The New Book “Digital Fit: Manifest Future of Business with Multidimensional Fit” Chapter 2 Introduction: Organizational Structure Fit ~ Future of CIO

Tuesday, September 19, 2017

The New Book “Digital Fit: Manifest Future of Business with Multidimensional Fit” Chapter 2 Introduction: Organizational Structure Fit

11:16 PM Pearl Zhu No comments

The digital dimension of organizational structure is enjoying a powerful tailwind.

Digital transformation represents the next stage of business maturity which will improve how the enterprise works and interacts with its ecosystem, with people at the center of its focus. From an organizational structure perspective, what is it comprised of, and what is the future of the organizational structure? In fact, tuning the organizational design and structure to achieve the high level of autonomy is the symbol of the digital maturity.

The digital dimension of organizational structure is enjoying a powerful tailwind: In traditional organizational structure, the business processes and structure are formal and even overly rigid, it is perhaps OK in the considerably static industry age. However, with increasing speed of change, the organizational evolution needs business catalysts for change. Otherwise, well-established enterprises are at risk of being defeated by smaller, nimbler competitors. It is for their own benefit to collaborate and build “horizontal” interdependence to achieve better time to market for business products and services, deploy knowledge from one subsidiary to another, or gain competitive advantage with speed. Thanks for the emergent digital technologies, many organizations today adopt the hybrid organizational structure that creatively blends structured and unstructured processes to run with bi-modal speed, for both “keeping the lights on,” and speed up digital transformation. The future of the digital organization is complex enough to act intelligently and nimble enough to adapt to the change promptly. The new organic, self-organizing system approach to organizational structure could become a reality, and that will be a true evolution of digital transformation.

High level of autonomy is the symbol of the digital organization: With rapid changes and continuous disruptions, a self-adaptive capability or functionality is generally a requirement within digital business systems. A key element in a self-adaptive organism is people. Consider nature and culture as to self-organized but interlaced environments, and humans are vehicles of the natural and cultural solution. A self-disciplined and autonomous team is often composed of many self-motivated people who can adapt to personal drive and focus on performing well in new and changing context. Discipline means following digital principles and develop some guidelines and policies, take a structural approach to manage the business in an autonomous way. High level of autonomy is the symbol of the digital maturity. Running a self-autonomous organization is to improve business efficiency, effectiveness, and maturity, so they can stretch out in every business dimension for driving the full-fledged digital transformation.

An organizational structure carries inherent capabilities as to what can be achieved within its frame: It’s no surprise that in many organizations, the official structure and unofficial structure co-exist The point is that whether the official structure and unofficial structure co-exist antagonistically or harmoniously. So, the issue is that, given the opportunity, establish a formal and enabling organizational structure in line with your desired direction and organizational ambition. It is also important to identify the unofficial structures and take them along on the journey of innovation and change. Ideally, the unofficial structure that has emerged over time is the formal structure you should have. Also, establishing some of the more advanced models will certainly require top management awareness, involvement, dedication. The right mixed structure is one that allows the right mentality and culture to bloom. Within a well-aligned structure, that dedication and effort may be spent on innovation efforts rather than overcoming organizational hurdles and pushing against structural boundaries. Companies that strive for innovation must experiment and learn to organize for both breakthrough innovation and continuous improvement and build innovation capability cohesively.

Organizations need to have an in-depth understanding of gains and pains of organizational development: Organizational development is part of the digital strategy, and digital strategy equals to business strategy with digital new normal. Very few organizations understand all the gains they could enjoy from organizational structure tuning. Gains in profitability, new learning, growth and market domination. Gains in culture change, in innovation rate and employee retention for the second level of gains. Organizational development needs to manage the conflict between classic styles and digital styles of management. Limited hierarchy works best in a creative environment where the free flow of ideas and their prompt implementation is a key element of success. The bottom line is how well the organizational structure is being influenced by factors such as: Does the chain of communication flow easily or does it stop at one level? Can the right people get the right information to make right decisions timely? Does management endorse open source knowledge and mindset? Does innovation take the top down or bottom up, inside-out or outside-in approach? Flatter structure will help to speed up the organizational response to changing markets.