Month: October 2020

Doing vs being: Practical lessons on building an agile…

Doing vs being: Practical lessons on building an agile…

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Four global success stories offer insights and lessons learned on achieving organizational agility.

Around the world, a growing number of organizations are embracing agility to improve delivery, increase speed, and enhance customer and employee experience. Indeed, in the time of COVID-19, many organizations have accelerated their shift to agile. Our recent research found that agile organizations responded faster to the crisis, while those that do not embrace agile working may well forfeit the benefits of speed and resilience needed in the “next normal” after the COVID-19 pandemic.

In essence, agility at an enterprise level means moving strategy, structure, processes, people, and technology toward a new operating model by rebuilding an organization around hundreds of self-steering, high-performing teams supported by a stable backbone. On starting an agile transformation, many organizations emphasize and discuss tribes, squads, chapters, scrums, and DevOps pipelines. Our research shows, however, that the people dimension—culture especially—is the most difficult to get right. In fact, the challenges of culture change are more than twice as common as the average of the other top five challenges.

Shifting culture requires dedicated effort. Unfortunately, many organizations on this journey struggle to articulate their aspired agile culture and bring it to life. This article demystifies culture change in an agile world through four practical lessons drawn from real-life success stories from around the world.

Lesson 1: Define the from–tos

Each organization is unique. Accordingly, each needs its unique culture to power the new agile operating model. Organizations building an agile culture should base their approach on aspirational goals. They also need to understand their current culture, including the behavioral pain points that can be used as a starting point to articulate three to five specific mindset and behavior shifts that would make the biggest difference in delivering business results.

At New Zealand–based digital-services and telecommunications company Spark, one of the first steps the leadership team took in its agile transformation was to launch an effort to articulate the cultural from–tos. Spark boldly decided to go all in on agile across the entire organization in 2017—flipping the whole organization to an agile operating model in less than a year. From the beginning, Spark understood that the change needed to be a “hearts and minds” transformation if it was to successfully enable radical shifts to structure, processes, and technology.

Spark’s culture change started with its Sounding Board, a diverse group of 70 volunteers from across the organization. These were opinion leaders—the “water cooler” leaders and Spark’s “neural network”—not the usual suspects visible to management. The Sounding Board’s role was creating buy-in for and comprehension about the new model and designing enablers (behavioral shifts and new values) to help employees along the agile journey.

An early task for the Sounding Board was to identify the behavioral shifts teams would need to thrive in the new agile operating model. Members used their experiences, inspirational examples from other companies, and Spark’s work on culture and talent to define these shifts. And to help inform what changes were necessary, the Sounding Board sought to understand mindsets (those underlying thoughts, feelings, and beliefs that explain why people act the way they do) that were driving behaviors.

The from–to aspirations were then shared with different groups, including the top team, and distilled into four key themes. Each theme had to resonate with colleagues across the organization, be both practical and achievable, be specific to the company (that is, not derived from general agile theory). The resulting articulation of from–to behaviors allowed Spark to understand and compare its existing cultural reality with the desired end state.

Finally, to set up its from–tos as more than words on paper, Spark made culture one of the agile transformation’s work streams, sponsored by a top team member and discussed weekly in transformation sessions. The work stream brought culture to life through action. The from–to changes were incorporated in all major design choices, events, and capability-building activities. The work stream aligned fully with other culture initiatives that would help to move the needle on cultural change, such as diversity and inclusion.

Melissa Anastasiou, the team member who led the company’s culture workstream, observed: “Like many organizations, the company’s experience has been that culture change is hard and does not happen overnight. It takes collective and consistent effort, as well as a genuine belief in and understanding of the ‘why’ at all levels of the organization. Setting a clear and purposeful vision for what great looks like—and ensuring that this vision is authentically bought in from bottom to top that is, from shop floor to C-suite—put us in the best possible position to deliver the change to full business agile.”

