SUCCESSFUL DIGITAL TRANSFORMATION – Siemens

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SUCCESSFUL
DIGITAL
TRANSFORMATION

How Change Management
helps you to hold course

We live in times in which
digitalization is radically
changing the business
landscape across industries.
To remain competitive,
businesses around the world
are increasingly investing in
digital transformation.

1

Executive summary

T he failure rates of digital transformations remain high.

These failures largely stem from the unique challenges
associated with digital transformation, including shifting
from the current culture to a more digital, entrepreneurial
one, dealing with a lack of digital talent, working in cross-
functional teams where silos have been the norm, meeting
accelerated timelines due to higher customer expectations,
and accepting evolving target states instead of fixed goals.
What most business leaders underestimate is that digital
transformation is not just about technology: Above all, it
is about people. That makes it complex – thus requiring a
new approach for managing the change.

From our experience with digitalization topics, we have
identified three key imperatives in successful digital
transformations. These imperatives have shaped our
Integrated Change Management methodology:

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2

3

Instituting an integrated approach across
facts – i.e., tangible elements such as technology,
processes and social interactions – i.e., intangible
elements such as culture and teams throughout
the transformation journey and across the entire
company

Living agile by proactively updating change
measures to meet both current needs and
overall objectives effectively

Adapting “classic” Change Management levers
such as communication, leadership, team setup,
training, etc. for digitalization needs

This paper analyzes real cases to provide a deeper, more
practical understanding of how digital transformation
can be a success story with the help of Integrated Change
Management. At the end of the paper, you will find insights
as well as key recommendations to start your own digital
transformation journey with confidence.

2

Executive summary

1 Executive summary
2 Top five challenges for digital transformations
3 Integrated Change Management
4 Institute an integrated approach to

Change Management

5 Live an agile Change Management approach
6 Adapt classic Change Management

levers to the context of digitalization

7 Key recommendations
8 About Siemens IoT Services

References

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Table of contents

Change Management
is a top 3 concern among
executives when entering
digital transformation
projects.

Digital transformation?
It’s all about the people!

4

Top five challenges for digital transformations

TOP FIVE CHALLENGES FOR
DIGITAL TRANSFORMATIONS

We live in times in which digitalization is radically changing the
business landscape across industries. Companies worldwide are
facing the challenge of managing the fast and repetitive adap-
tation of their organizations to suit the volatile circumstances
of the digital age. Sooner or later, your business may also be
faced with a disruption.

The worldwide digital transformation market is estimated to
grow by 20% annually to USD 2 trillion by 2022, from the current
size of USD 1.2 trillion2, driven by the prospect of significant
benefits in customer experience, time-to-market, product quality
and operational reliability. However, the failure rates of digital
transformation initiatives lie in the range of 60% to 85%. It is
perfectly understandable that business leaders are quite uncer-
tain when it comes to digital transformation in general, and
about Change Management in particular.

60%
to
85%

of digital
transformations
fail!

For more insights on
digital transformation,
have a look at our white-
paper “IoT – Turning
the Internet of Things
into reality.”1

5

Top five challenges for digital transformations

The top challenges
we often hear from
business leaders about
digital transformations are

SPEED

There is a need to progress quickly in an
environment that lacks complete clarity.
Encouraging people to speed up and make
their own decisions can subject them
to stress.

CULTURE

EVOLVING TARGET STATE

There is a lack of openness to digitalization,
sometimes even pushback from traditional
entities. It takes time for both leadership
and employees to adopt the necessary
information-sharing mentality and cope
with continuously changing conditions.

Unlike traditional transformations, the target
state continuously evolves due to changes in
technologies, processes and roles.
The flexibility required for this approach with
its “fail fast, fail often” mentality contradicts
the common 100% quality approach of
many traditional organizations.

DIGITAL TALENT

It is difficult to attract the right talent to
execute the transformation or fill in new roles.
New and existing employees need to grow
together and work toward the same goals
across the entire organization.

CROSS-FUNCTIONALITY

The impact of digitalization across
interconnected business processes is not
fully understood. Breaking down silos
and linking formerly independent
functions often leads to turmoil.

Does this sound familiar to you? A lot of business
leaders we spoke with see the need for launching a
digital transformation soon in order to prevent being
outperformed by their competitors. However, they do
not know how to prepare their organizations and
employees for what is to come. Therefore, it is not
surprising that 46%3 of interviewed C-level leaders
report that Change Management is among their top
three concerns when initiating digital transformation
projects. They acknowledge that the only way to remain
competitive is to create a wholehearted acceptance
of digitalization within an organization. Because ulti-
mately, people build up your business, not machines.

6

Top five challenges for digital transformations

INTEGRATED
CHANGE MANAGEMENT

Starting a digital transformation journey without
a dedicated focus on Change Management is like
leaving the safe harbor with no knowledge of how
to sail through turbulent waters. Only when a mast
cracks and the waves get rough do you notice that
you forgot to manage the complex interplays.

To reach your desired destination with a sailboat, you need the basic
equipment as visualized on the left. Facts such as technology and
processes as well as social interactions influenced for example by
culture and teams serve as the sails. Transformation management
acts as the boat’s hull to provide the platform and a reliable structure
for sailing the transformation in the right direction.

However, to master the challenges of a tough environment with
troubled waters, skilled skippers adhere to three imperatives:
Align both sails to benefit from the joint forces that quickly drive a
boat forward, use a robust, yet flexible boat hull to hold course, and
adapt the tools available on board to react to changing conditions.

Keeping the essence of these analogies and our experience with
digitalization projects in mind, we created our Integrated Change
Management approach to help you navigate your digital transfor-
mation journey:

1

INTEGRATED

2

AGILE

Manage the interplay
between both facts and
social interactions

Anticipate and adapt
to volatile and
uncertain situations

3

ADAPTED

Tune classic Change
Management levers
to the context of
digitalization

CHANGE MANAGEMENT

7

Integrated Change Management