Thus far, the digital era has been a driving force of change across industries, and the pace of transformation is accelerating. Back in 2001, Apple launched the iPod. In just three years, the iPod caused the sale of music CDs to fall to their lowest level in 35 years. Uber got its start in March 2009, launched its beta version in May 2010, and starting from 2011 the organization digitally reshaped the San Francisco taxi industry. This digital disruption to traditional cab operators took Uber just over one year to achieve. While the pace of the digital revolution can often be measured in months, it typically takes years for an organization and its people to fully embrace such fundamental changes in the way they operate.
Senior management behavior is vital to the foundational change of establishing an enterprise culture for the digital era. Increasingly, organizational responsibility is moving from head-office functions down to the positions where the decisions are most effectively made. In many organizations, this means that real decisions are no longer the exclusive remit of senior management. Using Lean concepts, organizations are becoming flatter and focusing on process efficiency and adding value. Inevitably, this trend will test the role of middle and senior management, as they find they are no longer needed for regular business decisions but are now required to develop visions of the enterprise’s digital future. In fact, many middle management roles are already disappearing as a result of the adoption of artificial intelligence (AI) and digital process automation, both of which have come out of the digital era. It is a significant step for middle management to lead the introduction of new practices and culture while at the same time their positions are threatened. However, perhaps this pressure itself provides the incentive and catalyst for change.
Business leaders have historically focused on outcomes. In today’s digital era, there are technological enablers that make it possible to measure and test the soundness of decisions quickly and easily. These enablers, such as big data and AI, permit leaders to harness digital tools and techniques to test and evaluate business outcomes. However, senior executives should also fine-tune their decision making by referring to the enterprise operating model, which outlines the business objectives and operation of the enterprise. Failure to do so would be making judgements in an operational vacuum.
Typical operating model concerns are:
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Strategy. How will the investment in digital capabilities drive organizational value? What future role does the organization want in the digital space?
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Market. How will prospective customers be engaged and relate to the organization?
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Operations. How will the business plan establish the value created by digital initiatives? How are innovation and operations to be optimized?
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Resources. How will the skills and capabilities of the workforce enable or inhibit organizational growth in the digital environment?
The emphasis of senior executive behavior is on providing leadership and fostering the development of people and capabilities. Enterprises should preserve the organizational knowledge base by enabling a learning environment and investing in the development of existing capabilities. The digital organization encourages ideas from all areas of the enterprise; it is within the existing work pool that the source of many of the ideas for digital disruption will lie. After all, an organization is likely to base its digital disruption upon the markets and geographies in which it already operates, and the existing workforce understands the customers and needs of both the current market and the current geographies. It is therefore essential that leaders utilize their existing resource pool by providing employees with the learning and tailored development to facilitate their transition to the digital era.
[For more from the author on this topic, see “Successful Digital Strategy? But What About Culture?”]