Lesson 2: Make it personal

This lesson is about making the change personally meaningful to employees. To take change from the organizational to the personal frontier, leaders need to give their people the space and support to define what the agile mindset means to them. This will differ among senior leaders, middle managers, and frontline staff, and have different implications for each. Inviting colleagues to share personal experiences and struggles can build transformational momentum and unlock transformational energy.

This was an approach adopted by Roche, a 122-year-old biotechnology company with 94,000 employees in more than 100 countries. In order to build an agile culture, Roche facilitated a deep, personal change process among senior leaders. More than 1,000 of these leaders were invited to learn a new, more agile approach to leadership through a four-day immersive program that introduced them to the mindsets and capabilities needed to lead an agile organization. The program, called Kinesis, focused on enabling leaders to shift from a limiting, reactive mindset to an enabling, creative one. It also started the journey of learning how to shift from a traditional organization designed for command, control, and value capture to an agile organization designed for innovation, collaboration, and value creation.

Throughout the program, leaders came to recognize the ways in which their individual mindsets, thoughts, and feelings manifested in the design architecture and culture of the organizations they led. This recognition highlights why change programs that start with personal transformation are more successful. Organizations are built and led by their leaders: the way they think, make decisions, and show up shapes every part of the organization. This dynamic is amplified in agile organizations, which have an unusually high degree of openness and transparency.

The Kinesis program focused on leading through example. Roche’s head of talent innovation (the primary architect of the initiative) heard dozens of stories of leaders coming back from Kinesis and showing up differently. Beyond its learning programs, Kinesis also helped make the change personal by catalyzing large-scale experimentation in organization and business models. Within six months of the senior leader programs, many participants had launched agile experiments with their own leadership teams, departments, and several in their organizational units—engaging thousands of people in cocreating innovative ways to embed agility within the organization.

A core tenet of Kinesis was invitation, not expectation. Leaders were invited to apply lessons learned back to their own organizations. With the new mindset and the invitation, most participants did. Compared with the initial expectations of 5 to 10 percent of participants running a follow-up session with their teams, 95 percent chose to do so.2 Today, agility has been embraced and widely deployed with Roche in many forms and across many of its organizations, engaging tens of thousands of people in applying agile mindsets and ways of working.

Lesson 3: Culturally engineer the architecture

Even the best-designed culture programs can fail if the surrounding context does not support—or worse, hinders—new mindsets and behaviors. To sustain a new culture, the structures, processes, and technology must be redesigned to support behavioral expectations. To be successful, the desired culture change needs to be hardwired into all elements of the business-as-usual organization as well as the transformation.

Magyar Telekom of Hungary (a Deutsche Telekom subsidiary), invested to embed and ingrain agile mindsets and behaviors throughout the agile transformation it started in 2018. As with Spark and Roche, Magyar Telekom began with the foundational lesson of defining its from–to. The telco started with three core values that, as the transformation matured, eventually evolved into seven values and were translated into slogans for more effective communication:3

  • Focus, becoming more focused by critically assessing the current tasks and saying no to things that are not worth the required effort
  • Ownership, encouraging ownership by nudging employees to think of their tasks as if being performed for their own company
  • Retrospection, emphasizing the need to review and assess, celebrating successes and learning from failures

To ensure formal mechanisms supported this agile mindset shift, Magyar Telekom used structural changes on an individual and organizational level, aligning the people, customer, and business processes as well as the physical and digital working environments to an agile culture.

Magyar Telekom’s people processes, for example, practically reflected four principles:

  • All messages employees receive from the company are consistent with its cultural values
  • The cultural values and themes of focus, ownership, and retrospection are embedded in all HR and people processes
  • The employer brand, recruitment process, and onboarding journey ensure every new employee understands the agile culture’s cornerstones
  • Criteria for career progression define and support agile mindsets and behavior shifts

Magyar Telekom’s business processes were also hardwired to support its culture values. One of several examples used to support the focus and retrospective themes was the quarterly business review (QBR), a common element of agile operating models for business planning and resource allocation. QBRs typically involve stakeholders from major areas of the organization to set priorities and manage organizational demand and dependencies.

