Organization for digital transformation

Again, haven’t been able to be active on the blog for some time as regular work has consumed most of my time. Instead, another new article for CFO World. This time I tried to shed some thoughts on the important area of organization.

In the article I’m arguing that digital transformation is only to a small extent about implementing new systems, technologies or cool solutions. This can, at best, transform the organization in to “digital for the moment”. But as soon as the world changes, and it does faster and faster as we all know, the organization will be left behind again. As long as the models of managing, steering and governing organizations from the pre-digital era still exists within the organization, it will quickly go back to minimizing risk by building (imaginative) barriers to entry, rather than capturing opportunities and focus on being smarter, faster and more innovative.

Also, as long as ‘digital’ is organized in a silo, the organization won’t get the true leverage of it, as it will sooner or later be confronted with conflicting goals and KPIs from within other silos and the often ongoing conflict between (for example) marketing and IT.

In later years we’ve seen the introduction of a new role, the Chief Digital Officer (CDO). Again, this can represent a short term viable way to function as a catalyst for the organizations cultural transformation into adapting towards digital and adding a digital DNA into all thinking, strategies and functions. The role should then focus on driving knowledge, adding guidance, comfort and pace rather than delivering solutions. But the role is then by nature interimistic and the ultimate goal for the CDO should be to become obsolete, when the organization have adopted a digital culture and DNA and can fully function by itself again.

In order to adapt to the pace needed for todays and tomorrows business landscape, the organizations must go from minimizing risk by doing long pre-studies and having too much of top-down management, to mitigating risk by trying, failing fast and learning. To do this effectively, responsibility must be delegated to the front-line with top-management functioning as the visionaries and the coaches giving support, rather than controlling and approving. One could see it as a tree, but with top management being the supporting roots and stem, middle management being the branches, and the employees in the front-line actually doing most of the work being the leaves and fruits. Asana has a lot of interesting ideas around appointing areas of responsibility (AoR:s) and Apple has a similar system in place as well called DRI:s (directly responsible individuals). Ultimately, it is a question about adopting to a culture of tolerance, pace and trust. This will be important in order to attract, grow and retain talent as well as to succeed on todays and tomorrows market, where speed of innovation, automation and learning from the data of fail-fast mistakes will be more efficient ways to win than control, minimizing risk and traditional barriers to entry.

Aaron Dignan has a lot of interesting thoughts on the subject – here a talk from a couple of years back on the responsive organization: