Speaker 1: Organizational change management is the number one thing you can do to make your ERP implementation or digital transformation successful. With it you have a chance to succeed and without doing it effectively you have limited to no chance to succeed. My name is Eric Kimberling, I'm the CEO of Third Stage Consulting Group and today I want to talk about the five things you can do, the five steps you can do to jumpstart your organizational change management to ensure that your overall digital transformation is successful and that you overcome the people issues that most if not all digital transformations face. Now in all of our years as expert witnesses and project recovery experts and greenfield implementation experts, my team and I have found that we have yet to meet a single CIO or CEO or CFO or any executive or project team member for that matter who has indicated that they spent too much time too many resources on organizational change. In fact I don't even recall a situation recently where a team member or an executive said we spent enough time and money and effort on organizational change. So change management is clearly the number one thing that will determine whether or not your project succeeds or fails and this is a really important point because if we look at the today's landscape in the ERP space, we're focused way too much on technology. We're talking about artificial intelligence and machine learning, cloud, all this cool stuff that has to do with technology but the end of the day that stuff does not matter one bit. What really matters is how well your people change and how well your people adapt to the digital transformation and the technological capabilities that you're trying to deploy throughout your organization. Now the importance of change management is especially true if you and your team are interested in deploying software best practices and limiting customization of the software and it's also especially true if you are looking to implement a single ERP system across most of the enterprise. The reason that these two things have even more of an importance for organizational change management is because it indicates that there's going to be more change and more impact to your organization and to your people. So if we don't change the software to fit the business, if we're going to adapt best practices or just the way the software works off the shelf or out of the box, then that means the people have to change to fit the software, therefore organizational change management is going to be even more important. And similarly if we're deploying ERP across the entire enterprise, a single system for multiple functions and departments and business locations across the globe, then organizational change management is going to be even more important than if we had done more of a best-of-breed approach to find the best functional software for each of our departments. So change management is important, that's the bottom line and chances are you probably agree with us or else you wouldn't be watching this video. So I want to jump ahead and talk about the five steps that you can do and deploy to your organization to jumpstart your change management activities. Now the first thing is to implement or to conduct an organizational readiness assessment and this is really a way to get a lay of the land to understand how resistant people will be to change, not if they're resistant but how resistant because there will be resistance. So we want to understand how resistant people will be to change and what the root causes of that resistance will be and where those pockets of resistance will be within the organization in different functional departments in different locations. So if you're a global organization with 20, 30 different countries of operation, chances are you're gonna have somewhat of a heat map result in terms of how resistant certain groups are versus how accepting of change other groups might be. Now on the surface some of you may be saying well we don't need to do that because our people are ready for change, our old systems are so old and so crappy that we know we need some sort of change and employees are on board with that. That's great, on the surface they may be on board with that but the problem becomes when we dig down and actually start to talk about the nuts and bolts of how people are going to change, that's when the resistance kicks in and where people start to dig in their heels. So resistance is a very real thing, it will happen, it may not be manifesting itself yet early in your project, people are excited about new technology, they're telling you that they're tired of the old technology or the old broken manual business processes, that's great, that's a good place to start but we still have to figure out how are we going to overcome that resistance when it happens, where it happens and depending on how severe it is. So an organizational readiness assessment is step one, is to get a lay of the land to understand what's unique to your organization, how are different departments and locations throughout the world, how are they going to be impacted or what's their level of resistance and the way we do that, my team from Third Stage and I do that, is we do two things. One is a online survey that we do to uncover some of the root causes of resistance and it's a usually a 10 to 15 minute survey that we send out to employees, it's anonymous, it's a way to uncover some of those root causes of resistance in a quantitative way and the second thing we do to conduct these organizational readiness assessments is a series of focus groups and this is a way to gather qualitative sources of resistance to augment the quantitative analysis that we do in the online surveys. So these are two relatively easy ways to find out where those pockets of resistance are going to be and so that organizational readiness assessment is a key critical first step. The second thing is change impact assessment. So different from organizational readiness, organizational readiness we're looking at in general what are the things that are going to cause resistance within your organization, whether it be communication breakdowns or negative perceptions of top-down communications or perceived misalignment between different functions and business groups, whatever it may be, that's the purpose of organizational readiness. In our second step on change impact assessment, we're looking more specifically at different departments and different functional areas, different teams and understanding how exactly are their jobs going to change, how are their roles and responsibilities going to change, what roles and responsibilities might be automated or shifted to another group, how are their jobs going to be need to be redefined. Those change impacts are the things we need to understand in a pretty granular level detail in order to affect the change later on in the next three steps that I'll talk about. So that change impact assessment is hugely important and one word of warning here is a lot of times when you're working with system integrators or the software vendors themselves or the implementation partner you're working with, a lot of times they'll want to focus too much time on the future state and now the future state is extremely important, don't get me wrong, but we don't want to gloss over and minimize and forget about the current state because the current state is reality, that's what people understand and change management's job is to figure out how do we get from that current state to that future state that the system integrators and the VARs are helping define. So while the system integrators and VARs and vendors are defining what that future state is, it's the