To further emphasize focus, the telco committed to implementing and scaling the QBR in the whole organization, including nontribe areas such as customer care or field execution. This formal mechanism had strong cultural implications. First, it signaled that the organization was committed to its cultural theme of focus. Second, the company-wide QBR aligned the whole organization around clear priorities, helping employees focus only on activities that create value while explicitly recognizing and deprioritizing activities that do not. Third, the QBR cycle also included retrospectives to understand and learn from previous successes and failures in a formal, structured, and highly visible process.

Another powerful way to ingrain culture is to change the physical and digital environments. Floors and walls can, quite literally, create either collaboration or barriers between teams. Magyar Telekom altered its floor plans to create spaces for individual squads, as well as all squads in a tribe, to sit and work together. The new physical environment promoted collaboration and continuous interactions. Team- level tools were introduced—including spaces for squads’ ceremonies and writeable walls where teams could visualize priorities, track progress, and engage in real-time creative thinking. Similarly, the digital work environment was updated with agile tools such as Jira issue-tracking and Confluence collaboration software, enabling efficient handling of epics, features and user stories. Within weeks, the Magyar Telekom work spaces turned from stereotypical offices to collaborative incubators of the new agile culture.

Lesson 4: Monitor and learn

Continuous learning and improvement is a core principle of agile working. It applies to agile culture as well. Successful agile transformations have shown the value of monitoring progress, evaluating behavioral change and its impact on performance, and running regular retrospectives to learn from successes and failures. However, measuring behavioral change has traditionally been a challenge.

ING, a well-known leader of agile transformations in banking, innovated here and used multiple approaches to track the impact of its agile transformation on productivity and several dimensions of performance, time to market and volume, and employee engagement. As part of these tracking initiatives, ING also tracked the progress of culture change and its impact on the overall transformation. The bank even teamed with INSEAD’s Maria Guadalupe, a professor of economics, to study and improve the quality of tracking efforts and the resulting insights.

ING’s first tracking initiative was a 40-question survey with 1,000 respondents that ran five times between 2015 and 2017. The survey questions, including those related to culture, were linked to the bank’s objectives and key results. This correlation between the transformation’s soft and hard drivers and its performance metrics allowed ING to see which cultural factors led to results and were critical to the transformation’s success. According to Michel Zuidgeest, ING’s lead of Global Change Execution, the product-owner roles and their corresponding behaviors, for example, turned out to be one of the most important factors affecting outcomes. Skill sets for product owners, chapter leads, and agile coaches—as well as the way they work together—were not clearly defined at the start of the transformation, and individuals in these roles had to grow the right mindsets and behaviors before team performance improved.

ING’s second tracking initiative, started in 2019, combined a 300-person “working floor” survey with senior leadership interviews across 15 countries. Once again, metrics on agile included culture-related questions on whether people on the floor felt more responsibility, whether they could collaborate better, and whether they were more able to learn from others in the company. In parallel, ING used qualitative methods to track the shift toward an agile culture. Updated performance frameworks and dialogues, for example, tracked whether employees were adopting desired behaviors while a continuous listening framework gave an ongoing pulse check of how people were doing.

ING used the data from its tracking initiatives to produce practical learning. Survey and interview results were used in QBRs, leadership dialogues, and improvement cycles. Outcomes were shared with tribes, the central works council, advisory groups, and others, and used in performance dialogues. ING also shared its findings with universities, sharpening both the company’s tracking efforts and university research. The value of tracking became very clear. ING managed to measure culture progress, establish the correlation between culture and performance, and use culture data to bring its agile operating model to life.

ING’s tracking initiatives produced insights on agile maturity, performance, and culture. Payam Djavdan, ING’s global head for One Agile Way of Working, explains that as the agile culture metrics improved—specifically the sense of belonging, motivation, purpose, and empowerment—employee engagement consistently increased. Similarly, several dimensions of team performance improved as the culture of credibility and clarity took hold while greater autonomy, a core principle of agile culture, allowed teams to take on their own challenges. In parallel, performance dialogues revealed that trust in tribe leads was a defining factor in employees’ engagement and their ability to share the tribe’s purpose.

