Inside magazine issue 12 |

 Part 01 - From a digital perspective

The digitally-fit
organization
Basil Sommerfeld “There’s never been a worse time to be a worker with only
Partner
Operations Excellence ‘ordinary’ skills and abilities to offer, because computers, robots
& Human Capital and other digital technologies are acquiring these skills and
Deloitte
abilities at an extraordinary rate.”
Roxana Moise-Cheung
Erik Brynjolfsson and Andrew McAfee, The Second Machine Age1
Manager
Operations Excellence
& Human Capital
Deloitte
 Inside magazine issue 12 |
 Part 01 - From a digital perspective

Digital transformation isn’t really Is your organization ready to face the who will bring new skills into an evolving
about technology challenges triggered by the digital organizational context and to help existing
Would you expect that the decision age? Do you have the right strategy employees gain relevant skills for the digital
on which size of tables to choose for in place? Do you have the requisite economy. In a world of accelerating change,
your employees’ cafeteria affects your capabilities in your organization to building the organization’s digital capability
organization’s productivity? Could successfully execute the business organically is not always feasible, so many
this be part of your digital business strategy? How will your governance organizations are acquiring other entities
transformation? At first glance, these may processes support swift decision- for their talent base, to narrow the digital
seem like random pieces that are difficult making and respond to market skills gap.
to fit within the same puzzle. But consider trends?
this: the tables in question were in the The key imperatives for a digital
offices of a large, online travel company Business agility is the new definition organization
working with Humanyze, a people-analytics of success In 2016, organizational structure rocketed
company headquartered in Boston. The In the new digital world, the definition to the top of the agenda among senior
latter works as an integrator of wearables, of success is no longer linked primarily executives and HR leaders worldwide, with
sensors, digital data and analytics to to efficiency, but to business agility. 92 percent rating it a key priority.6 How
identify, for example, which employee talks Organizations need to be able to seize you define and design your organization
to whom, where they spend time and how opportunities in a rapidly changing while identifying and developing talent
they interact with each other. The analysis business environment, while responding to and leadership is a key differentiator to the
identifies patterns of collaboration that the needs of their technology-empowered success of a new digital initiative; however,
correlate with high employee productivity. customers and acting quickly to aligning your organization to respond
At the company in question, Humanyze successfully implement the digital strategy. to digital business objectives presents a
found, on the one hand, that while eating unique set of challenges for the executive
together people shared more insights Presently, dwindling numbers of leadership team.
and thereby boosted their productivity organizations operate using highly
and, on the other hand, that productivity hierarchical models, in which decisions are While 74 percent of organizations say
increased in proportion to the number taken in a traditional top-down manner. that they already have a digital strategy,
of people at the same table. In this case, Instead, organizations operating in the the level of readiness to execute such a
integrating digital technology suggested digital business sphere have adopted strategy successfully is quite low, with
that an increase in the table size would loose hierarchies in which responsibility only 15 percent believing that they are
have a direct and measurable impact on sits closer to where the impact of each “equipped” with the right people and skills
employees’ ability to work productively. decision is felt. Also, companies are shifting to succeed in a digital environment.7
The tale of the tables shows that digital the focus toward outcomes and away from
transformation is not only about the the processes performed to deliver those
technologies themselves—social, mobile, outcomes.
analytics and cloud—the real value comes In the new digital
instead from how companies integrate Mobility and flexibility will be crucial
them and transform their business and for people to stay relevant world, the definition
their ways of working.2 It feels contradictory to note that
the lifecycle of a piece of technology of success is no
With that story in mind, let’s look around. is measured in months, but leaders
Some might say that the fourth industrial consider it acceptable for an employee longer linked
revolution3 is happening right now! By to do the same job for 5 or 10 years. It is
2020, more than seven billion people easy to stagnate in that environment, so primarily to
and businesses, and at least 35 billion professional mobility leading to the right
devices, will be connected to the internet.4 life outcomes represents an important efficiency, but to
With people, businesses and things facet of successful organizations in the
communicating, transacting, and even digital economy. business agility.
negotiating with each other, a new world
is emerging—the world of digital business, Planning the skills of a workforce in the
where the majority of revenues across digital environment is complicated. So is
different industries will be driven by digital.5 the simultaneous need to locate people
Inside magazine issue 12 |
 Part 01 - From a digital perspective

