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Abstract
Change management in the era of digital transformation is a critical need for any company. Companies must adapt to the pace of external market change to maintain competitive advantage, increase profits, and increase customer base. Lack of such adaptability leads to loss of customer trust and, as a result, reduced competitiveness. Digital transformation is ongoing and refers to a radical change in the company on the way to optimization. Automation, robotization, and digitalization are just three examples of large-scale company transformations these days. However, not all executives can keep up with this pace, resulting in the loss of the commercial attractiveness of the company. This dissertation reveals the essence of change management theory in the digital age and offers universal recommendations for bridging the gap discussed.
Introduction
One of the most dynamic spheres of human life is socio-economic. State communities maintain a steady tendency to progress in the context of the current time, modernizing economic and social development within the country. Although the rate of such development differs for each social system, it is difficult to deny the general growth in a broad view (Remeikien et al., 2020). It is noteworthy that one of the most striking manifestations of the socio-economic environment is business. In general, a business should be perceived as a form of human professional activity, which allows an individual to obtain financial means for existence and cover the need for creative realization (de Vasconcellos et al., 2019). Business as a form of socio-economic activity of communities is of critical importance and must be adequately supported by both state regulation and social recognition. The emergence of business should be seen as an evolutionary response to the growing needs of the individual. Attention to the forms of the most popular commercial activity in recent years actively supports this argument. Given the global introduction of severe social constraints triggered by the serious COVID-19 pandemic, one of the most popular business formats has been delivery services: food, non-food items, or services (McKibbin and Fernando, 2020; Mehrolia et al., 2021). Another illustrative example can be considered the emergence of private schools and universities that receive funding not from the state but students, investors, and prize funds. The emergence of such business forms was catalyzed by societys deep frustration with the aging systems of public education and the search for worthy alternatives. These examples are excellent evidence of a businesss social and economic importance as a form of professional activity. The exercise of commercial services is inextricably linked to social demands and is necessarily combined with the general agenda.
Based on the above, an important conclusion for this dissertation can be drawn about the general dynamism of the business industry. Commercial activity is obliged to be adaptive and complexly evolving to correspond to the demands of the time clearly and not lose relevance. In turn, this property is necessary to maintain high competitiveness in a rapidly changing market. So, companies in the market of 2021, providing services for the sale of typewriters, can hardly compete effectively with companies selling laptops and computers. It is the competitive ability of business managers to consider the context of the time and respond to social demand in the right way that increases the companys chances for rapid professional growth. At the core of these properties was a methodological concept called change management (Galli, 2018). Change management ensures that a company that has embodied rapid response strategies and changes in organizational structures will maintain competitiveness in the market and achieve a practical advantage over other companies in the industry market. The implication of this definition recognizes the criticality of organizational change management for any company because, in the absence of this methodology, there is a problem of loss of commercial relevance and the transition of the customer base to a more customer-focused, modern business.
Change management in a company emerged as a natural business need to adapt to a changing environment. There are several critical reasons for the importance of such management. First, the need to keep up with changes in the external environment is critical to business. For example, once a market leader, Nokia failed to remain competitive and left the top position (Khan et al., 2017). Second, change management allows one to realize the cross-functionality of the whole enterprise and ensure its harmonious integrity. With such a methodology, there is a need for interaction between the companys different departments, which increases the chances of efficiency. Third, if a company is about to make a significant transition, whether rebranding or a change in a market niche, prior organizational change management practices create a solid foundation for the safest transition with minimal losses (Galli, 2018). An important reason is a significant increase in productivity and performance that occurs when aspects of transformation management are embodied (New York Pugi, 2018; Prosci, 2020; Christopher, 2017). Finally, the fifth factor for the significance of the methodology discussed is the tendency to involve employees and their opinions in operational processes. Since the essence of change management involves a plurality of views, employee engagement and motivation are significantly increased (Flemming, 2020). This practice is essential for any company, as its implementation brings apparent benefits for business regardless of the professional sphere.