Culture counts in all organizational transformations; it becomes critical in agile transformations. Organizations can do agile by changing their structure, processes, and technology. But they cannot be agile without changing the way people work and interact daily. Enabling a successful, agile transformation requires a fundamental shift in culture. Lessons from organizations that have successfully made this shift can give others a head start on their own transformation journeys.

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How to Build a Digital COE

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Is your organization considering digital transformation? Even amid the unexpected events of 2020, research shows that 70% of companies are either maintaining or increasing their spending in this realm.

If your organization decides to embark on this journey, it’s time to start thinking about building a digital center of excellence (COE). Today, we’re sharing exactly what this means and why it’s worth pursuing as you consider investing in the tools and technologies that can drive your company forward. 

What is a Digital COE?

Is COE just another three-letter acronym reserved for C-suite executives who only speak in jargon?

Not at all. A COE is something that any organization can build.

At its core, a center of excellence is a team of specialists all working toward a common aim. These specialists bring various backgrounds, educations and experiences to the table, and each one is integral. Though their areas of focus may be different, they’re well-versed in the organization as a whole, including what it takes to succeed.

You see, each of these specialists understands how the entire business value chain works. They’re also familiar with customer expectations and your company’s technology infrastructure.

Not every COE is a digital COE. It is only considered a digital COE if it’s primarily focused on digital operations. It is similar to an ERP center of excellence.

Why do I Need a Digital COE?

If you’re already focused on transitioning from legacy systems onto a new digital platform, and you have enough resources, time and budget, then why should building a digital COE be top of mind?

The answer is simple: Without the right resources in place, your best-laid plans could take you in circles. 

A digital COE gives you the internal infrastructure necessary to compete with digitally disruptive competitors. In other words, it enables your organization to transform its structure, culture, technology and customer experience. 

In addition, a digital COE facilitates collaboration between your company’s various digital stakeholders, including:

  • Technology experts
  • Process optimization specialists
  • Business unit leaders
  • End-users

How to Build a Digital COE

Now that we’ve covered what a digital COE entails, let’s take a closer look at how you can begin building one in your own organization.

1. Prioritize Your COE

When you decide to undergo a digital transformation, it’s tempting to rush right into the ERP selection process. However, it’s important to take a step back and ensure your internal foundation is firm.

You can do this by building a digital COE and relying on this team to help you map your current business processes and look for pain points. This informs your digital strategy, revealing which technologies you should adopt and how they should be leveraged to meet your ongoing business goals.

2. Keep Customers at the Center

Ultimately, every investment your company makes, from marketing collateral to ERP software, has the same overarching focus: your target audience.

For this reason, your digital COE should likewise be customer minded. In fact, one of your first steps should be tasking your COE with understanding your customers’ needs. Without an understating of customer needs, you could wind up straining the corporate budget on resources that your buyers don’t connect with or use. 

As your COE analyzes buying patterns and reviews customer feedback, it also should map out the individual journey each customer should take. This ensures that your future state business processes support a seamless customer journey.

3. Diversify Roles

Not every person in your COE will be responsible for the same tasks. Rather, the beauty and functionality of this group lies in its diverse mix of talents and skill sets. 

Use this to your advantage and assign different roles and priorities depending on each person’s core competencies. These might include:

  • Compliance
  • Regulatory issues
  • Planning
  • Maintenance
  • Finance
  • Quality assurance

4. Leverage the COE for Change Management Support

Members of your digital COE will work alongside your other employees, acting as their champion and key resource. As organizational changes are rolled out, these team members will report on the status and keep employees up to date on key milestones. 

This team also can facilitate user adoption by assisting with change management efforts. Before, during and after an ERP implementation, your COE should help provide stakeholders with the skills, support and tools they need to take advantage of new technologies.

5. Focus on Continuous Improvement

In the time that follows a digital transformation, there are bound to be inevitable kinks to work out and adjustments to make. An ERP system that you thought was user-friendly might prove otherwise, and a new process may not be as efficient as you first imagined. 

