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Don’t be Left in The Digital Transformation Dust – How Technology is Changing the Shape of Mainstream Organizations

By Dr. Mary Young

Pyramids are exalted symbols in organizations.

They’re a metaphor for the workforce itself: the broad base of entry-level employees, gradually narrowing to the managerial ranks, and tapering further to an elite cadre of senior executives who have climbed the ladder and get rewarded for their knowledge and success, and eventually made it to the top. The higher up someone ascends, the greater their expertise and decision-making power. At the very pinnacle sits the chief executive, master or mistress of all that she or he surveys.

That’s the organization as we’ve known it up until today.

But digital transformation is dismantling the pyramid.

Digital transformation is one of the hottest business topics today, yet many people have a fuzzy idea what it means. It’s not just about adding technology to do things faster or more efficiently. It’s how companies use that technology and the masses of data it generates (think click-rates, demographics, buying patterns and location) to innovate new products and services that meet customers’ changing needs.

Your bank just doesn’t just hold onto your money. Now it gives you an analysis of your spending patterns and offers you products customized to your personal profile. The bank also monetizes digital data in other ways: by analyzing data from its entire customer base, the bank now sells new products, such as market insights, to B2B customers that it never served before.

Digital transformation is disrupting what companies do, how they do it, and the business environment they operate in. Research by The Conference Board finds that the shape of organizations changes in digital transformation. Rigid hierarchies and silos are giving way to fluid, cross-functional teams because they’re better at innovation and agility.

Rather than being locked into rigid job descriptions, employees can leverage technology to organize around short-term projects, tapping into expertise or building new skills that may not be reflected in their current job titles. In fact, the quality of an employee’s network and reputational score may become important factors in his or her career success.

In this era of digital transformation, organizational culture must also change.

The values that helped large, traditional companies to thrive in the past become dysfunctional in digital transformation. Rather than emphasizing individual achievement, companies need to foster―and reward― collaboration. Rather than avoiding risk, they need to encourage experimentation. Rather than eliminating mistakes, they need to be able to learn from them. And rather than regarding outsiders as a threat, they need to become much more open to external resources and partnerships.

Imagine standing in front of your organization today and presenting your biggest failure in the past year. Except instead of awkward silence, your presentation on the project shortcomings is met with applause. After the presentation, coworkers and patting you on the back and asking you questions about what you’re working on next. It may seem like an impossible organizational culture, but it’s happening. At Google X, employees are encouraged to collaborate on different ideas and take big chances. And every failure is presented to the group and met with passionate applause. A smart failure, one that your team learned from, encourages innovation.

And it’s not just Google.

Procter & Gamble has a Heroic Failure Award. Tata has a Dare to Try award. Supercell (the company behind Clash of the Titans) pops open a bottle of champagne when a game fails.

Collaboration, working with outsiders, and experimentation need to be woven into organizations to succeed in the time of digital transformation. But where do the seeds of these changes grow from?

For organizations to achieve these structural and cultural changes, they need a different leadership model. Here are just four of the new, digital leadership competencies:

  • Learning vs. knowing. In a world of fast-changing technologies, an explosion of data, and unanticipated threats and opportunities, leaders will advance not because of what they know but because of how well they keep learning. Digital transformation requires leaders who are inquisitive and unafraid to acknowledge their own knowledge gaps. They set an example for others by demonstrating that risk-taking and even failure can be okay, so long as they’re used to improve future performance.
  • Open-minded and adaptive. Digital transformation can disrupt an entire industry. The biggest threat to a global bank may not be a rival bank but Amazon, which keeps raising the bar for customer experience. Leaders need to be keenly attentive to what’s happening outside, see beyond the company’s current business model and think creatively―and objectively― about how it needs to change.
  • Outside-in thinking. Leaders need to leverage external resources—through partnerships, crowd-sourcing, corporate investments, and other approaches―to accelerate learning inside the company. They need to lose any trace of not-invented-here thinking.
  • Transparency. Leaders need to give subordinates access to information, internal expertise, suppliers, and customers―access that leaders once controlled more tightly. To help autonomous teams succeed, leaders must be willing to explain the underlying rationale behind corporate strategy and to open to discussing it with employees at all levels.

So what do you do if your CEO isn’t prepared for the digital transformation?

How can organizations move away from the drag caused by the familiar way of doing things and culturally shift to meet these new demands?

Where do digital leaders come from in the first place?

At PeopleFWD 2018, I’m going to share the answers to these and other questions. Digital transformation is disrupting the traditional organizational structure. As business and HR leaders, you need to know how to avoid being left in the digital dust.