Change management as a general methodological idea emerged a long time ago, although no one can give an exact date of its emergence. Nevertheless, in the digital era, organizational management has reached unprecedented relevance due to the intensification of the pace of qualitative and quantitative changes in the market. With the advent of the Internet and global networks connecting nations, cultures, and companies, the competition for customers and profits has become even more serious and chaotic (Essling et al., 2017; Hanna, 2018). Change management is the organizational tool that helps a company remain structured and systematic despite a rapidly changing marketplace. The structure of managing this change itself has undergone a metamorphosis. One of the most striking manifestations of change management in the digital age is becoming digital transformation. The central core of this term corresponds to a significant restructuring of commercial management and transformation of the business system through the adoption of digital strategies and management approaches. More companies are turning to automated systems to collect and process commercially essential data and are abandoning routine manual labor due to its imperfection compared to the operation of robotic systems. This is not to say that automation necessarily leads to fewer jobs as a new form of change management. Although some of the changes in labor-management discussed in this dissertation are permitted, the general course is toward a transformation of the operational structure that uniquely combines manual and machine labor.
Purpose of the dissertation
This dissertations central purpose is to define the theoretical concept of change management in the era of digital transformation and examine international management experience on the effectiveness of change management in following the growing pace of the digital age.
Objectives addressed in the dissertation work
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To gather and select academic studies that meet the topic of this paper and meet the primary filtering criteria.
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To conduct a comprehensive literature review to outline the theoretical framework of change management as a methodology and change management as a form of organizational necessity in the digital age.
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To include a theoretical assessment of digital transformation and its practical applicability to the real market.
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To summarize the international experience of digital change management and trace trends among leaders and anti-leaders in this area.
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To obtain and discuss the findings concerning transforming change management in the digital age.
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To assess the degree of alignment between change management methodology and the pace of digital market transformation.
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Based on the results, to create a pool of universal recommendations that will be effective for any company, regardless of the vector of professional activity.
Literary review
The essence of business
Business and entrepreneurial activity were not characteristic of the everyday life of primitive man. On the contrary, the business became a reflection of evolutionary progress in human development due to the emergence of complex socio-economic constructs. When relations between individuals began to be trade-monetary, the understanding emerged that individual community members could enrich themselves by covering social demands and demands with their supply (Aubakirov and Adayeva, 2021). Although the business has been significantly transformed since then under the pressure of time and increased competition, the general essence of business systems has remained unchanged. This goal is made possible through strategies to integrate material, social, informational, industrial, and financial resources to ensure the highly efficient production of goods or services intended for further sale to customers or on a b2b vector.
Determining the driving forces that cause individuals to realize business has high methodological potential for a deeper understanding of economic systems. By now, several views on this have emerged within the author community. The primary factor is the desire to earn large sums of money, which cannot be obtained through standard work in companies (Urevig, 2021). Second, a critical driving force for many people is the desire to develop a product that has not been previously marketed or whose quality does not meet expectations (El Shoubaki et al., 2019). Often, this decision requires relying on the current market agenda to make comparisons and draw conclusions. Third, economic awareness, the desire to prove oneself as an entrepreneur and create jobs are significant predictors of the emergence of business companies (El Shoubaki et al., 2019). In addition, many authors point to the natural human desire to achieve high performance and take pride in it (Johnson et al., 2018; El Shoubaki et al., 2019; Urevig, 2021). Related to this is the desire to take risks inherent in proactive leaders: risk, in general, is an inherent feature of any business activity (Johnson et al., 2018). It is appropriate to state that it is through business that humanity has new economic goods, whether it is a modern electronic device or basic survival food. The entrepreneurial industry accumulates societys enormous intellectual potential, introducing young skilled workers to tasks and providing inexperienced workers with proper training (Golovchanskaya et al., 2018). According to Heyward (2020) and Sukoharsono et al. (2020), an effective business cannot exist without social influence, which is expressed not only in creating jobs and enabling local people to fulfill themselves professionally but in providing vulnerable groups with dignified support. This is especially evident for multinational companies such as Apple, Google, or McDonalds which host large charitable foundations each year and openly declare their support for minorities (Hwang, 2019; Minevich, 2021). Muller (2021) and Mohamed (2020) disagree, showing the lack of need for companies to address social welfare issues. Regardless of the views, however, it is correct to summarize that the general functional roles of business for the modern marketplace are multiple and cannot be reduced to unambiguous theses.