change management team's responsibility to figure out here's where we are and here's what that impact is going to be. Now we're not yet talking about transactional training and getting into the system and getting our hands dirty to understand how exactly are we going to press buttons and enter enter fields and that sort of thing, but we're talking at a higher strategic level of understanding where we're gonna shift roles and responsibilities and job and work around throughout the organization and generally that's something we start defining early in an implementation during the blueprint or the design stage of a project. So that change impact assessment is hugely important. I would not leave that to your system integrator to do because typically they're not thinking about your current state and they probably don't care a lot about your future state or your current state because they don't need that necessarily to define your future state and to design the software, but you do need it from a change management perspective. So that change impact assessment, step number two. Step number three, and this is a huge hugely important one, it's somewhat intangible and it's something that we see so many organizations completely overlook or not even really think about and that is ensure that your team is aligned as an organization. You need to make sure that you're aligned around what this digital transformation or ERP project is going to be. Now once you've done the change impact, we start to realize how big the impacts are going to be to the organization. We've also conducted the organizational readiness assessment at this point, so we understand where the pockets of resistance are likely to come from and now it's time to make sure we're aligned around what it is we're going to do to tackle those sources of resistance and those change impacts, but also even more fundamentally to make sure we're all on the same page with what this digital transformation is going to be. Is this a simple technology upgrade or is this a true business transformation where we're looking to make quantum leap improvements to our business operations? Those are two very different scenarios with very different implementation strategies, different resourcing needs, different price tags and pain tolerances and things of that nature, so we need to make sure we're on the same page with what it is we want to be. So we want to define what it is we want to be when we grow up and we also want to make sure that we understand how it is we're going to affect that change and executives need to understand what sorts of change impact that entails and make sure that they're on the same page and are realistically aligned around the expectations of what it's going to take to get our people to change to meet our objectives for the overall transformation. So ensuring we have that internal alignment from the executive level down to mid-level management at the very least and all your key stakeholders at the senior level within the organization, you want to make sure they're on the same page and that we're all aligned on what it is this project is before we get too far down the path of starting to implement something that isn't aligned with those needs. So alignment and we have a whole framework and a whole process that I could walk you through. I've included my email below, happy to send you some information about any of these things we talked about, but alignment is one of those things I'd be happy to walk through with you, a framework we use for our clients. The fourth team is to develop or to assemble your change team. Now this should be primarily your internal team, your resources, your project team members and stakeholders and change agents, those should be primarily internal people. You can lean on outside resources, ideally technology agnostic resources like Third Stage. Our team at Third Stage is agnostic, we know change management very well, but whoever you use you want to make sure it's not your system integrator. Your system integrator is very good in general at implementing software. They're good at designing it, implementing it, showing you how to use it, helping understand how the technology can enable better processes. That's the sort of thing your system integrator and your VAR, your vendor, is going to be good at. So make sure you have a separate team advising your internal team on how to best affect change. And one of the best approaches that I've seen work here is to take somewhat of a Trojan horse approach to change management, where you don't even necessarily have a big standalone change management team, but you have a standalone change management team internally, but a skinny-down version of that, but you also make change management part of your DNA throughout the entire project. So in other words, everyone on the project has some level of change management responsibility. Now you don't want to completely decentralize, if you will, the change management initiative or the change management responsibilities, because what ends up happening is when times get tough and we're under pressure, budgets are getting cut, we're under time deadlines, change management ends up being the first thing to get cut. So we don't want to overly depend on the rest of the team to handle change management, but we do want to share that responsibility and use that hybrid approach to ensure that they're deploying their change management responsibilities, but you also have somewhat of a centralized internal team that's responsible for coordinating all the change efforts and executing many of the change efforts as well. So be sure you identify those internal and external resources that you need for your change team, that's step number four. And then the fifth step is to create your change strategy. Too many times companies will go in or even consultants will come in and have a canned, out-of-the-box, off-the-shelf type of change strategy and plan and set of tools, one-size-fits-all. That's not an effective way to manage change. We need to take steps one through four as prerequisites and inputs into helping us understand how we're going to execute change given our unique situation and our unique objectives and people and culture, all that good stuff. So we want to make sure that we create a change strategy, a plan, tools, methodologies that are unique to us. And the other part of this that we need to recognize is change management goes so far beyond basic training and communications. Too many people that aren't versed in change management think of change management in the context of training and some newsletters and basic communication about the product status. That is not change management. That's a tiny sliver of what effective change management constitutes. I've included a link below to a video that provides some more background on the major components of a change strategy, so I invite you to check that out using the link below. I've also included a link to our 2019 ERP report which includes a number of best practices around organizational change management and another implementation best practices as well based on our experience from over a thousand different digital transformations and ERP projects over the recent years. So I hope you find this information useful. Those are the five steps to jumpstart your organizational change management plan. If you enjoyed this video, I encourage you to please share it, like it, provide any comments you have below too. If you're a change management practitioner or someone who's struggling with change management, I'd love to hear your feedback below. So please include comments in the fields below. Hope you found this helpful and look forward to chatting with you soon. Take care.