This is another place your COE can take action. Task these individuals with continually optimizing business processes and technology based on user feedback. This might require simple adjustments, or it might require business process reengineering, depending on the scale of the situation. 

Focusing on continuous improvement is one way to ensure that employees feel involved and that they continue to embrace organizational changes.

A COE is Key to Digital Transformation

In the time that follows a digital transformation, there are bound to be inevitable kinks to work out and adjustments to make. An ERP system that you thought was user-friendly might prove otherwise, and a new process may not be as efficient as you first imagined. 

This is another place your COE can take action. Task these individuals with continually optimizing business processes and technology based on user feedback. This might require simple adjustments, or it might require business process reengineering, depending on the scale of the situation. 

Focusing on continuous improvement is one way to ensure that employees feel involved and that they continue to embrace organizational changes.

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How to Build a Digital COE
Change management in the agile world – Willing, able and ready

Change management in the agile world – Willing, able and ready

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“What do you mean there’s no big bang release date? How will we know what to build if we don’t know what the thing will do far in advance? How can we train people to use something if we don’t have all the user requirements and specs up front?” Such questions ring through the hallways of companies making the transition from a waterfall to an agile way of designing and delivering software.

Even companies that pride themselves on being agile may struggle with what comes next, once their MVP is code complete. Many of our clients struggle with how to bring users along for the change as they develop their software iteratively. If they focused on change management at all in the past, they usually did so with an all-or-nothing mindset, with a specific release deadline and lots of effort leading up to a big bang release. This model doesn’t work in an agile environment where the product is never “done” and where new functionality, features, and products are constantly being developed, piloted and adapted.

Supporting change: Willing, able and ready (WAR)

Regardless of how a technology product is rolled out, the most challenging part is almost always user adoption. I often tease clients that “technology is easy, it’s people that are difficult” because of our preconceptions, habits, and preferences. Technology adoption will always be challenging unless we equip users to accept it.  We are used to the phrase, “ready, willing and able,” but I think that the more logical and effective progression is:

1. Willing: “I want to do this.’’

2. Able: “I know how to do this.”

3. Ready: “Okay, let’s do this”/ “I am going to do this.”

Exhibit 1: WAR: Are your users willing, able and ready? 

To make change stick: The agile change plan

Every good change management plan has the same basic elements: leadership and stakeholder alignment, communication, training, and activities to support business readiness.

Elements of the agile change planExhibit 2: Planning for change

How agile change management is different

What we have found is that agile change management means not only introducing users to and involving them in the development of new products and platforms, but also influencing them to think differently about the process. In an agile change program, activities have a slightly different flavor than in traditional programs. Just as discovery and development are continuous and iterative, so too are the change management activities.

Agile - old vs new way

Exhibit 3: Agile change management – The difference

Agile OCM (Organizational Change Management) in action

“This approach makes so much sense and thinking about what being ‘willing, able and ready’  really helped us to develop a good plan. Understanding that we also could take an agile approach to our launch and adoption activities made it a much more manageable and sustainable process.” (Client launch manager/change lead)Recently, I have been working with a major retailer to implement a custom service platform which is used by both internal and external users. It is designed to replace multiple existing systems and a plethora of currently heavily manual processes. Naturally, a transformation of this magnitude takes some time to achieve, but that doesn’t mean that real business value cannot be achieved with smaller chunks of functionality delivered at more frequent intervals.

Using an agile change management approach, the product team aligned its change efforts to the iterative development cycle:

Discovery: Together, members of the cross-functional team aligned on the “big why” with the business leadership, helping to shape a compelling vision that would act as the North Star throughout development. They used personas to identify the needs, expectations, and reservations of the various stakeholder groups to help shape the outlines of the plan. They also laid out plans for how to educate users about the agile journey.

Inception: As the team agreed on the MVP and the initial thin slice of functionality to deliver, the members responsible for launch and adoption also considered the question: “What is the thinnest slice we can take to achieve initial results?” What is an acceptable pilot? What will be the impact of the initial functionality and what is the simplest way to repeat and test relevant training?  What is an acceptable low fidelity way to begin communication? What are the most important messages to convey at first?