Ideas peculiar to a specific time and geographical location may not be relevant for other communities. This perfectly natural mechanism allows social groups to develop according to their pace and skill specific (Remeikien et al., 2020). It follows that the business industry evolves: companies find themselves under pressure from socio-economic and political driving forces, which cannot remain conservative for a long time (Aubakirov and Adayeva, 2021). Organizations can resist change, but if they do, they risk losing relevance to the current agenda, as has been shown by Khan et al. (2017). Maintaining relevance is fundamental to any business interested in increasing capital. However, this mission is directly related to the existence of competition. Suffice it to imagine a company carrying out professional activities in the absence of any competing forces: in this sense, it seems evident that due to the lack of market supply, the consumer will not be able to refuse the services of this company. The expensive food in airports and movie theaters is an excellent confirmation of this assertion (Crockett, 2019). Realizing that individuals cannot make other choices, managers of such organizations significantly inflate prices.
While it may seem to an individual business executive that competition in the marketplace is disruptive to profits, one may recall the above example of airport food, in reality, it is not. Essling et al. (2017) talk about competition as an essential driver of economic growth, whether locally or globally. Competition differentiates market power and avoids dangerous monopolistic phenomena that threaten the quality of supply. Competitive economic forces catalyze the development of scientific and technological progress through the systematic encouragement of entrepreneurial investment in innovative products, the use of more modern technology, and the optimization of inventory management, as World Bank (2018) writes. Consequently, inefficient economic production, obsolete technology, low-quality or irrelevant goods disappear in competition.
Change management
The methodological discussion of change management is systematic since the term defines an essential component of a companys organizational health. In this context, it is essential to recognize that change management is a private practice of general management of an enterprise, but the former has unique features that are not peculiar to general management. The question of the terminological definition of this concept does not find a single answer in the academic field. For example, Perkins (2018) describes change management as ensuring that any change is accepted by the people, meaning employees, affected by the problem. Ahmad et al. (2017) have a broader view when describing the process as an approach to move a company smoothly into the future state by paying careful attention to individual aspects of change. Wen-Jun (2019) perceives change management as a form of organizational resistance to external threats by effectively holding and processing them. The most novel views expressed by Varon (2021) are primarily consistent with Ahmad et al. (2017): the author writes that change management is a series of tasks that allow a smooth transition from the current agenda to the future while minimizing risks. Thus, with four different perspectives, one can generally summarize that change management is a critical element of organizational management, which allows the company to realize professional development with minimal threats. It is a characteristic of a successful company in a dynamic and unpredictable market
Academic and public interest
There is no exact time frame for the emergence of change management as a methodological concept. Since the phenomenon is evolutionary, one can extrapolate that change management as an idea that existed long ago. Industrial era companies were under competitive pressure and always had to react quickly to any external and internal changes to remain relevant (Aubakirov and Adayeva, 2021). Such management was intuitive because no particular methodology had yet been developed. Therefore, entrepreneurs were forced to use personal experience and prediction based on subjective beliefs instead of the automated calculations inherent in the current agenda. The academic study of change management has gained urgency relatively recently. By now, there are more than 612,000 scientific publications in the Web of Science database that have studied change management. The Google Scholar digital database reflects more than 5.5 million topical papers. Reference to Figure 1 clearly shows that the number of publications on change management has grown exponentially and has increased significantly since the 1980s. In all likelihood, this jump can be attributed to the spread of computer technology, which radically changed the structure of operational efficiency. It is a mistake to think that the academic community is interested in studying this problem only in management sciences. Figure 2 nicely demonstrates the opposite situation: many publications are written in the thematic categories of environmental science, ecology, engineering, and computer science. From this, one can conclude that this phenomenon has a wide acceptance by the academic community interested in in-depth research on this issue.
It is interesting to note that the public interest in process management has a slightly different trend. From Figure 3, one can see that the number of Google queries for the phrase change management has slowly declined over the past eighteen years. However, it should be emphasized upfront that these results do not imply a dramatic decrease in interest in change management among ordinary users. With the widespread development of digital technologies, the number of platforms where users can search for information has changed, or the topic in question does not require repeated study, and a one-time study is enough.
