Managing Change Through Digital Transformation
Implementing new software to drive a strategic pricing strategy is a major component of growth, but it also requires significant changes within your organization — and that’s where many projects run into obstacles. Strategic change management can keep your project on track and guide your team toward success.
The core objective of effective change management is to maximize value captured through the change of people, processes, or technology. Change management amplifies the returns expected from any project. McKinsey Quarterly states in “Change Management that Pays” that projects with excellent change management initiatives gain an ROI 43% higher than those with little or no change management initiative. Projects with no or poor change management leak 75% of their true value.
A lot of companies think of change management as part of product implementation—but it starts well before that. It is a business best practice that you start thinking about change management even before the pricing project kicks off. No matter what returns or ROI you promise your boss, you must have change management techniques in place to accomplish your goals.
Any process change must include buy-in from cross-functional areas, which may include pricing, sales, procurement, finance, IT, eCommerce, marketing, supply chain, and more. People will not implement or adopt a new tool unless there has been organizational buy-in at the outset. Once the leadership of these groups is aligned on the strategy and implementation plan, then the project kicks off. However, it is important that this core team remains assembled throughout the process.
Also, your project plan for implementation must include well-defined techniques to accelerate adoption, reduce resistance to change, and facilitate organizational transformation.
Change management is important to accelerate the adoption process, reduce resistance to change, and facilitate organizational transformation. Read on for key tactics.
The Tie Between Clear, Frequent Communication & User Adoption
The most important factor for success of your initiative is effective user adoption. Process alignment accounts for 13% of success, organizational change is 16%, and then only 1% for software functionality.
Most Important Factors for Success
It is imperative that leaders empower the implementation of change by giving their employees power to accept it. This power starts with a well-defined vision that paints a picture of a desirable future, provides a sense of purpose, is easy to communicate, and conveys the urgency for change. In pricing projects, the pricing software is replacing the sales team’s pricing process they have created to get them this far. Whether the current pricing process is Excel sheets, notebooks, or napkins, the change management team must explain that the current process can be enhanced with AI and machine learning recommendations. There is often inertia; people don’t prefer to change the tools they are using if they can’t see a good reason to do so. The sales force will be resistant to what they have always done because that is what they know. The leadership’s communication is critical to generate excitement and adoption of the new technology. By using positive language and communicating wins and lessons learned, the technology will be highly sought after to improve results across the organization's excitement and adoption with the new technology. By using positive language and communicating wins and lessons learned the technology will be highly sought after to improve results across the organization.
The way leaders talk about the pricing project is important to user adoption. Instead of saying it is a project to drive margin, say it is a project to help the sales force with price guidance. This slight change in language will energize the sales team. They are receiving a tool that will help them with pricing guidance, based on good data from successful transactions, and that will help them add more value to their customers.
It is also important that your sales force’s opinions are heard. Utilize surveys to see what isn’t working in your current system. Collect their responses and use these pain points as a checklist as a reminder to what you are working toward in your new pricing project.
Additionally, be sure to include a sales manager in the early conversations. This person will be a key champion later when inevitably someone asks about why the software is recommending a certain price. If a sales manager was in the room for the science review and understands how the price recommendation is aligned with their compensation, how it is aligned with the company goals, and why every single attribute is being used to determine what a customer should be willing to pay, it comes down to explaining the product instead of defending it.
Reduce Resistance to Change Through Training
There are 4 keyways to reduce implementation resistance:
- The best person to train a salesperson is another, well-respected salesperson. Based on PROS experience, it is important that the sales manager is involved as they are the most important driver of adoption. If a sales manager is a believer, all their sales representatives will drive adoption. If the sales manager does not buy-in, their team will not.
- The training plan should be an extension of the communication plan that blends the corporate strategy and stated goals with the system. Also, training should not be a one-time thing. Recurring office hours and opportunities for refresher courses and questions will enable better adoption. Studies show that people need to hear things 5-7 times before they stick, and training on a new technology is no different. Through all training and communication plans it is important to think about the receivers. Think, if I’m going to adopt this technology, what’s in it for me? And then communicate the value your business is focused on.
- Concept training is a great tool to have in your arsenal, not focused so much on the system but on the concept of what is happening within the system. Also, a pilot is very important because you then create a small group of advocates for the system.
- Check, during the first stages of implementation, to see if people are using your tool. Log the reasons that people are not using the technology and go through them one by one. This will ensure that all goals are aligned, data issues are being worked through, and people are understanding the training or reason behind the system. Resistance will be vocalized in many ways:
- I don’t understand (education)
- The data is wrong (check, demonstrate, and educate)
- The science is wrong (check, demonstrate, and educate)
Once you have outlined these roadblocks and their reasons, spend extra time working through them. In some cases, the most critical and vocal employees can become champions and advocates of the system with more time and emphasis placed on what’s in it for them.
How Do Stakeholders Respond to Change?
Facilitate Organizational Transformation with Clear Goals
When implementing a new tool, it’s critical to ask what is the key KPI for measuring improvement? Break this KPI down to the simplest element and then increasingly move toward levels of complexity. For example, your goal may be to increase margin, but that goal is too complex. Instead, break the goal down into three measurable steps.
- Goal: Need to improve margin on my quotes
- Start with opening new tool when quoting
- Then quoting above floor
- Finally, tracking percent of target price realized by salesperson, region, product, etc.
Each of these steps is within a salesperson’s control and is a fair starting point to measure adoption of the pricing tool. If sellers can execute each task in an organized manner, eventually the team will be able to link simpler tasks to work toward a more complex goal, such as tracking financial results.
Align Incentives and Make Adoption a Game
By nature, sales organizations are very competitive. By aligning sales incentives to the adoption plan sellers will have a clear understanding of how their work in the new tool aligns to their compensation and performance. While in the adoption phase, consider including adoption metrics in the sales teams’ quarterly review, or aligning bonus metrics to data points from the tool. By gamifying the new technology, salespeople are more likely to adopt the software. For example, setting up a sales competition as a short-term KPI could be a beneficial way to help drive user adoption. These contests do not need to be expensive, and they work better when they are highly personalized and can serve as a motivation for the sales organization. For longer term goals, or more complex metrics, align compensation plans or include technology adoption metrics as part of annual performance evaluations.
Bottom Line: The difference between a winning and a losing pricing transformation is how strong the change management is.
Don’t let your company get bogged down in the change management details. Focus on over communication and adoption, reduce resistance to change through training, and facilitate organizational transformation through clear goals to ensure your pricing transformation is a success.
To learn more, reach out to us at PROS or dive deeper by watching this webinar. We’d love to help you to manage the change in your organization.