Digital leaders: Driving pace and scale in a dynamic market, part 2 (organization)

Digital transformation involves a fundamental change to an organization’s core DNA—including how it listens to customers, how it innovates, how it collaborates with partners, how it delivers new products and services, etc. It’s all about people and driving change across the entire enterprise.

The ultimate goal is to enable an organization to become more agile—across the entire enterprise—in responding to evolving demands in a dynamic market.

In this second post in our series on digital leaders, I’ll discuss some of our key research findings on the impact of digitalization on an organization’s structure and what digital leaders are doing in response. These findings are based on our 2017 CGI Client Global Insights program, which involved face-to-face interviews with more than 1,300 business and IT leaders, as well as research we conducted in partnership with IDC in which more than 200 business leaders were surveyed on the topic of organizational design.

Our research shows that organizations are changing:

• 68% of future decision-making will shift from the corporate level, closer to the customer
• 85% of an organization’s employee management systems need to change to enable cultural change
• 90% of digital leaders view internal and external collaboration culture as critical

Accountability is being pushed down, putting decision-making closer to the customer

As organizations pursue digital transformation, they recognize that fundamental organizational change is needed to become an agile digital business. Our research shows that 68% of organizations executing digital transformation strategies say their future decision-making will shift from the corporate level to the business unit, team or even employee level. Digital leaders are putting decision-making closer to the customer. As a result, decision-making becomes more informed, faster and customer-centric, enabling an organization to respond more quickly in a dynamic market.

How are these changes impacting organizational structures? Many organizations are moving away from a traditional hierarchical structure to a flatter one. While a flatter structure offers many benefits, there’s still much debate around the type of organizational structure needed to compete in a more dynamic world.

Is a flatter organizational structure enough? Which structure is your organization adopting to support your digital business?

Changing management systems

Regardless of the structure chosen, an organization’s employee management systems need to change to support it. Eighty-five percent of our respondents agreed. Systems for setting performance goals, monitoring performance and giving rewards have to be realigned or replaced to drive a change in culture. With any new structure, there’s a need for a surrounding culture that is talent rich, innovation driven, customer centric and collaborative.

Finding talent with the right mind-set and digital skills, freeing them up for strategic work and rewarding their contributions also is critical. Digital leaders are re-evaluating their recruiting and retention programs. They’re also moving away from measuring individual performance to measuring business unit or team performance. The idea is to create a culture where teams are empowered and motivated to work together to achieve the organization’s goals.

Simplifying the complex and creating a collaborative culture

Based on the insights from our interviews and findings from the research, digital leaders also are facing the challenges of transformation through simplification. They’re first asking, “What do we really need to do and what is the best way to get it done—by ourselves or by someone else?” And then, they’re starting the journey by simplifying their operations. They’re changing their ways of working to free up employees to focus on more strategic work, using insight to improve decision-making and bring it closer to the customer and building cultures that motivate employees to innovate. They’re also partnering with others in their ecosystem to gain new digital capabilities. Through improved efficiencies and productivity, better decision-making, innovation and new expertise, they’re freeing up time, resources and money to devote to transforming for the future.

Ninety percent of respondents also agreed that an internal and external collaboration culture is critical to operating in more dynamic markets.

What changes are you making to your human capital strategy? Is your organization taking steps to simplify the organization?

Share your thoughts in the comments or, if you would like to learn more, feel free to contact me.