Creating digital products and services requires more than a set of novel technologies. A different organisational system must be adopted to enable effective digital business operations. As an example, a digital organisation is a company equipped with technologies, processes, policies, structures and behaviours compatible with the need to navigate a fast-changing market and deliver outstanding digital experiences. Key findings from my various experiences over the last decade regarding digital organisations are shared below. This guide is not exhaustive but serves as a compilation of patterns I have identified in companies from segments including banking, telecommunications, gaming, technology, education and digital assets.
The pressure for fast responses and economic efficiency are crucial drivers for creating operating models more suitable for delivering efficacious digital experiences to customers, employees and shareholders. Companies must also be more prepared to face dynamic competitive landscapes introduced by emerging technologies. Consequently, the main changes necessary to face these new challenges must be clarified. The twelve factors listed below can serve as an initial sketch for helping executives and managers to understand the variety of disciplines that must be addressed to navigate the upcoming digital challenges. Let’s analyse each of these key factors.
01 – Focus on customer needs
Digital markets are highly dynamic and unpredictable. Users’ needs are always evolving and becoming more individualised. For this reason, digital organisations must readily employ mechanisms to create customer proximity, value their voice, measure satisfaction and develop pleasing relationship channels. Matching digital and physical needs is another relevant challenge. Quite often, companies must create digital journeys to integrate a large network of partners and facilitate the delivery of physical goods to customers. This challenge is present from big players like Amazon to your favourite small coffee shop around the corner. Techniques such as user research, design thinking and fit-for-purpose are instrumental in shaping better clarity regarding real customer needs.
02 – Use technology to enhance business performance
Technology is the main protagonist in the digital scene as humanity constantly seeks ways to facilitate labour and enhance productivity. All the advancements in AI, analytics, interoperability, scalability, elasticity and mobility have enormous potential to automate a vast array of repetitive and predictable activities. These elements must serve as enablers to the human ability to face complex and fast-changing situations. Thus, digital organisations must revisit their investments in smart technologies to implement solutions more capable of dealing with the need for speed and growth of the business.
03 – Grow awesome teams
Creating high-performing teams with characteristics such as collaboration, autonomy, technical excellence and psychological safety is crucial. An awesome team can establish tight social connections among members and a deep understanding regarding common values, strengths and overall weaknesses. We must also recognise that people have different intrinsic motivators. Traditional formulas are no longer effective for motivating and engaging people. Digital companies must be capable of testing various ways to boost employee engagement. For instance, the well-known study named ‘Project Aristotle’ (from Google) conveyed practical insights into the key characteristics of effective teams. According to this research, ‘Teams are highly interdependent – they plan work, solve problems, make decisions, and review progress in service of a specific project. Team members need one another to get work done’. This concept encompasses the main enhancements necessary to develop high-achieving teams.
04 – Shorten feedback cycles at various levels
In general, digital organisations operate in complex and uncertain environments. Therefore, feedback is the fuel for continuous improvement. Short feedback cycles are about having information available and the ability to constantly sense improvement opportunities in processes, products, behaviours and structures. Having a regular cadence of planning and review contributes to taking the best out of feedback cycles. Note that fast feedback cycles must be adopted at several layers of an organisation to engage in multiple levels of strategic decisions. For this reason, fast feedback cycles are used to continuously review how an action is implemented and also to learn whether the organisation is advancing towards the right strategic aspirations (for example, collecting feedback on the impact of portfolio decisions).
05 – Embody consistent engineering practices
Building digital products and services requires technical mastery in designing, developing, testing, deploying and maintaining modern software and applications. Practices for enhancing code quality and security are also mandatory for delivering long-lasting products. The DevOps culture is also a relevant ingredient for enhancing the entire product development lifecycle. Additionally, a core subject in digital organisations is the implementation of tools to monitor the operational performance of applications and infrastructure.
