Digitalisation 2 – Organisational Impact
There is No Way Out…
As pointed out by CISCO’s CEO John Chambers, 40% of businesses in the Western world will no longer exist in a meaningful way in 10 years. 70% of companies will “attempt” to go digital, but only 30% of those “will be successful”. That is because this is not just change but transformation, and transformation is transformation, whether digital or not.
It is essential to understand where your organisation fits in with re to the level of digitalisation. In case you haven’t done so yet, you might want to read the previous article.
We all know Darwin’s survival of the fittest principle and this actually applies quite neatly to organisations and digitalisation. In a way, digitalisation accelerates change and thereby brings organisational inefficiencies and misalignments to the fore. For example, today many organisations still operate, measure and manage in silos. When things don’t work properly, they create a cross-function to try and align different, otherwise independent, units. Over the last several years, most large organisations have ‘grown’ rather than been designed with the bigger picture in mind and have become unique constructs, partly reworked and patched up. Each individual part might be highly efficient but the whole is ineffective in respect of overall employee engagement, customer satisfaction and purpose. In addition, over the past decades entire industries (e.g. energy, utilities) have developed such low standards that the wave of accelerated change means only those who can adapt quickly will survive.
Any businesses that “have done things the same way for years” are or will soon be affected by disruptive change. It is starting to come from all angles: the economy changes, the competition changes, products turn into services, technology changes, customers change, employees change, vendors change, buying methods change, delivery methods change etc.
Digital technologies are not to blame but rather highlight where we have gone wrong: creating artificial bodies that over-systemise, put processes before people and depersonalise work. I am not even going to go into corporate purpose and meaningfulness. So, companies have grown and operate in an increasingly complex world: business environments are more diverse, dynamic and interconnected than ever, and far less predictable. As a result, the average life span of a corporation is now 32 years – while it was 61 in 1958.
This complexity and constant changes have a big impact on your digitalisation plans – and vice versa. If you want to digitalise parts of your business, automate processes across business units, you’d better know what you’re doing because it will affect the entire organisation. When creating and gathering data, a key objective is to make sense of all the data to help employees make faster, more informed decisions.
As a result, all parts of your company will learn how to adjust and adapt more quickly. Otherwise you run the risk of being amongst the 40% that lose out on the digitalisation journey.
The Starting Point: Understanding One’s Own Organisational System
To illustrate how all aspects of a business are impacted and interdependent, we use a concept which considers all its essential parts. This idea was developed by well-known business consultants Robert Waterman and Tom Peters in the 1980’s. The model is most often used as a holistic tool to assess and monitor changes in the internal situation of an organisation.
It is based on the premise that, for an organisation to perform well, 7 elements need to be aligned and mutually reinforcing. So the model can be used to help identify what needs to be realigned to adapt to change, or to maintain alignment (and performance) during times of change. It is a good way of illustrating the organisational impact when managing accelerated change.
This approach became known as the ‘7-S framework’, which translates into a series of terms beginning with the letter ‘S’. It will be described and explained in subsequent articles of this series. Each article will cover one ‘S’. Without going into detail, the framework shows that the clearer the interdependencies between the ‘S’ and your people, and the more responsive the interplay, the faster your organisation will be able to respond and react to changes on your digitalisation journey.
For a definition of the 7 business-critical areas, please go to http://www.pathfinder.management/systemic-thinking/
All or Nothing
The digital sector of the economy will grow. New technologies, applications and services are a certainty, but no one can predict how and where these advances will unfold. Much depends on the ability of your organisation to adapt in order to benefit from this endless array of threats and opportunities.
Today, more than ever, it is vital to identify and orchestrate all aspects of a business. As the 7S framework nicely illustrates, significant progress in one part of the organisation will be difficult without working on another; an identified opportunity in a customer segment should influence business strategy in a timely fashion, trigger ideas in the marketing department which will impact systems. For digital to become a reality and be sustained, business leaders must take an organisation-wide view.
Companies need to understand that digitalisation is not an IT topic but an overall organisational transformation that impacts every part of the business and, therefore, needs to be managed by the entire workforce.
To see how we integrated the 7S into what clients call a “clever and game-changing approach” when assessing business units and teams, please try our Pathfinder Freemium version.