MVP Delivery: As the developers were working on the minimal viable product, the team members responsible for managing change also worked with an MVP mindset, for both content and delivery. Rather than building a big training plan highlighting all the benefits and functionality of a future product, they engaged pilot teams with “just enough” bite-sized training modules. Instead of investing a significant amount of time and resources in sophisticated communications at the beginning they started with simple, lower fidelity tools that could be tested and adapted quickly to user feedback.

Iterative Development: Following the rollout of the MVP, the change management activities kept pace with the expanding and evolving functionality. As the design team workshopped the product and gathered feedback from customers, this input was incorporated into training and communications materials. Members of pilot groups became change champions who became advocates across expanding networks. And with each iteration,  not only the content but the format of the change and communication tools evolved to become more sophisticated and robust:

Stakeholder alignment: From small workshops and one-on-one meetings to cross-functional design sessions to product champions to champion network
Communication: From individual slides and email blasts to product roadshows to all-company exhibitions
Training: From in-person demonstrations to recorded videos to self-paced digital tutorials
Business readiness: From individual paper checklists to crowdsourced task lists to automated onboarding

The takeaway

For any major change, product and development teams must take their users along on a journey, preparing them to be willing, able and ready to embrace the new product. The best way to do this is not with lofty expectations for massive big-bang transformation in one go. Rather, it is with a flexible, constantly evolving program of tools and activities that, like the product itself, start with an MVP then expand and evolve in response to user feedback.

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5 Implications for Change Management in an Agile World

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As change management consultants, we’re often asked how Agile and change management fit together.  There are a lot of questions about how adding change management to an Agile project management cycle works; there are concerns expressed about whether change management will slow things down, and get in the way of the speed and innovation derived from Agile. 

The need for change management is arguably increased in Agile because of its iterative nature, the amount of churn created, and consequently, its impact on climate and readiness. There are implications for change management when an organization adopts Agile that need to be addressed.

What is the same in both approaches is the need to focus on full implementation, not just installation.  What is the same is the fact that if you marry a fit for purpose, situational change management approach that’s blended with project management protocols, you will help projects be implemented faster and to benefit realization.   

5 Implications for Change Management in an Agile Environment

Agile is a project management approach that works by breaking projects into short, iterative cycles called “sprints”. At its core, Agile is based on the assumption that circumstances change as a project develops.  That’s why, in an Agile project, the planning, design, development, and testing cycles are never done.  They continue to change as the project takes form.

As with other project management disciplines, Agile project managers focus on doing things technically right by making certain they deliver business changes under time, cost, and quality (scope) constraints. That’s Installation. While you are still working through a life cycle, in Agile, they are doing this in short sprints, rather than saving it all for the end.  This has the potential to create ongoing disruption and churn.

These differences create some implications for change management in an Agile world:

  1. Because there is less planning time (you are going directly from milestones to script), change management templates are less useful
  2. There is less opportunity to formalize and standardize
  3. Because Sponsors and Targets can be exposed to the changes earlier than in the traditional Waterfall approach, there is more immediate disruption, and disruption is constant. Since there is a direct correlation between levels of disruption, and resistance, resistance occurs much earlier, and must be planned for and managed earlier
  4. Given all of the above, change practitioners must be more adept and able to make judgment calls rapidly and often, rather than relying on templates and tools
  5. Impacts on Project Managers, IT, and Sponsors must be managed

The same change management deliverables are needed, although the timing for developing these may be altered in Agile.  In the Initiation phase, the foundation of these deliverables should be built:  

  • Business Case for Action to define what the change is
  • From-To Definition to identify gaps between “is” and “will be”
  • Key Role Mapping to identify where Sponsors are needed, and who specifically these individuals are by name
  • Readiness Planning to have strategies and tactics available to manage resistance
  • Communication Planning by audience, with feedback loops to gather feedback that identifies potential sources of resistance

In both the Agile and Waterfall life cycles change management practitioners must continually ask the same questions to manage risks in real-time, and be prepared to apply situational strategies and tactics for mitigation:

Blended Approach is Still Best Practice 

Whether you are using Agile or Waterfall life cycles, it is still best practice to blend the technical plan with the human side plan.  In fact, because of the iterative nature of Agile, it is even more critical that you do this in order not to miss implications on the people side for technical project plan changes, and vice versa. The other common options (bolting on the human side at the end, or running parallel plans) don’t work.   

Instead, both the technical (aka project management) side and human (aka change management) side of implementation must be managed concurrently to achieve real project success:  projects that are delivered on time, on budget, all business, technical, and human objectives met. 

AIM & Agile: Two Methodologies, One Common Assumption

The Accelerating Implementation Methodology (AIM) is ideally suited for an Agile world.  AIM is a change management framework designed to be flexible based on what is occurring at the moment rather than what is next on the “to do” list.  AIM’s core principles guide you on what you should be doing, given the day-to-day project realities and challenges.  It is a risk dashboard for the people side of a change.

Both Agile and AIM are based on the common assumption that change is not linear!  In our vast experience working on business change implementations both small and large, we have yet to see a project follow the exact original plan.  Most, if not all, implementations are dynamic and unpredictable.  That’s why a process that is flexible, based on what is occurring at the moment, is so valuable.  It’s one of the reasons Agile and AIM work so well together.

In the end, it doesn’t matter if you are working in an Agile environment, or a more traditional Waterfall development process.  The blend of a fit for purpose and repeatable change management process like AIM dramatically improves the likelihood of implementation success.  

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5 Implications for Change Management in an Agile World


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What is digital transformation, why does it matter, and how can organizations implement change?

Questions such as these have become very relevant in today’s dynamic and fast-paced economy. 

In an era where disruption and innovation have become the norm, organizations cannot afford to sit idly by while their competitors adopt and profit from new tools and technology.

Below, we’ll learn the basics of digital transformation, a few digital transformation roadmaps, how it has shaped today’s business world, and more. 

What is digital transformation?

Digital transformation refers to the adoption of digital technology in order to transform a business, its practices, its workplace, and its strategy.

Every transformation program is unique and will focus on different aims, including everything from improving business performance to overhauling the customer experience.

One of the most important points to highlight is that digital transformation is not the same as software implementation. Software implementation is definitely a key component in digital transformation programs. 

However, simply deploying a new tool will not achieve a meaningful business impact.

Over the years, digital technology’s role in the economy has continued to grow:

Digitization – transforming analog processes into digital ones – was the focus towards the end of the last century. The PC revolution replaced typewriters with desktop computers, turned fax machines into scanners, transformed physical records into electronic records, and more.

The arrival of subsequent digital technologies, such as the internet and mobile, shifted the focus to digital transformation. Between 1995 and June 2020, the number of internet users grew from 16 million to nearly 4.7 billion. Along with this expansion, the continued evolution of technology opened up new markets and enabled entirely new forms of value. The result: widespread digital innovation and transformation.

The digital revolution is far from over and will only see more growth in the years ahead. Some argue, for instance, that another industrial revolution will combine digital technology with physical and biological technology. Advancements in these areas, they suggest, will completely transform the economy and the world as we know it.

Given these revolutionary technological trends, it should be no surprise that so many companies argue in favor of aggressive digital transformation.

Yet many business professionals lack a clear direction or roadmap, both of which are necessary in order to make progress.

Mapping out the digital transformation journey

Digital transformation roadmaps vary from source to source, but many of them follow the same general pattern.

One model by Deloitte outlines a three-stage business transformation process:

Imagine. Organizations should start by understanding disruptions, exploring new options, and choosing a path forward.

Deliver. New capabilities are designed and built, then tested and refined before full-scale rollout.

Realize. An organizational change program is then implemented, monitored, adjusted, and sustained.

One of Deloitte’s strategic frameworks that specifically focuses on digital transformation defines five stages: strategy, business model, capabilities, operating model, and people, process, and technology.

