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How Organizations Can Thrive In The Digital Economy


 

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Tom Cole, CEO at RDA comments on a recent article from Harvard Business Review -You pick the metaphor - who moved my cheese, evolve or go extinct, or the quickest way to become an old dog is to stop learning new tricks. Digital transformation is disrupting business models in every market, service, and industry. This article captures five 'musts' for every business leader to take advantage of in today's realities.”


We live in a digital economy: a virtual environment that has changed the rules of doing business and made disruption the norm. It has put customers, not companies, in charge. And it has transformed workforce dynamics as the “born digital” millennials come to prominence in the workplace.

This age is ripe with opportunity. Organizations can now engage with customers and employees like never before, and the virtual environment holds the potential to drive operational efficiencies, save time and money, and open the exploration of new commercial avenues. When it’s far cheaper to build an app than a manufacturing plant, there are greater returns to be gained for significantly lower investment.

Gartner predicts 41 percent of enterprise revenue will come from digital business by 2020—almost double what the percentage was in 2015 (Gartner, 2016). For the Googles, Ubers, and Facebooks of the world, facing these challenges and realizing and exploiting these opportunities are second nature. But for traditional firms, they’re a whole new world.

To understand what digital leaders do differently, Korn Ferry not only drew on broad research into business change but also interviewed leaders who are driving transformation at some of the world’s most successful organizations.

This revealed five essential leadership and organizational capabilities: discipline and focus, agility, connectivity, openness and transparency, and empowerment and alignment.

Discipline and Focus
Organizations that successfully transform with the digital world have a clear vision of what digital means to them. They define their desired outcomes, and they focus relentlessly on achieving them. Such organizations do so by prioritizing the things that drive the most value—customers and talent, data, and products—and then they are disciplined in their execution. They decide quickly what to invest in, and then draw on their strengths to make these investments efficiently, effectively, repeatedly, and at scale.

Agility
Digitally sustainable organizations are agile: They think fast, decide fast, execute fast, fail fast, learn fast, and scale fast. Agile businesses run planning and execution in parallel, investing in scenario planning so they can act promptly when opportunities arise. They are also prepared to take risks. They create solutions based on what they already know and evolve them as customer feedback comes in. This means streamlining reporting lines, engaging a wider group of stakeholders from the outset, sharing ideas and plans before they’re fully formulated, and seeking input along the way. They launch several projects at once to see what works and what doesn’t, and then make rapid decisions about what to invest in and what to stop investing in.

Connectivity
Agile organizations are connected organizations. Connected businesses create ecosystems made up of networks of people, from both within and outside of the organization, who can drive change. These organizations are no longer concerned about defined roles, instead focusing on shared objectives and metrics to deliver on specific projects. Ideas and input come from all sides and segments and across all stakeholder groups. Everyone involved actively collaborates with the outside world, co-developing solutions with clients, partners, and sometimes even competitors.

Openness and Transparency
People must collaborate, solve problems, and think creatively to meet customer expectations in the digital economy. This means everybody has a voice. Open businesses understand that brands are now public property. Customers and employees can find out anything they want about any business—and pass judgment on it—at the click of a mouse or the touch of a screen. Open organizations thrive in this climate by being deliberately transparent about their ethics, responsibilities, decisions, and practices. They leverage their own IP whenever possible but are also happy finding and applying IP from outside sources when needed or when more cost-effective.

Empowerment and Alignment
In the digital economy, value is found in three assets: people (both customers and employees), data, and products. Successful organizations put power into the hands of the people closest to these assets: Marketing, HR, and customer operations have power over customers and talent; IT has power over data; and R&D has power over products. Organizations can empower all employees, from the board to the front line, by aligning them to the same three things: what the business stands for, what it’s trying to achieve, and how goals are being implemented. This enables people to make the right decisions in the moment, without the need for continuous guidance.

Like the industrial revolution 250 years before it, the digital revolution has transformed the time we live in. It has taken us into a new age and changed the meaning of value.

In the industrial age, value came from machines. With the digital revolution, value comes from technology, data, and algorithms. But now and in the future, value will come from people (Jean-Marc Laouchez et al., November 2016). People bring the creativity and discipline needed to understand and use technology to bring about transformational change.

But for organizations to harness these qualities in their people, they need to inspire them to bring their all to the cause of digital sustainability. This means moving away from traditional power structures, toward open, transparent, and connected structures and organizational cultures that encourage innovation and experimentation.

That’s how to build a business that’s fit for the digital economy. That’s how to be truly digitally sustainable.

 

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