Jul 22, 2016

Building Digital Organizations: Every Organization’s Challenges Are Different

Hugh DeWitte

Hugh DeWitte

Building Digital Organizations: Every Organization’s Challenges Are Different

Digital is changing how the world works and lives, providing better experiences and outcomes for people across the globe. It is the great leveler. But keeping a level head when trying to figure out how to build a digital organization is anything but one-dimensional.

Successful digital business performance has become increasingly important.

Digital is an investment that requires sufficient resources for execution.

Building a digital organization often starts with investment funding that establishes foundational platforms, skills, and organizational structures—with return on investment (ROI) achieved over a span of two to four years. But once that organization is established, the real work begins.

Digital demands an orchestrated ecosystem.

Many organizations rely on digital partners to increase pace and add skills while steadily developing select competencies in-house that align with their business goals.

Digital organizations often start in IT, but that is rapidly changing.

As digital organizations mature, we have seen a change from close alignment with corporate IT to self-directed functions closely aligned with core business domains (e.g., business units, marketing, and sales).

Digital leadership reporting relationships are varied across organizations.

Digital leaders report directly to a diverse group of senior positions including chief executive officers, chief information officers, chief marketing officers, and geographic leadership positions; the right alignment is driven by digital business need. These business needs have led to a recent trend of introducing chief digital officers and chief omni officers in the retail sector.

Digital accountability and decision making authority tends to focus on growth.

Digital leaders rarely have full profit and loss responsibility—and are typically accountable for digital revenue growth and coordination of enterprise digital investment to achieve governance and ROI.

Digital organizations have moved from a transactional ecommerce focus to omni-commerce focus.

Turning to integrating physical and online to provide a seamless customer experience anywhere, regardless of customers’ preferred method of shopping.

So Where Do You Start?

You cannot determine what your organization looks like unless you first understand what you are good at, which capabilities may need improvement, and which competencies you possess. Competencies are the combination of knowledge, skills, and behavior of a specific digital business capability. A competency is not necessarily a person and/or a role on an organizational chart, nor is it specific to platform or tool.

Digital business capabilities are areas such as commerce and fulfillment or content management. Credera has a list of 10 foundational digital business capabilities that we believe are key to any digital transformation.

“What If” Questions You Should Ask Yourself:

  • What if your online sales quadruped overnight?

  • Can you quickly scale?

  • Which key metrics could be used to measure each competency, informing scale decisions as you plan for growth?

  • Which competencies does your current organization handle well today?

  • What areas are partners and vendors allocated across?

  • Is it the right mix? How are you operating as an organization today?

Areas to Consider

Once you identify the resourcing levels and decide on your opportunities, there are three essential areas of consideration:

Degree of Globalization
  • Extent to which digital is performed globally.

  • Benefits of globalization include better use of limited resources and cost optimization.

Degree of Ownership
  • Extent of what is owned internally, building a highly skilled, global team.

  • Renting is good for commodity services or new or short-term/project-based services.

Degree of Automation
  • Extent of what can be automated and where manual intervention is still needed.

  • Balance between engineering for internal efficiencies vs. customer-facing functionality.

Now you are ready to define the digital organization and ask some seemingly simple questions that can have some complex answers.

What is the digital organization?

  • What are the benefits to the company, customers, and partners?

  • How will this digital organization grow our business?

  • What is the digital maturity of my current digital capabilities?

How will it work?

  • What are the roles?

  • How do roles connect?

  • Business unit vs. enterprise.

  • Global vs. local.

  • Ownership and accountability.

When will we do it?

  • Do now vs. plan for the future.

  • Phases based on needs of the business units and enterprise.

  • Constraints: budget, skills, other dependencies.

How attractive is the digital growth opportunity?

  • What is the market size, growth, and opportunity of the omni-commerce market?

  • What are the industry trends specific to digital strategy?

  • What is the competitive landscape?

How should we operate to be successful in the digital market?

  • How does the current business model translate to digital (customers, products/services, pricing)?

  • What is the future state business and operating model to deliver on the digital strategy?

  • What are the operating capability gaps to reach the future state?

  • What are the technology gaps to reach the future state?

What investment strategy is required to grow the digital business?

  • What are options (including build, buy, and partner) and recommendations to grow?

  • What are the benefit, investments, and ROI for recommendations to grow?

  • What is the two-to-three year roadmap, key initiatives, and implementation plan?

  • What are the known risks associated with initiatives and investments?

Don’t Forget Culture

But remember, culture can always trump the best-laid digital transformation plans.

I’m always reminded in the midst of a business transformation engagement that every business is different. I’ve heard management consultants say, “Every client believes they are different, and they’re not,” but I disagree. If you cannot fully understand the nuances of the company culture, just like any family dynamic, it will be hard to implement a happy and healthy organizational solution that will be willingly adopted.

An illustration from a recent experience helps illustrate that digital strategy is dependent on understanding cultural adoption.

Churches are a great example of culture.

Churches are filled with people of a common belief, but they are often distinctive in how they operate to achieve their missions. Credera recently worked on a digital strategy for a large church in Dallas. While adding additional staff members would be a simple answer in scaling their digital operations, scaling up the number of digitally-focused employees was not the most fiscally responsible solution for a nonprofit organization.

We needed to find solutions that combined people, processes, and technologies in ways that spoke directly to their lean organizational culture and their desire to serve God not processes. Any “competency scoring, capability assessing, and technology platforming” will not answer those fundamental realities.

Healthy digital organizations are not built in a vacuum. They must be tailored to fit an organization’s unique culture, objectives, and digital opportunities.

Interested in learning more about Credera’s approach to building a digital organization? Follow us on LinkedIn or contact us here.

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