06 – Creating strategic cohesion among local units
Cohesion is the ability to optimise an end-to-end work system and facilitate integration, alignment and collaboration across multiple teams. Moreover, cohesion means harmonising the autonomy to develop local strategies with global drivers and aspirations. Local units need a sufficient level of autonomy for fast decision-making and delivering value with more speed and accuracy. Running Strategic Mobilisation Sessions (LINK) is an excellent example of how to foster more cooperation among various units and create more alignment regarding shared objectives and constraints.
07 – Weakening the walls between silos
Working in silos is an inevitable social construct in large organisations. Even when we tried to break them down, we ended up creating only different forms of silos with fancy terminologies. For this reason, digital organisations must find ways to promote cross-functional collaboration among different areas and departments. That is why sometimes we don’t need to break the silos; we just need to enhance their connectivity. These ties can be encouraged by running shared initiatives. Transparency regarding relevant decisions and data is an essential ingredient for improving the integration between organisational units.
08 – Tame value networks
Delivery of more value with fewer inefficiencies is a frequent topic in executive agendas. Finding ways to reduce queue time, quality variance and unnecessary activities might be levers for achieving better economic results. However, old-fashioned ways of visualising and managing value streams are no longer enough to master the hyperconnected digital world. Value flows to and from several directions in digital organisations. We require dynamic and responsive ways to manage and improve a vast tissue of nonlinear processes, stages and players necessary to run effective digital businesses. Measurements regarding internal efficiency are equally important to raise awareness of optimisations in processes and structures.
09 – Evolve around data
What can’t be measured, visualised and analysed can’t be improved. For this reason, implementing mechanisms for capturing and democratising relevant data is vital to enable fast decision-making on how to improve digital products and services. The ability to use data to extract weak and strong signals is another crucial skill for identifying trends and better strategic moves. It is relevant to underline, continuous processes for capturing and analysing data will also contribute to monitoring financial figures and economic performance.
10 – Create safe spaces for experimentation
Running experiments is the foundation for acquiring empirical learning and it is a powerful way to create innovative products and services. Experiments can succeed or fail, and failure can be frequent when companies validate fresh business hypotheses. Managers should therefore create guardrails for tolerating failures caused by new experiments. Reframing the meaning of failure as a natural part of organisational learning is also essential. People should feel free to take risks and create new ideas. This type of organisational construct is a necessary arrangement for shielding the company’s reputation and growth.
11 – Maintain legal and ethical congruence
Digital operations must not harm people’s rights or well-being. Compliance with regulations, legal responsibilities and ethical requirements is a mandatory characteristic for digital businesses. Users can be a fragile part of the intense relationship with digital products. Companies should be vigilant against any type of abuse and exploitation in their interactions with customers. The same level of concern should be applied regarding employees, shareholders, regulators and partners.
12 – Contextualise management systems
Large organisations typically have a variety of contexts and domains. Companies are social systems with dynamic situations. Problems sometimes require ordered and linear solutions; however, complex issues frequently appear. Navigating complex situations requires nonlinear and unpredictable approaches for iterating and adapting a solution. Managers should be able to sense the nature of challenges and tailor the management system for more coherent outcomes. Occasionally, managers can rely on well-defined and prescriptive practices. Other times, however, the same managers must adopt flexibility and responsiveness in testing new ways to solve complex problems.
This list acknowledges the need to address various subjects and capabilities for enabling effective digital organisations. Digital transformation is not only about implementing new technologies. Novel methods of running operations, different behaviours and nimble organisational structures must be considered to achieve excellence in the digital world. An integral and holistic view is necessary to master all the domains in such a deep evolution.
This list above represents a humble point of view based on my experiences over the years. These factors are also accurate considering the executive agenda of most of my current clients. This list of factors is in no particular order—managers and executives can address these factors in several ways.
By sharing this list, I aim to collaborate with other executives and managers to amplify their understanding regarding what a digital organisation is and the key subjects to which firms must dedicate their attention and energy. I hope you find it useful, and you are welcome to tailor these factors to your own context.