When enabling your organization to business objectives. As a leader, Change is the new “normal”.
successfully deliver on digital business you will be challenged to create Digital organisations must be
objectives, the following key digital shared goals and identify the right nimble, hyper-responsive to market
imperatives should be considered : incentives for your new digital and able to change track, reallocate
organization. resources, implement processes
and continuously renew their
1. DEFINE what digital means for your
As companies strive to become digital culture. Embedding change
organization
more agile and customer-focused, capabilities in the business is one
2. DESIGN the digital-fit operating organizations are shifting their of the key success factors for digital
model to support execution of the structures from traditional, implementation.
digital strategy functional models toward
interconnected, flexible teams. In light of these challenges, leaders
3. DELIVER the digital transformation
More than nine out of 10 executives of digital organizations must answer
surveyed (92 percent) rate one central question:
1. DEFINE digital organizational structure as a top
priority, and nearly half (45 percent)
A. A digital organization must report that their companies
“How do I redesign my
operate in a fluid and perpetually
evolving environment, and
are either in the middle of a organization to succeed
restructuring process (39 percent)
this requires new definitions, or planning one (6 percent). A in the new digital
objectives, and roles
“Digital” means different things
new organizational model is on landscape?”
the rise: a “network of teams”
to different people. Concepts like in which companies build and
“digital operating model,” “digital empower teams to work on specific
analytics,” “digital optimization,” business projects and challenges.
“digital personalization” and These networks are aligned and
“omnichannel,” to name but a coordinated with operations and 2. D
 ESIGN the digital-fit operating
few, are very likely to be new and information centers. model “One operating model does
unfamiliar concepts for most
not fit all”
employees. Challenges still remain: only 14 Culturally open, dynamic and flexible
percent of executives believe their structures built on mutual trust are the
Define what “digital” means for companies are ready to effectively basis of the information economy today
your business—the digital vision redesign their organizations in and should be a long-term aspiration
and business goals—decide order to enhance the roles of for many companies. Although radical
how your vision translates into a “networks of teams”; only 21 structures such as those of Valve and
digital strategy and identify the percent feel expert at building Zappos are unlikely to work in many—or
organizational design principles that cross-functional teams; and only indeed any—other organizations today,
will help you align your organization 12 percent understand the way they can’t be dismissed as curiosities.
to the new digital business goals. their employees work together in
networks.6
B. Digital organizations must
be uniquely cross-functional,
necessitating deliberate and
C. Digital organizations must To become more
operate with speed and precision
formal alignment across
functions
while understanding when fast agile, organizations
and nimble (rather than slow
Digital organizations require
the convergence of technology,
and consensus driven) decision- must develop
making is needed
customer data and analytics
to enable disruptive product
Change is the new “normal.” Digital practices to deal
organizations must be nimble,
development. However, when
adjacent enabling functions such
hyper-responsive to the market, with change events,
and able to change track, essentially
as IT and marketing own the
management of these required
operating with the speed and to be able to adapt
decisiveness inherent to young
inputs, digital is likely to encounter
friction. It is critical that a leader
start-up ventures. However, many rapidly
large organizations are risk averse
who can understand these enabling and pragmatic when it comes to
functions aligns their competing decision-making.
 Inside magazine issue 12 |
 Part 01 - From a digital perspective

Valve is a sizable and much-studied US software company that has no

hierarchy, no defined strategy and is seemingly held together by the shared
philosophy and sense of responsibility of its employees.
Its 300 or so employees are encouraged to determine for themselves what the
best projects are to undertake, convince their colleagues of their idea, then
assemble teams to realize those projects. Valve was four times more
productive than either Google or Apple in terms of market capitalisation per
It would be a mistake for leaders of more
employee and as much as ten times more productive than peers in the video
longstanding organizations to attempt to
games industry.8
jump to such structures. The culture shock
would be too great. Instead, successful
Zappos is a US-based shoe retailer with 1,500 employees, whose CEO Tory
leaders must proactively consider what
Hsieh recently announced the company’s intention to move to a radical,
they can learn from organizational models
self-governing, operating system called “Holacracy.” In “holocratic”
being established by “digital natives” and,
organizations, there are no job titles and no managers, and hierarchy is
depending on their own level of maturity,
removed completely. In 2015, Zappos was ranked 86 on Fortune magazine’s
see how they can apply new ideas and
“Best companies to work for” list.
adapt their organizations to meet digital
challenges.
Inside magazine issue 12 |
 Part 01 - From a digital perspective

The four types of digital organization9

Possible solutions range from “Tactical”
models, where digital technology and ways
of working are used within business units to
achieve existing objectives, to “Business As
Usual” (BAU) models, which embed digital
culture, processes, business models and
technology across the organization until they
become a way of life. There are, of course,
many hybrid options in between.

