Navigating the organizational terrain of digitization is an uphill struggle for digital leaders. Our 2019 study exploring Digitization on Boards revealed that almost half (45%) experience a lack of dynamism and speed. Structures are fragmented or over-complex, say 55%. And around 35% have trouble identifying and uniting internal stakeholders within this confusing architecture.
Our study also confirmed the need for a role framework for digital leaders, as 41% said they lacked a clear role profile when they joined their organization. And only 18% were assigned a senior mentor or coach. To address the problem, Amrop’s Digital Competency Model (ADCM) is a 4-dimensional dashboard with 24 sub-indicators. More than a theoretical framework, it is based on hundreds of observations from our interactions with clients and candidates. It also owes much to the rich pool of academic literature sparked by digital transformation. All references are in the full article.
Digitization and the Organization - A Chicken and Egg Situation
Of the organizations we surveyed, 38% had a workforce over 10,000. This size creates the perfect storm for digital initiatives: structural complexity and the need for quarterly reporting. It’s a chicken and egg situation: 37% of digital leaders face questions regarding ROI, whilst 30% lack the resources to deliver it.
Sense-making — from executive suite to ground-level operations – will be more important than ever in two areas. First, in setting a digital strategy, as we saw in our last Chapter, and second, in building an organizational architecture that integrates people, platforms and tools.
In this second of our four-part series unpacking Amrop’s Digital Competency Model, we zoom in on the Organization Dimension.
1 – Organization Design
Key question: How confident do I feel in building a digitization infrastructure that fits our organizational structure and needs?
Digital has now arrived at the core of a great many non-tech businesses. This calls for a rethink of organizational design.
The very term ‘digital business strategies’ reinforces the idea that digital strategy should transcend technical functionality. Digitization changes the dynamics of doing business. So it should be paired with business strategy, rather than being subordinated to it (Weinrich 2017). As the pilot of an organization’s digital strategy, a CIO should ensure that organization design, processes and capabilities, are supportive of it.
Organization design provides the space to improve digital performance, adjusting a company’s structures to allow the insertion of competitive technological advances best placed to fuel competitive advantage.
No matter how creative your organizational strategy, no matter how agile your working culture, digitization can only add value and profit via an organizational framework that creates a fertile terrain for new technologies.
2 – Business Modelling
Key question: How confident am I in designing digital business models that create, deliver and preserve value?
Addressing how a business runs, untangling its logic to make it work for digital innovation, is, we argue, a fundamental CIO competence.
Researchers such as Bouwman et. al (2018), have examined traditional business modelling through a fresh lens: the need to create and capture value through new technology. Their work addresses an ongoing debate: how business modelling innovation should look when a business incorporates tech elements, (especially big data). It proposes that the CIO should be fully involved in the incorporation into a business model of products and services, (or their elimination) changes in market position, or shifts in process management. Or indeed, spearhead the shift.
A good CIO envisions business modelling as a formula. This transforms the engines of a company into a malleable logic that is primed to flex and adapt to digital transformation.
3 – Design Thinking
Key question: How confident am I in ensuring attractive, user-friendly and feedback-responsive digital platforms?
Implementing a digital strategy that is right for the organization requires strong contextual analysis, problem finding and framing, and ideation.
Stakeholders “need their interactions with technologies and other complex systems to be simple, intuitive, and pleasurable” (Kolko 2015). Especially given the rapid rise in complexity of the modern business environment, which digital transformation may well be intensifying.
A CIO who is competent in design thinking resolves ill-defined or ‘wicked’ problems (evolving, with paradoxes, and contradictions). He adopts solution-focused strategies. He uses abductive reasoning (drawing plausible conclusions from his observations). He uses productive reasoning to implement solutions incrementally.
This blend yields a value proposition that enhances the stakeholder experience, even in the most abstract industries.
Kolko refers to the ‘design-centric organization’ to describe companies who go beyond the norm in design thinking. A CIO with good design thinking doesn’t let failure constrain her efforts. She embraces challenges and setbacks, stimulating an iterative process of sketching, designing, re-designing. She transmits a narrative that infuses digital products with a humanizing language.
4 – Business Focus
Key question: How confident am I in integrating digitization in our business processes and objectives?
As we saw in our first chapter (Strategy), the CIO has a unique role as Digitization Visionary. Nonetheless, he must always keep in mind the impact of innovation on profitability.
It’s vital to maintain business focus in order to bridge organizational strategies and digitization throughout the design and implementation process. Whilst it might seem enough to just understand how the business works, to acknowledge an organization’s goals and guidelines, it is not.
A business-focused digital leader will shift traditional management performance beyond simply installing digitization, towards improving a company’s entire productivity.
Crawford (2012) proposes three main areas of business-focused leadership:
- communicating to drive results
- managing for business impact
- demonstrating project value to the C-suite.
Crawford’s analysis supports the need for the digital leader to possess strong communication skills. The CIO must be able to present himself effectively, using compelling arguments to support the strategic outcomes of his mission.
Always with digitization as a main objective, Crawford argues, the business-focused CIO considers innovation in the light of questions such as: “have these had the economic impact we were expecting? What was the return on investment? What was the customer impact?”
These constant points of inquiry allow him to present digital transformation in a way that gives others an inspiring glimpse of the overall business impact digitization could bring.
5 – Global Impact
Key question: How confident am I in anticipating and managing the global impact of digitization on our organization?
A CIO sees value and impact as a natural implication of her role. Taking advantage of new technological tools such as data-based products, she “explores ways to develop new market niches, or to transform the company so it can develop smarter products and services.” (Lee et. al 2014). Truly innovative and visionary CIOs go further still, to inspire a global scope of positive outcomes.
The CIO represents an avant-garde management layer, capable of nourishing organizational outcomes and structures in a way that embraces global markets and dynamics. Bettina Bu¨chel and Michael Sorell of IMD (2014) advocate an inclusive, diverse way of conducting business, that involves balancing the different cultures that must be adapted to, and global standards. They describe globally-savvy leaders as being capable of identifying emerging markets, spotting opportunities in foreign countries and overcoming cultural difference to boost development. This global mindset is a highly beneficial way of addressing the complexities and asymmetries of the wider world that lies beyond domestic borders
6 – Risk Management
Key question: How confident do I feel in installing processes for anticipating and managing digital risks?
Few argue that the path towards digital innovation is fraught with risk; from cyber-attacks, to users frustrated by design glitches, to ethical issues. Businesses operating along more traditional lines were becoming adept at recognizing and managing risk. But with the rapid advent of digitization, risk management has become a whole new ball game
Risk management is closely linked to organization design. It demands access to high-quality data, well-informed, talented staff and greater transparency; in terms of processes that justify (calculated) risks, and as channels to approach risk from a fresh perspective. It needs to be assimilated at the early stages of a digitization initiative, setting the tone at design stage. Prioritizing digital initiatives is critical to minimize any disruption to service delivery.
Equally essential is to build a culture with a ‘digital mindset’, one that includes effective risk management governance, and related frameworks. This ‘digital risk portfolio’, (Deloitte, 2018) will help the organization to anticipate and navigate the specific, potential pitfalls of digital initiatives.
How do digital leaders rate their own competencies?
To test our model and take the temperature of digital leaders concerning their own abilities, we incorporated the ADCM indicators into our 2019 study, inviting digital leaders to self score.
In the Organization dimension, we found 4 indicators in which less than 4 out of 10 digital leaders felt fully confident in their own abilities:
- Business Modelling
- Design Thinking
- Global Impact
- Risk Management
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