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Marketplace Best Practices
October 31, 2023

5 Strategies for Change Management in Digital Transformation

Nicole Kahansky
Nicole Kahansky

Key Takeaways

  • Digital transformation often leads to significant shifts in how employees work, which can make internal adoption challenging.
  • Successful digital transformation requires employee buy-in.
  • Strategies to improve internal adoption include, understanding your why, ensuring leaders are bought in, taking an iterative approach, tailoring communication, and employing the right technology partners.

Digital transformation is when an organization uses new technologies to reshape the way they do business, often making their processes more automated, efficient, and error-proof. Digital transformations can create enormous opportunities for innovation, but they’re notoriously difficult to pull off.  

Why is it so hard? Successful digital transformations require three things: technology, process, and people, and getting buy-in from your employees is no small task. This is because introducing new technology often leads to significant shifts in how employees carry out their work, sometimes changing the nature of their work completely.

According to data from a recent Forrester study commissioned by Nautical, focused on launching an online marketplace, 56% of respondents agreed that the willingness of internal teams to adopt and use new technology was challenging or very challenging. 61% of respondents agreed that resolving internal knowledge gaps was challenging or very challenging when launching new digital marketplaces.

Though some resistance to internal adoption is inevitable when you embark on a digital transformation, it isn’t insurmountable if you have the right tools. In this article, we review:

Wh‎at is digital change management?

Over time, businesses have come to realize that big changes require careful management. Change management is the process of guiding organizational transformations from their earliest stages of preparation, through implementation, to their final result. 

That means preparing, equipping, and supporting everyone involved in the change to ensure successful transitions. 

Wh‎y is change management important when adopting new technologies?

It’s impossible to talk about digital transformation without considering the internal changes they entail: peoples’ jobs will likely change, and internal adoption rates are what will determine the success or failure of your project. It’s people that ultimately drive the success of your innovations.

Business leaders therefore need to focus on the human impacts of every digital transformation they embark on, including cultural or economic changes that might take place in the company. 

For example, when launching a marketplace, your salespeople might be concerned about how the new technology will impact their jobs. Will they make less commission? Will people bypass them and go straight online?

Applying change management in digital transformation — like building a specific communication strategy around the transformations — can help you foresee and address these kinds of employee concerns before they become insurmountable.

5 ‎change management strategies to improve internal adoption

1. Understand your why

Before you commit to a big digital transformation, you need to have a true understanding of the why. Sit down with key employees and take a close look at what's going well and what's not in your business. Here are some questions you can ask:

  1. What’s the reason for the business change? 
  2. Do your employees feel frustrated by your current processes?
  3. How well does information move through your business?
  4. What’s the competitive landscape? 
  5. What are the goals of the digital transformation?

With those answers in hand, explore how new digital tools and better data might benefit your business.

Organizations that fail to formulate a compelling “why” for their digital transformations will have a serious uphill battle ahead of them. Simply protecting your bottom line with flashy new technology won’t be very compelling to employees whose jobs are being completely transformed.

2. Start at the top

According to McKinsey, a transformation is 5.8 times more likely to be successful at organizations where CEOs communicate a compelling, high-level change story. It’s not only the employees who will be working with the new technology who need to understand and buy into the change but management as well. Change needs to come from the top.

In 1962, Everett Rogers proposed a theory called the Adoption Curve, which explains how all new innovations gain popularity by first taking root among a small group of tech-enthusiasts (called innovators). Early adopters then bridge the gap between those innovators and the majority. In the case of organizational digital transformation, the early adopters need to be the management teams.

When proposing new technologies to management, be sure to discuss the overall positive impacts of digital transformation on their areas of concern, including reduced task time, improved efficiencies, fewer errors, and lower costs over time.

3. Crawl, walk, run 

Digital transformation is a complicated journey with many steps that requires constant assessments and improvements. If you move too fast, the complexity of each step will overwhelm your team, setting you back or even killing your project. 

That’s part of the reason why at Nautical, we’ve found the best strategy for launching a new technology is to integrate it in three phases: Crawl, walk, run.

This is a strategy that everyone understands. As babies, we learn to crawl before we walk, shakily at first and then gaining confidence, and it’s only once we’ve mastered walking that we begin to run. 

This concept can foster greater internal adoption of new technologies. Employee experiences will be shaky at first, so it’s important to give your business the opportunity to stumble a few times before you really get it running.

One of the biggest benefits of the crawl, walk, run approach is that it helps employees get acclimatized to digital transformations over time, so it doesn’t feel like they’re being thrown into the deep end.

4. Tailor communication for specific stakeholders

To avoid resistance to the new technology, everyone in your organization needs to understand what the digital transformation will mean for their specific job and what they’ll be expected to do differently. Empower teams to drive change around processes where needed to meet the requirements of the new technology.

You can address this by creating a communication plan specific to each team and getting started before deploying the new technology. Reach out to employees early and make sure to address department-specific pain points.

Every employee has fears and perspectives specific to their daily tasks. If you take the time to explain the value of digital transformation to their individual jobs, you’ll be building excitement instead of uncertainty.

Looking for the right words? Check out Nautical's glossary of terms to help communicate changes.

5. Employ the right technology partners

You may think that custom-building your technology will make it easier to meet employees' expectations and needs, but the numbers show that internal adoption is generally lower for custom transformations. 

For example, when it comes to marketplaces in particular, 70% of organizations that built their own marketplace software saw their internal teams’ willingness to use the technology as a challenge, according to the Forrester study, compared to 47% of those who purchased vendor platforms.

Firms that purchased vendor marketplace solutions faced fewer challenges with internal adoption

The best option for most businesses is to buy and build their new technology: buy the backend and build the front end.

This mixed strategy gives businesses the ability to deliver reliable technology that meets employees’ day-to-day needs, while still offering customization options to suit your specific goals.

Maximize internal adoption for a successful digital transformation

Digital transformation, despite its name, is a very human challenge. Getting your employees on board with the changes you want to see starts with a comprehensive change management approach. Once you find your why, start at the top, move slowly, communicate often, and work with a technology partner to ensure maximum internal adoption.

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