimental, learn-and-pivot approach vs. detailed medium-term planning
  3. More portfolios of smaller projects and fewer large, top-down, straight-line programmes
  4. Less top-down command-and-control and much more localised autonomy in decision making
  5. Heavily matrixed and dynamic organisational structures changing quickly to reach a business goal.

Lots of OCM 1.0 is still relevant to digital transformation efforts, but we are learning that some elements are too unwieldy and slow. Sometimes this is not appropriate to the pace, scale and cadence required for digital projects and the way that some people must now work and some businesses operate.

We are seeing an increase in the use of Agile and Lean approaches to enable change.  Specifically, integrating change management principles into Agile projects and vice-versa, approaching organisational change with an Agile mindset and using Agile methods to execute.

In the same way that Agile is emerging out of the shadow of software development, so the practice of Design Thinking and its creative, human-centred, prototype and learn approach has been moving steadily out of product development and into new areas and business functions.

There’s also a growing recognition that a change ‘state’ is a becoming a desirable permanent feature rather than a difficult transitional phase to be managed between two fixed points of business stability.

Contemporary organisational change management, what we call OCM 2.0, embraces and emphasises things like Lean, Agile and Design Thinking over several of the more traditional centrally planned and programmatic approaches to managing organisational change.

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Digital Business-as-Usual and OCM 3.0: Where we think we’re headed.

Predicting the future is a risky business.  Perhaps it is safer to look to the present for signs as William Gibson said ‘The future is already here – it’s just not evenly distributed.(1)

A true digital business is much more than a traditional business using digital technology to improve efficiencies or to market and sell goods and services online.  Digital businesses are born and created digital. They are fashioned from CASM technologies along with newer emerging technologies such as Machine Learning and Augmented Reality in creative ways to generate new sources of value.

The most striking examples are known as platform businesses which represent a departure from the traditional linear business model described earlier.   A platform business connects consumers with producers to facilitate an exchange, generating value for all three participants.

Many of us are already consumers and producers in the platform business economy.  Catching rides with Lyft or driving for Uber, renting our rooms on AirBnB, selling our art or music on eBay and Bandcamp, ordering Friday’s takeaway via Deliveroo and having the boiler fixed via TaskRabbit.

What’s interesting about these businesses from an organisational change perspective is that they are relatively small in terms of numbers of actual contracted employees. But, enormous if you consider the ‘producers’, often independent contractors as quasi-employees and the millions of customers and consumers.

It starts prompting questions like “What is the organisation?” and therefore “What are the implications for managing and enabling change?”.  For example, “How do we manage the people part of our business when our managers are algorithms and apps?”, especially in a DevOps environment releasing discrete technical changes every 11.6 seconds, like at Amazon.

As an illustration of how a platform business is managing the people impact of its technical change, Deliveroo recently concluded it needed to hire fifty ‘Operations Liaison’ staff(2) as coaches and points-of-contact for their riders.   They sound exactly like what we at Able and How, and other OCM practitioners would call ‘Change Agents’.

We’re not suggesting that every business is going to be platform based, but, when traditional 20th century giants are building them with the likes of GE’s Predix, IBM’s Watson and Microsoft’s Azure B2B platforms, we think it’s worth thinking about the implications.

Even if you’re not in the platform business yourself, then you should perhaps be considering how automation is going to augment or replace employees and what they do for your customers, suppliers, partners and each other.

We think that OCM in this digital business-as-usual economy will build upon current best practice as continuous change becomes the norm.  Early signs suggest that OCM 3.0 will involve a return to the basics, applying upon some of the disciplines that emerged in the 80’s, as well as drawing heavily from the behavioural sciences, anthropology and psychology to help us design person-centred experiences with intelligent assistants and smart applications that enable change from within.

Summary

So, here are our summary conclusions on how and where you should apply the different variants of OCM to enable success in the digital economy:

  1. ‘Traditional’ Organisational Change Management or OCM 1.0 is still enormously valuable, if not even more necessary at the strategic and enterprise level.  Your employees, customers, suppliers and producers and other stakeholders (especially employees groups, NGOs, unions and regulators) should be engaged via all available channels and listened to as you go on your journey to engage them through the process. Otherwise you will lose some of them by going elsewhere to do business or, worse, bring your business to a grinding and potentially catastrophic halt.
  2. At the next level down, in the guts of your business you should be thinking about encouraging OCM 2.0 best-practice. Your leaders, managers and anyone else responsible for changing how your business works via digital technology should be learning about using Agile/Lean approaches and elements of Design Thinking to engage employees and other people in change.
  3. Start thinking about OCM 3.0.  Use the digital tools in your environment. Effecting change through the interfaces, platforms, algorithms and AI built in to your products, services and processes.

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Tomorrow we look at answering our next question – Digital Change: How do Change Practitioners get it right?

#letschataboutchange

 

(1) William Gibson, The Economist, December 4, 2003.

(2) Driven to despair — The hidden costs of the gig economy. Sarah O’Connor Financial Times. September 22, 2017



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