Characteristics of change management
An important feature of change management is the fixation of the result. If, as a rule, the enterprises response to an external or internal threat is temporary in nature, then change management is aimed at a general shift of the vector of organizational development for a long time (Christopher, 2017). In this regard, it is particularly relevant to recall Levins theory of change management, which involves freezing projects to identify critical points in order to adjust the vector of further development (Hussain et al., 2018). To implement this task, change management focuses on changing the perception of the enterprise, its values or processes, and the problems in the minds of stakeholders. Such practices are accomplished through training tools and adequate advocacy for change to the extent that employees become aware of the need for change as a whole. Changing the logo, slogan, and vision are significant transformations in terms of corporate culture, and endorsement of these changes has critical value for the company. In this context, it is essential to emphasize that approval is not perceived as blindly following managers instructions but as supporting the idea of transformation, which fits perfectly with the ideology of pluralism of opinion, which is valid for change management (Flemming, 2020). This correlates with nudge theory as ideas that employees will change in directions that are discreetly initiated by leaders (Ebert and Freibichler, 2017). Paradoxically, when managing change, organizational leaders often try to maintain stability in the company. However, stability in most cases means preserving the organizational core, which does not contradict the ideas of change.
Change management becomes impossible without recognizing speed from three perspectives. First, the speed of business transformation largely determines a companys competitive advantage. If a manager cannot follow the pace of the market (Figure 4), it creates a gap between theoretical expectation and reality that tends to widen as the commercial activity progresses. On the other hand, it is the speed of response to crises occurring externally. For example, a competitor company releases an exposé video about the firm in question and accuses it of illegally collecting personal data, then the companys speed of response ultimately determines its ability to keep the relevance. A great real-world example is the recent news that Apple will analyze images on users iPhones for child abuse using machine learning (Nicas, 2021). This news expectedly caused a public outcry, as it raises issues such as private access and privacy. Just days later, the company released a broad overview of the proposed technology, explaining its implementation strategies in detail and reassuring users (Varia, 2021). This example perfectly validates the idea of reflective speed as an aspect of change management. Finally, the third type of speed that change management leaders should pay attention to is ensuring an uninterrupted flow of interactions with customers and suppliers. Any delays and problems associated with the implementation of commercial services, delayed delivery of a paid online item, lead to organizational trust and reputation problems (Newman, 2021). Thus, an essential aspect of change management is speed since change itself is a phenomenon that has a temporal characteristic.
Digital transformation
One manifestation of the digital economy, the new century economy based on the deep integration of computer technology, is digital transformation. This term, like change management, has no limited context and is therefore interpreted differently by authors. Hicks (2019), for example, points to the replacement of obsolete technical equipment with more modernized, improved, and optimized tools. Schwertner (2017) looks at the other side of transformation, pointing out that its uniqueness lies in the cultural acceptance of risk as necessary for change. They are not contradicted by Mugge et al. (2020), who clarified that digital transformation affects all industries worldwide. In this context, it is fascinating to refer to Figure 5, which shows that the study of digital transformation comes from engineering and computer science, telecommunications, optical and economic sciences, and business. Taking the above into account, it is possible to arrive at a generalized definition: digital transformation is the integration of digital, computerized, technologies in the production economy to automate and optimize.
In advance, it should be stated that the above generalization does not mean only a technological approach to management. Thus, digital transformation is not a process of evolution of information systems in the company, including only the expansion of the development team. Instead, digital transformation seeks to modernize approaches to managing communications, corporate culture, and operational efficiency to achieve the desired professional goals (Vial, 2019). This transformation aims primarily to optimize labor productivity for a smoother delivery of goods or services to the end consumer. Consumers can be not only the companys customers, although they constitute the bulk of the business, but suppliers, investors, and other parties interested in improving business processes. In this regard, it is advisable to quote a broad study by Conti-Brown and Wishnick (2020), which stated that the maximum output from the digital transformation is possible only in the case of a conscious rejection of conservative management models that contradict the ideology of optimization. The search for specific tools that allow the transformation in practice, in general, occupies a special place in the public study. Revisiting Figure 3 shows a weakly linear increase in Google queries for this key. More people seem to be realizing that it is not enough to have a working website, brand social media accounts, and YouTube channels to meet the standards of digital transformation. On the contrary, the professional success of digital transformation in a company is based on the competent establishment of an organizational strategy and the proper management of change in all areas of the companys work activities (Vial, 2019). In this context, it is imperative to emphasize the need for integrative integrity of the company in contrast to its fragmentation and fragmentation as separate departments: only in this way is the interconnectedness of corporate culture and efficiency from the implementation of transformative processes achieved.