The Tactical model. The challenge is that these investments

Characterized by: opportunism are made in silos, without a view to
In the Tactical phase, digital technology changing the effectiveness of the entire
and ways of working are used within businesses. Investments are large but not
business units to achieve existing strategic. Digital remains at the edge of the
objectives. business, its challenges and opportunities
are restricted to the minds of a few, and
Techniques like digital marketing, the subject is treated as an exception to
processes such as online self-service business as usual.
and technologies like field force mobility
all create value without the need to re- The Tactical model is extremely common in
engineer the way the business works. organizations that have expressed a desire
to establish a digital market presence, but
who have so far not articulated a coherent
digital strategy.

The Centralization model. in digital. Phrases like “Skunk Works”

Characterized by: agenda setting and “Guerilla Units” are often used to
To bring appropriate governance to describe the well-intentioned pet projects
expenditure in digital, digital initiatives of managers that are meant to establish
and skills are consolidated into a central innovative technologies, products and ways
unit; this unit then translates corporate of working, but rarely have much of an
strategy into priorities for digital initiatives impact at a strategic level. Identifying and
and works with the business units with selecting these initiatives is one of the first
regard to implementation. This enables tasks of a digital team. It can also identify
appropriate governance of digital strong talents and ideas to bring into the
expenditure. It also creates a structure for team.
turning corporate strategy into priorities
for digital initiatives with the central team In general, the central digital team is a
being able to work with the business transient feature of the organization that
units to implement them. This structure helps it gain control of investments, breaks
tends to be more efficient in enabling the down silos and teaches and empowers
organization to scan the market for digital leaders to use digital techniques to
opportunities, support the exchange of transform the organization. This could
ideas on digital between business units and become the optimum model in cases
deliver digital processes and technologies where, for example, the central team
on behalf of the business. becomes a “Digital Expertise Center,” but in
majority of cases, responsibility for digital
This centralization can also benefit should be broken up and passed to the
organizations that are doing far too much business’s operational leaders.
 Inside magazine issue 12 |
 Part 01 - From a digital perspective

The Champion model. Organizations operating on the basis of

Characterized by: transformation this model have sufficient openness and
A digital strategy is in place, and has been trust to effectively focus on performance
effectively communicated across the rather than becoming embroiled in the
business. decision-making process. The most
significant enabler of this model is deep
A central digital team no longer holds all understanding between the leadership and
responsibility for digital, and emphasis is employees of what digitally really means
placed on sharing knowledge, educating for their organization. Capabilities such
and enabling others in the business. as innovation, data analytics, and change
are shared strengths that enable the
organization to be self-sufficient.

The Business As Usual (BAU) model.

Characterized by: normality
Ultimately the objective of digitization
is to create a business that is flexible
and responsive to change at all levels. In
the BAU model, using and working with
digital is no longer unusual, and is a fully
embedded part of daily working life.

There is no longer any need for a

centralized team, and those working on
initiatives and with specific digital skills
rejoin business units. Everyone remains
connected on an ongoing basis. Teams
form and disband dynamically based on
business needs.
Inside magazine issue 12 |
 Part 01 - From a digital perspective

How to measure your digital readiness Example of Digital readiness

To choose the right operating model for
their digital organization, leaders must
understand the gap between the current 1. Strategy
and desired status quo in the context of & Leadership
the new digital ecosystem.

Organizations should not seek to be 5. Digital 2. Customer

leaders in every aspect of digital business, Operations engagement
but instead focus on those that are
fundamental to their digital strategy.

To that end, leaders must answer five key

questions:

•• Do we have the right vision and 0

strategy for digital, and the
1
leadership, communication and focus
required to support this vision? 2
•• Do we have the right approach to 3
understanding and communicating 4
4. Organization 3. Product
with our customers to succeed in a & Talent & Services
digital environment? 5

•• Do we have the right products and

strategy, and the ability to develop,
manage and sell them effectively?

