By now it should be clear the fourth industrial revolution is in full swing. Digital business models are taking over even the most traditional organizations, and the advent of AI provides a completely new range of opportunities. However, becoming a digital company is no trivial task, because this era is defined by the speed of change instead of increasing efficiency. That disrupts what has been considered managerial common sense for decades.
Software development led the charge with the Agile revolution, but was soon limited by non-Agile organizational structures. As a consequence, the concept of digital transformation emerged — but applying outdated approaches caused (and still causes) many transformations to fail. Thoughtworks' "thin slice" approach tackles that problem by applying Agile principles for quicker value creation and faster adaptation. Benjamin Cremer details this with a successful banking transformation example, emphasizing the required focus on value creation by introducing the term "value slices."
However, iterative transformation and continuous improvement challenge yet another part of traditional organizations — and one of the core enabling functions for the entire Agile journey: change management.
This article proposes a fresh perspective on change management for digital transformation. Based on real-world experience, I want to share four lessons that highlight how an approach based on value slices addresses common challenges with change management, and how this in turn can help product teams to exceed expectations.
But before going into the details, let’s define what’s actually meant by the term “change management”:
Change management - as defined by PROCSI - is “an enabling framework for managing the people's side of change”, whereas change refers to any alteration within an organization, process or individual behavior, and can include processes, structures, technology or culture. A transformation can be considered a very extensive and ground-breaking change that is not just about doing things differently, but becoming something different.
The problem with change management
Change management has been a central discipline of transformation programs for decades. There are as many frameworks and books on how to successfully do change management as there are articles dissecting the failures of change initiatives.
There are two main arguments why a rigid change management approach based on extensive upfront analysis will likely stumble:
1. The hidden depths of change
As Wilfried Krüger pointed out in his ’change iceberg’ concept, change management needs to address a large number of hidden factors such as organizational politics or mental models in addition to visible, more straightforward factors like costs or resources. The adapted iceberg model for digital transformation highlights a number of specific dimensions ‘below the surface’. All of these hidden aspects have in common that they are hard — maybe even impossible — to plan for.
2. Agile companies need agile change management
Just like building products has changed in the age of digital and AI by forcing companies to rethink their value creation processes, our approach to change management needs to evolve as well. How can we expect to increase speed and flexibility in an organization when the approach followed is based on dated waterfall-esque methods. To “Invest significant time and energy into creating a comprehensive change management strategy before starting any change initiative” — the number one solution to failing change management strategies according to a recent blog post by HBR — may not hold true in the digital age.
Four ways value slices address common change management challenges
The purpose of this article is not to create yet another academic exercise on how to fix change management for good. Instead, I want to share four observations that show the benefits of value slices through the lens of change management:
Create strong and trusted change agents
Inspire a desire for change
Focus change support capacity for hands-on enablement
Create a learning culture for your change team
Strong, trusted change agents
To effectively scale major change, a network of change agents with diverse backgrounds and expertise is needed. Especially in less hierarchical and more collaboration-oriented organizations, change agents help to genuinely communicate and to build trust across functions and levels. This is something that centralized, top-down approaches often struggle with. This perspective has been promoted by Thoughtworks for years, and has recently also been picked up by PROSCI.
Traditionally, introducing and overseeing change has been a leadership task. In Kotter’s “8-Step Process for Leading Change”, creating a so-called ‘guiding coalition’ is one of the first steps. While this sounds role-agnostic, more often than not this group consists of executives and senior leaders from change-affected areas, supported by a central change management function or a transformation office.
Conversely, value slices can create change agents almost naturally. Leadership and transformation office still play a part, but successfully transforming teams results in advocates and supporters in the areas actually affected by change. They are more likely to convince peers both because they are more relatable, and because they better understand the implications — and the hands-on challenges — of the changes. Whom would you trust more, the salesperson trying to convince you of a product or the customer happy with the purchase?
Here’s how it works in practice: During the digital transformation of a leading bank, we opted for a value slice approach, and started with a single pilot product area. Not only was the change a big success in terms of key metrics (they crushed all their business goals, while simultaneously boasting the highest employee satisfaction in the entire organization), it also created some of the most influential change promoters along the way. The new domain product owner gave talks about her experiences of change and how they all benefited despite the initial challenges, while she was also spearheading the newly formed product guild to share knowledge and empower other product owners across the organization. In a similar fashion, the team’s newly introduced tech lead promoted the idea of dedicated tech leadership for product teams and domains, and continuously highlighted the impact of this new role on the success of the product.
