I wrote recently about our Digital Maturity Model to assess where you are today and identify opportunities to improve your digital maturity. The key concept is that it takes more than an investment in the latest technology trends to be a Digital Leader, it also requires strong digital leadership, a culture that embraces digital opportunities and the talent to move fast and smart.
This is especially important for traditional businesses that are now forced to compete in an increasingly digital world. Their competition, in addition to their traditional competitors, now often include digital-native (e.g., Uber, airbnb, Netflix, etc.) organizations, that don’t know any other way than to embrace an innovative, digital culture.
Most of the organizations that are thriving have a defined digital strategy, but then an organizational structure that allows for distributed responsibility and decision that is closer to the action. The action, of course, is the customer. Digital leaders are constantly testing, measuring and adapting to improve the customer experience and drive positive business outcomes.
Having a Chief Digital Officer can help to establish the importance of digital, bring resources talented in digital into the organization, and establish a “digital center of excellence”. Ultimately though, the end game is that digital is embedded throughout your organization and culture and the Chief Digital Officer is just an influencer and thought leader.
Deloitte recently published a study called Building your digital DNA and in it they outline four different organizational structures for how digital is being done.
- The Tactical Model – investments in digital are being made in silos (each business unit), there is no cohesive digital strategy to align investments and digital is still thought of as a fringe piece of the business
- The Centralization Model – digital initiatives and skills are consolidated into a central unit, helps with having a cohesive strategy and appropriate governance, but can be too removed from the individual business units and the customer
- The Champion Model – have an established digital strategy and heavy trust throughout the organization, able to execute effectively on digital initiatives without complete reliance on the centralized digital team
- Business As Usual Model – digital culture, processes and technology are no longer something separate, they are just the fully embraced way business is done, the business is flexible and responsive to change at all levels and now behaves like a digital-native organization
In the Mckinsey post The Secrets of Going Digital, they say that organizations that are doing well with digital aren’t just trying to play “me too” with their competitors, instead they are looking for really big ways to impact and disrupt (or prevent disruption) in their industry. Regarding the organizational structure, they say “it matters less about the boxes and lines and organizational structure of who owns whom, but they need to be able to call on those resources. It doesn’t matter if your developers happen to sit with IT or the CDO. But the CDO needs to be able to influence those developers, needs to be able to demand-manage and get the right set of priorities acted on fast enough by those guys.”.
Success in digital involves the combination of having a well-defined digital strategy, having the appropriate digital talent in the organization, and then establishing a culture of trust and innovation that allows you to streamline decision making, constantly test-and-learn and adapt your strategy to better serve your customers.