•• Do we have the right organization,

The example organization shown above Although this is fine in the short term,
talent and culture to support my
is typical in that it has succeeded in in the majority of cases it will not be
vision, products, and services?
delivering some successful digital products sustainable in the long term as the rate
•• Do we have the right processes, and services to its customers in line with of innovation and change continues to
controls and technologies to develop a defined digital strategy but it delivers increase and new digital competitors enter
and sustain a profitable business? them in a traditional hierarchical manner. traditional marketplaces.
 Inside magazine issue 12 |
 Part 01 - From a digital perspective

In the digital world, the most Support services

important capability gaps are not
technology-related
The most critical capabilities organizations
need to develop to meet the digital
challenge are far from being technology-
related.10 Instead, they include:
Customer
Change
•• Digital leadership to build and Journey
Management
support the business vision and Mapping
strategy.
Leadership is in fact more important
than ever in times of change, but
leadership styles may change to reflect
the more collaborative nature of the
digital workplace. There is no fixed Data Innovation
definition of strong digital leadership in analytics Management
the digital world, but a few key leadership
principles still remain critical to success:

A. Set a vision. Above everything else, E. Provide real-time interactive •• Customer journey mapping to identify
the leader must set a vision for the feedback and use social and mobile the pain points in the customer
organization’s digital future, be able platforms to engage with the team journey and improve customer
to translate the strategic course of satisfaction.
actions to the wider organization F. Foster a culture of knowledge and Some organizations are redesigning
and get the buy-in content e-sharing and role model the entire organization around the
values such as integrity, openness customer life cycle, while others
B. Empower, don’t dictate. The leader’s and transparency empower their customer journey
role is to give the individuals and owners to create an enhanced customer
teams the ability, resources and G. Drive decision-making based on experience. Whichever model they
freedom to accomplish a goal analytics choose, organizations need to be digital
efficiently and accountably. Leaders customer savvy to be able to map the
must keep their teams focused H. Supports team diversity to achieve experiences within their customers’
on the outcomes, support and the optimum balance between ecosystem of value and translate them
reinforce their people in taking deep functional expertise and into the right products and services to
ownership and be a role model that generalized skills to create a flexible, enhance their digital experience.
focuses attention on the business dynamic and highly effective team.
strategy
•• Innovation management to enable
•• Change management to support the a shift in thinking about and applying
C. Develop the “network of teams.”
embedding of a culture of innovation, technology to create new sources of
The digital leader quickly develops
adaptability and entrepreneurship. customer value. Digital businesses
a network within and beyond this
Most organizations and business connect customers and employees to
area of expertise, successfully
processes are not built for rapid support “co-creation” of their products
operating across silos and within
change; rather, they are designed for and services and ensure that they are
functional teams
consistency and efficiency. However, properly tailored to meet customers’
faced with a continuous change in needs. Companies such as Procter &
D. Be smart and mobile. The digital
relation to customer experiences Gamble (P&G) use digital virtualization to
leader is hyper-connected and
and needs, organizations, processes, test product packaging and shelf layouts
always “on the go,” ready to grasp
products and services must constantly with real customers in virtual stores
any opportunities on the market.
evolve and adapt. Changing the before embarking upon the production
A digitally savvy professional
mindset at the organizational level and phase.7
capitalizes on opportunities new
foster a culture of change, innovation
technologies bring to the business
and entrepreneurship represents an
as well as to the team •• Data analytics to help turn data
imperative and a challenge at
into insight and improve customer
the same time.
experience to drive new sources of
revenue.
Inside magazine issue 12 |
 Part 01 - From a digital perspective
 Inside magazine issue 12 |
 Part 01 - From a digital perspective

