The Impact of Digital on your Strategy, Structure and People
22 February, 2019
By Guy Vereecke, AHEAD (Belgium)
It is a known concept that few organizations rarely remain at the top of a certain industry for a longer period and most of us will agree with the statement that ‘technology is changing everything even faster’. Artificial Intelligence, digitization, big data are not only reshaping the competitive landscape, they are transforming the rules.
Today, most large corporations reorganize already every two to three years and such a reorganization takes in general more than 18 months. We can almost state that they are often permanently in reorganization mode and they nevertheless lag and fall behind.
We shouldn’t be surprised that companies start to experiment with new approaches. Those who get it right often create agile, fast-moving organizations, who respond swiftly to the opportunities when they arise. They move the decision power to the front lines and often work more like a network and less like a traditional hierarchy.
Despite that there is not one-best-way to prepare for the increasing pace of change, there are some common guidelines.
As speed is becoming more and more important, organizations need to prepare to take faster decisions. This includes that you can no longer wait for 90 percent of the information, though you will have to decide with only 70 percent and correct afterwards.
Readjusting quickly becomes the new operating model. Successful organizations create value ‘on the go’. They abandon the traditional top-down planning and bottom-up information flow, typical for multi-layer middle management structures and replace it by a structure that allows an emergent mix of multiple strategies to be formulated and carried out in real time, improvising and learning by doing.
The urgency imperative places a premium on agility.
This asks for a different form of decision-making, whereby the first level involves the choice for the foundations of your organization, reflecting its core values. Here the CEO plays a major role
The second level are the ‘big-bet decisions’, such as acquisitions, capital investments. In successful organizations, we see that in order to speed up these type of decisions, it may help to designate a single executive sponsor. The third level include topics such as pricing, product launches, portfolio management. Decisions that are often highly iterative and cross-functional.
The big challenge is to bring the relevant parties together and to manage the different priorities and agendas without becoming bureaucratic. The final level are the decisions that can be pushed to the edges of the organization. Often-low risk, ad hoc decisions that can be corrected with little cost. The more that decision-making can be diffused, the easier it will be to remain high performing in a world of uncertainty and disruption.Of course, certain roles should remain centralized and a certain hierarchy will remain in place, though the ‘unnecessary’ hierarchy should disappear.
This ‘right-sizing’ is often a source of uncertainty that is amplified by the growing importance of automation and AI. They underline the importance of continuous learning and employee development. New tools such as people analytics will enable organizations to personalize the L&D needs.
Leadership becomes even more important in the new type of organization. In an agile organization, an employee can be a leader and sometimes a follower. Influence and expertise replace control as power base. The new type of leader will empower, inspire, influence and be able to align his people around common principles. They will walk the talk and cultivate purpose.
Of course, urgency alone can be a recipe for dysfunction. Nevertheless, if you can combine urgency with agility, capability and identity you are on the right track to build your organization for the future and never forget: the past is past.