Suddenly, it was not the board of directors or the transformation office that was trying to advertise the change — which leads to…
A desire for change
People want to understand what’s going on and what’s expected of them. As Kotter described as early as 1979, communication, education and involvement are key activities to reduce resistance. However, there's nothing so powerful and inspiring like witnessing others achieve success. It offers tangible, real-life examples of what is possible and creates the urge to participate. As Gary O’Brian suggests, you need to create “an ‘exemplar’ experience for staff that’s aligned to how you want to work in the future”.
Value slices can act as such exemplar experiences. They translate abstract concepts into concrete action. They make change tangible. They provide early success stories that create a pull effect that can inspire people and make them want to be part of it. And for people who are resisting change out of uncertainty, fear of loss or the unanswered question of “what’s in it for me?”, they provide valuable insights related to their personal role in the envisioned future state of the organization.
In our recent case, the success of the pilot product had a substantial effect on the organization. Following the success of the first pilot, other areas volunteered to become part of the first scale-out wave of transformations. Tribe leads and business owners actively campaigned for their products and teams, while designated product owners and tech experts were eager to engage in the preparation. Even though this did not remove resistance entirely, the ‘exemplar experience’ created by the pilot helped tremendously to create needed momentum.
Focus for hands-on enablement
To support major change initiatives, substantial enablement and coaching is necessary. Behavioral change can’t be learned by explanations alone. You don’t become a great football player by only watching football games - you have to play (a lot!), and you have to be coached to become actually very good at it. This is even more true when you are not only changing processes or reporting lines, but also trying to instill a new culture and new ways of working into your teams.
Yet, why do we expect teams to transform based on some slides and process charts?
Again, value slices are a great way to tackle this challenge. Imagine a change support team of six people. In a big bang scenario, they have to take care of dozens of teams and hundreds of people (if not more). Consequently, the team will focus on what scales best, which often boils down to guidelines and slides that educate the people as best as possible with the limited resources at hand. In contrast, by focusing on a few value slices at a time, the team of six can ensure the people involved in a transformation are properly enabled and supported. They can spend time one-on-one to understand the needs of individuals, join workshop sessions or coach people in new roles.
In our banking example, the transformation team was able to spend a considerable amount of time with the pilot team to discuss roles and responsibilities, and iterate on the new ways of working. We emphasized the coaching of product owner and tech lead, discussing real-world challenges as they happened, and jointly facilitated workshops and retrospectives to support the pilot team in their new setup. Instead of implementing a set of defined rules, people were practically enabled to understand the why, what and how behind the change.
This philosophy, although time-consuming and often less efficient, truly empowers people within the new structure, increases adoption and ‘stickiness’ of change, and provides valuable feedback for the change team about their approaches. This leads us nicely to our fourth and final aspect…
A learning culture for your change team
Value slices provide a great learning environment for the entire organization, including the change management team. The direct interaction with the people affected by the transformation creates short feedback loops, and the limited scope of the change allows for a certain level of experimentation. Whether it is communication approaches, enablement formats or role descriptions, a test environment with a friendly user group can make a big difference before a larger scale roll-out.
Actively engaging with people, collecting feedback and tuning your approaches will go a long way to foster a culture of continuous learning and improvement in your change management team.
As we’ve seen with our banking client, the transformation office leveraged the pilot transformation to assess the effectiveness of certain communications, identify and react to upskilling needs, and measure the overall capacity for change within the organization. Instead of crafting an academic communication strategy for a full-blown org transformation, direct feedback was used to gauge what worked, and where more - or different - communication was needed. This, in turn, helped to build trust in the change management team, as it became less associated with reporting and process templates, and more with hands-on support and enablement. Of course, such experiments need to be done with sensitivity to the people impacted — so set boundaries, clearly communicate and set expectations so there are no surprises.
Summary
In an ever faster environment where companies can’t afford to stand still, a value slice approach to transformation can help to keep pace with the digital evolution. However, this requires change management to adopt new principles too: By empowering change agents across all levels and functions to decentralize change, creating an ‘exemplar experience’ to inspire a desire for change, shifting towards a hands-on enablement approach for behavioral changes, and embedding continuous learning in your change process, you can start to increase the likelihood of success for your transformation, and on your journey towards an evolutionary organization that is not scared by the prospect of change, but embraces its potential.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