The multiplicity of manifestations of digital transformation for the company requires a separate discussion. Since it has already been shown that the term corresponds to a multi-vector process of organizational change, it is legitimate to expect that digital transformation can be achieved through several vectors: it is about customer experience, business process, and operational efficiency (Kane, 2017). Improving the customer experience through digital aims to improve the interaction between the brand and current customers and potential ones. In addition to the apparent direction of marketing through print publications and city billboards, this includes using social media and the website to increase customer touchpoints. However, the best strategy is cross-platforming, which puts the potential customer in the sales funnel through the harmonious use of all available digital media (Moriuchi, 2021). Moreover, technology in this context allows portraits of the average customer and the customization of targeted recommendations for their preferences, which increases consumer brand loyalty. Such manifestations of digital transformation are critical to enhancing a companys competitiveness, especially in stressed market sectors.
Operational performance transformations are a must for organizational change. Primarily, this refers to partial or complete automation of internal processes, allowing a significant increase in enterprise productivity (Raj and Seamans, 2018). Automation as a trend should not be considered only in the use of software to facilitate the work performed by employees. On the contrary, the computerization of production has a high potential to improve corporate structures through predictive tools, communication, and the collection of key performance metrics. Commercial solutions exist in industry markets that allow for statistical regression analysis of organizational data to create predictive modeling (Raj and Seamans, 2018). Using this data, decision-makers can adjust the current business agenda or make radical new corporate decisions. Automated collection of key performance metrics simplifies the work of a corporations HR department and ultimately allows for optimized resource management to achieve the most favorable economic benefits.
Finally, an essential aspect of digital transformation is the change in company business models. With the introduction of information technology into working practices, the commercial offerings of products and services are expanding (Raj and Seamans, 2018). Practice shows that companies previously investing only in the development of physical products are significantly restructuring their business processes, including enterprise-wide corporate goals, with the progress of digital transformation (Shirer, 2020). Such reasoning refers to the expansion of the geography of consumers. For example, in an offline clothing store, sales could only be made locally to the local market, whereas the digital transformation allows the full use of social media and other web-based platforms to find customers all over the planet. This phenomenon underlies the emergence of transnational online stores more specifically, aggregators that present a platform for retailers or wholesalers including Amazon, Ozon, Aliexpress, Wildberries, and other major online marketplaces.
It is acceptable to turn to the example of the real company Netflix. The companys initial commercial path, namely the sale of DVDs, has transformed over time due to understanding market trends. In 2007, Netflix began to work with streaming video, introducing to the world a digital platform that takes into account the personal interests of the user, and later the company began to produce its video content (Rataul et al., 2018). As a result, Netflix has grown from a little-known company to a major media giant with a combined audience of more than 207 million users (Stoll, 2021). This example perfectly illustrates how a company with the anticipation and drive for change has effectively transformed itself with digital technology by completely restructuring its organizational system.
Aspects of digital transformation
A central feature of digital transformation is the pursuit of innovation and the professional ability to take risks. Experiments with technology, based on deep calculations or intuitive leadership management, constitute the core of digital transformation (Vial, 2019). In general, it is worth noting that it is impossible to implement any change associated with business management without the potential for risk: the process of moving from the current state to the desired point in the future is always inextricably linked to the threats and delays that may arise in the transition. Thus, digital transformation as an extended process is interested not so much in discussing initial and final organizational states but the nature of the path from point A to point B. As Sharma and Kurien (2017) have shown, change in the marketplace occurs in leaps and bounds, which means that influential executives should consider the essence of external economic drivers to manage transformation intelligently and smoothly.
Notably, measuring digital transformation as a process is difficult because of the unpredictable nature of technology development. General trends for the next few years are the subject of forecasting by influential executives and are used to adjust the course of the enterprise, but it is not known precisely what changes await the digital economy in five, ten, and fifteen years. This raises an obvious measurement problem: no objective tools
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