Around 70% of digital transformation projects fail, according to a 2019 McKinsey study. In the realm of digital transformation, change is not just a possibility; it’s inevitable. Change is a force that shapes destinies, propels innovation and challenges the status quo. However, as change permeates organisations, it brings with it a companion – conflict. How this conflict is addressed holds the key to shaping the trajectory of an organisation’s future. In this blog, we delve into the importance of change within the context of digital transformation, especially in the procurement domain.
We’ll explore how diverse approaches to change management impact outcomes, why digital transformation is pivotal and how a harmonious blend of change management principles and technology can drive successful transformation.
Challenges with Change
The Conflict Conundrum: Change and its Resolution
It is an undisputed fact that change and conflict are inextricably linked. As organisations embark on transformative journeys, conflicts predictably arise. The way these conflicts are addressed plays a decisive role in defining an organisation’s future path. Change, rather than being feared, should be seen as an opportunity for growth, improvement and innovation. There are many examples where organisations fail due to their inability to understand and react to evolving markets. Blockbuster’s reluctance to incorporate digital streaming, for example, proved fatal and a large contributor to their bankruptcy, losing out to the adaptive and impending titan, Netflix.
Diverse Approaches to Change: One Size Does Not Fit All
Every organisation is a unique entity with its own DNA, culture and way of functioning. It is no surprise, therefore, that each company and team approaches change differently. A survey by Altimeter found that 31% of organisations struggle with setting clear goals and key performance indicators (KPIs) for their digital transformation initiatives. The corporate culture and leadership style of an organisation influence the strategies employed to manage change. What works for one may not work for another, emphasising the importance of customising change approaches to suit individual contexts. The difference between organisational culture and procurement team culture is highlighted in the 4C Transformative Procurement Survey with only 22% having fully or well-aligned cultures.
The Unavoidable Significance of Digital Transformation
In today’s digital age, transformation is no longer a luxury; it’s a necessity for survival. The rapid pace of technological advancement, combined with the recent pandemic-driven disruption, has made digital transformation more pertinent than ever. However, the sobering truth is that many digital transformation initiatives do not deliver their anticipated benefits. The results from IDC’s 2019 Global Digital Leader Survey show that the main challenge to transformation is the lack of integration of their digital projects. Incompatible systems can hinder operational efficiency. The key to success lies in effective change management that not only introduces technology, but also ensures its adoption and integration across the organisation.
Change Management in Procurement: A Multi-Dimensional Approach
Procurement, a critical function within organisations, is undergoing its own digital revolution. Change management in procurement is not solely about implementing new technology; it’s about preparing people for a seismic shift in processes and methodologies. This involves crafting a change strategy and philosophy that are embraced by leadership and encompass the Golden Triangle of people, process and technology. A 2022 survey of CIOs by Gartner found that 95% of organisations struggle with developing a vision for digital change. Without a well-executed change management strategy, employees may not embrace new technologies.
Prioritising People: The Keystone of Successful Transformation
At the heart of procurement change management lies a people-centric approach. Recognising that smooth organisational change hinges on prioritising the people who will implement and interact with new technologies is essential. According to David Shore, a leading change strategist at Southern Illinois University, resistance to change is the most common reason why many change initiatives fail. When employees are empowered, engaged and well-prepared, the digital adoption curve becomes smoother, and the chances of success increase exponentially.
The Future of Change Management: 4C’s Change Manifesto
The future of change management is being reshaped by emerging technologies. Artificial Intelligence (AI), Robotic Process Automation (RPA) and blockchain are revolutionising procurement processes, demanding a deep understanding of their impacts and the strategies to drive their adoption. Importantly, psychological aspects are gaining prominence. Traditional change management has often overlooked the psychological factors that drive resistance. Understanding and empathising with change resistors are essential for orchestrating successful digital transformations.
Communication and Learning: The New Paradigm
The digital era demands new communication and learning methods. Mass emails are being replaced by more personalised, interactive and visual communication methods. For example, experiential learning, microlearning, virtual reality and AI-powered personalised learning are revolutionising the way employees acquire and retain knowledge. A 2023 study by Prosci found that projects with excellent coaching and training were five times more likely to meet or exceed objectives compared to projects with poor training.
Embracing the Dynamics of Change in Digital Transformation
In conclusion, change is the cornerstone of progress, and in the realm of digital transformation, it’s a necessity. As organisations navigate this transformative journey, they must recognise the inevitability of conflict, prioritise their people and adhere to a well-structured change management approach. By integrating change management principles with the potential of emerging technologies, organisations can pave the way for successful digital transformations that empower employees, drive innovation and secure their competitive future.
By applying our knowledge to digital change and associated entrenchment, we not only align the change with strategic goals but also ensure that the human aspect of change is well-addressed for our clients. In a digitally enabled world, you cannot navigate a new world with an old map. If you are interested in discussing digital transformation, change management or merely want to collaborate on a topic, then get in touch with 4C Associates via Allison Ford-Langstaff (Partner), Joe Gibson (Head of Digital Innovation) or Harry Gordon (Digital Analyst) and we’ll be happy to help.