Key principles to effective completely finished and organizations are change management capability to be
digital governance continuously challenged to adapt to new embedded at the organizational level and
Siloed, rigid and random are just market dynamics and the needs of digital ensure a successful delivery of the digital
three characteristics of the ineffective customers. In this ecosystem, change transformation:12
governance processes of many management is the key to helping your
•• Creating a climate for change
organizations today, ultimately leading to organization keep pace with the times.
an ineffective customer experience. As •• Engaging and enabling the organization
organizations move to more mature digital Agile organizations develop practices to
•• Implementing and sustaining change
strategies, they will also need to shift their deal with change events impacting their
governance accordingly to ensure agility as businesses such as price wars or mergers.
they execute their strategies and provide They must be able to rapidly identify
effective and efficient responses to the challenges and opportunities, define an
needs of their customers. approach/response to deal with the issues,
allocate resources, execute successfully
3. DELIVER the digital transformation and encourage positive behaviors and
attitudes across the board. And they must
Embed change management practices
handle all these changes as a routine
in the organization to enhance digital
without major disruption to the business.11
experience delivery

The change management structured

The digital age is characterized by constant
approach includes several key phases
change; no digital experience project is
and key actions to be taken to enable
Inside magazine issue 12 |
 Part 01 - From a digital perspective

Change Management — Key steps and actions

Creating a climate for change Engaging and enabling the Implement and sustain change
organization
•• Create a well-defined “customer- •• Celebrate success stories on the
first” vision •• Assess readiness for embracing digital agenda across technology,
new digital agenda marketing and business
•• Identify sponsorship and
enable collaboration between •• Engage your change champions •• Support continuous learning to
key stakeholders for the digital and agents for digital experience educate employees on the digital
initiative: (e.g., CMO and CIO) delivery (e.g., technology imperative
management, business and
•• Secure resources for new •• Monitor digital adoption by the
marketing leaders, etc.)
technologies and people organization and continuously
•• Design and implement tailored adapt your approach
•• Select your team to drive the digital
communication to gain buy-in for
change; create change CoE for
digital agenda
digital

The eight steps of change management

Implementing and
Sustaining Change

8. Make it Stick
Engaging and
Enabling the Whole
7. Don’t Let Up
Organization

6. Create Short-term Wins

5. Empower Action

Creating a climate
4. Communicate for Buy-in
for Change

3. Get the Right Vision

2. Build the Guiding Team

1. Increase Urgency

Source: Forrester, Implement essential change management practices to improve experience delivery, 2015
 Inside magazine issue 12 |
 Part 01 - From a digital perspective

Conclusion remember ourselves coming into the working to deliver a consistent customer
office one day to discover that we “were experience across these touchpoints in a
“The machine does not blessed” with a newly implemented digitally driven world.
system whose only aim was to “make our
isolate man from the life easier” and which, in fact, just made To achieve that, business leaders
great problems of nature things more complicated? need a holistic new approach that
integrates technology and people into
but plunges him more Undeniably complex, the ability to a new organizational digital ecosystem
deeply into them.” digitally reinvent a business goes and contributes to the creation of
beyond designing and implementing sustainable new ways of working that
Antoine de Saint-Exupéry
technologies, systems, social networks, ultimately contribute to enhancing the
How many times have we heard about tablets, etc. Instead, the focus is how business output.
significant IT investments made in we constantly evolve our organizations,
organizations to achieve a particular how we develop our capabilities and our
business objective and that “it didn’t people, and how we prepare ourselves
work”? How many times do we for and eventually change our ways of

Sources
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Prosperity in a Time of Brilliant Technologies, First edition, W.W. Norton & Company
8. Kelion, L. (2013), “Valve: How going boss-free empowered the games-maker,”
2. G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, (2015) “Strategy, Not http://www.bbc.co.uk/news/technology-24205497
Technology, Drives Digital Transformation,” MIT Sloan Management Review and
9. Deloitte (2015), “Building your digital DNA. Lessons from digital leaders”
Deloitte University Press
10. Fenwick, N. (2015), “Organizing Your Digital Future. What Type of Organization
3. Schwab, K (2015), “The Fourth Industrial Revolution. What It Means and How to
Do You Need to Become a Digital Predator,” Forrester
Respond,” http://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-
what-it-means-and-how-to-respond 11. Le Clair, C. (2013), “The 10 Dimensions of Business Agility,” Forrester

4. Gartner (2014, 2015), “Agenda Overview for Digital Business” 12. Yakkundi, A., Schooley, C. (2015), “Implement essential change management
practices to improve experience delivery,” Forrester
5. Forrester (2015), “The State of Digital Business, 2015 to 2020”

6. “Deloitte Global Human Capital Trends Report 2016. The new organization: Different
by design”