Digital transformation and change management - what is the difference?

Curated by
Jesper Toft
June 3, 2022
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People often talk about change management and digital transformation as if it is the same thing. It is not the same thing but it is closely related and a digital transformation will often require change management. So let’s get some definitions on the table.

What is Digital Transformation? 

Often I hear that digital transformation is about technology and that is partly true. Of course, there will be digital tools involved in a digital transformation. But implementing a new ERP system or a CRM/Marketing platform is not a digital transformation without employees transforming their behaviour. 

Digital transformation is the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements. 

What is Change Management? 

Change management is a systematic approach that includes dealing with the transition or transformation of organizational goals, core values, processes or technologies.

The purpose of every organizational change management initiative is to successfully implement strategies and methods for effecting change and helping people to accept and adapt to change.

In short - Digital transformation is creating new or modifying existing processes, culture etc using digital technology and Change management is how you facilitate change.

Why is this important? 

Imagine that your boss walks into your office and says, “We are going to change your job description - you will no longer be in your car visiting customers, you will now only sit behind a desk and only use your phone” That’s certainly a change!

Some people look at that situation optimistically and think, "That’s great, I can’t wait to see what new opportunities are available and I no longer have to eat at gas stations!" Others, however, look at that same statement from the boss and immediately experience fear and dread. They may think, "Oh great, now my career progress is going to stop. And I like eating at gas stations"

62% of people either don’t like to leave their comfort zone or do so only occasionally.

When we implement new technology we almost always change roles and responsibilities around the technology.

Here at Avidly I am primarily implementing HubSpot Sales Hub and CRM and most of the time I am changing more than just a system. In a recent project we implemented HubSpot - the first real CRM system the company has ever had, we changed the ways of working, we changed the organization and finally we changed the incentive model. That is a big chunk of change for most of the employees.

Much like playing football, success is a matter of teamwork. It is up to the coach to coordinate each individual's unique talents to deliver a single successful outcome. The goalkeeper is depending on a strong defense. The physiotherapist is important for the team to be able to recover from injuries etc. Change management requires individuals in key roles to engage with the change and coordinate their efforts in defined ways. From the highest levels of leadership to front-line employees, an entire system of people within the organization must support employees through the transition. 

Facilitate change

You don't always know how much leadership capacity you need to allocate for a change. I have worked with companies where a new CRM is a walk in the park. Perhaps it is the 3rd or 4th time they change and they know exactly what they want and how to go about it. Not much leadership time has to be allocated to that process.

I have also worked with companies where each individual is working with their own systems (maybe a piece of paper or excel) and they get the job done. Or are they?

Growth is crucial for most companies - at least if you read the strategy document - and it is really rare that you see rapid growth with employees not sharing information or systematically engaging with customers. These companies are often characterized by a high degree of specialist knowledge that takes forever to obtain. They usually depend on relations and the most frequent argument for not utilizing new technology is: we are special and our customers are used to working with us in this way. New technologies - no thanks.

However, these companies are amongst other things challenged by globalization, the fight for talent, retirement and competition. A change is needed regardless. 

Senior management and the board of directors are responsible for supporting and implementing the strategy. No strategy today is without new technology and that is why digitalisation and change management plays a very big role in modern companies and they need to be able to facilitate change and choose the right digital tools.

What to do?

First of all, you need to identify the need for change - in other words, you need to know and understand your organization.

Information is important - not just when starting a change process but all the way through. Along with that you also need to have some kind of structure where you do different things.

This is a very simple model for implementing a project:

When we start a project we always try to tie the project to the strategy. Because we are hired to implement a tool we can't be responsible for succeeding with a company’s strategy. We play a huge role, but we are not a part of the ship nor part of the crew. So we need to have some leverage and the strategy is a good foundation. We also need to have a group of leaders that want to do this and are supporting each other. Finally, we need to communicate with the employees and listen to their needs and thoughts about the future.

Change agents

For major organization-wide changes, companies frequently will hire external change agents. Because these consultants are from the outside, they are not bound by the firm's culture, politics, or traditions. Therefore, they can bring a different perspective to the situation and challenge the status quo. This can be a disadvantage, however, because external change agents lack an understanding of the company's history, operating procedures, and personnel.

To offset their limited familiarity with the organization, external change agents usually are paired with an internal coordinator from the company. These two then work together with line management. In very large firms, the organisation sometimes has an in-house change specialist. This person replaces the external consultant and works directly with the organization’s management team to facilitate change efforts.

If you want to know more about how change and transformation can be implemented in your company then reach out to me or one of my colleagues! 

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