Another model by BCG describes a three-stage “digital path to business resilience,” specifically geared towards digital transformation during the COVID-19 crisis:

Respond. Organizations mainly focus on business continuity and human safety.

Recover. As countries gradually begin to reopen and ease lockdowns, organizations focus on restarting and reopening.

Reimagine. The future remains uncertain and potentially volatile, so it is important to transform and find new ways to create a sustained competitive advantage.

Each of these research firms naturally offers in-depth information about their models and recommendations on how to apply those ideas.

Yet the general pattern remains relatively the same for the vast majority of organizational change plans:

Analyze potential options and develop a strategy.

Create a plan of action and the capabilities necessary to enact that plan.

Implement the program, monitor its performance, and refine as necessary.

Naturally, during the COVID-19 pandemic, it was and is important to adapt transformation strategies to fit the circumstances.

Catalysts that drive transformation

For years digital innovation has driven disruption and change throughout the global economy. Technological advancements enable new products, services, and forms of value, which in turn enable innovative change that disrupts the marketplace.

Individual companies and even entire industries have evolved as a result, compelling many organizations to adopt new technologies, workflows, and business models.

Yet innovation is only one among a number of catalysts that drive change and influence digital transformation strategies.

Here are a few others:

Performance improvement. One of the most common goals of any digital-powered business transformation initiative is performance improvement. The logic is straightforward: new technologies can improve organizational performance, which can drive up profit margins, generate a competitive advantage, and more.

Competitive pressure. Many companies only engage in digital transformation efforts after competitors take the first step. This makes sense since transformation is no small undertaking. Yet those who are adopting as a result of external pressure rarely become digital leaders or innovators. To capture market share, it is necessary to act early and invest aggressively.

Customer expectations. Peoples’ needs, expectations, and behavior can be driven by a number of factors, from technological advancements to world events. When those expectations change, organizations must implement new customer experiences in order to keep up. For example, as mobile technology became widespread, customers began to prefer companies that offered better mobile and multi-channel experiences – organizations that could do so were able to gain an edge over those that could not.

The COVID-19 pandemic. In 2020, overall IT spending dropped as a result of the COVID-19 pandemic. Yet despite the financial downturn, the pandemic has spurred growth in some technology-related fields and it has even fast-tracked digital transformation for many companies. After all, certain types of technology, such as telecommuting software, are necessary to operate in a remote world.

Digital transformation often refers to long-term, large-scale programs that affect the entire organization, though smaller digital programs can still achieve substantial results.

Digital Adoption Platform (DAP) spurs digital transformation

70% of organizations today are focusing on measures to use their technology effectively and successful organizations will leverage this time to continue introducing new technologies with the right strategy in place. As explained digital transformation isn’t simply buying new software; it’s integrating new business processes, workflows and developing a comprehensive digital strategy to ensure success. 

digital adoption platform (DAP) is a tool that can enable digital transformation across diverse areas of a company. If a company is implementing new software but not having their employees adopt and fully use it, then the investment is a waste and the digital transformation process becomes stunted. 

Conclusion: Success yields rewards for those who persevere

There are endless examples of the positive impacts of digital transformation.

Chipotle, for instance, according to a report by Deloitte, added features to its mobile app that allowed for greater customization of orders. Over the next two quarters, digital sales grew by more than 100% year over year. In Q3 2019, for instance, digital sales amounted to 18.3% of total sales, compared to 11.2% in Q3 2018.

That report also cited the case of a manufacturer that rolled out a new technology to help retrain employees for new positions within the company. This rollout more than doubled overall employee engagement.

Yet it must be remembered that no business initiative is without challenges, including digital transformation. 

To earn rewards such as those mentioned above, it is important to understand, address, and mitigate those risks. 

For instance, according to a report by the World Economic Forum, by 2022, we will see a widening digital skills gap and 54% or more of employees will require “significant re- and upskilling.” 

To succeed in tomorrow’s digital economy, then, it is necessary to rise to that challenge, adopt new technology, train their workforce, and fully embrace digital transformation.

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