Sunday, January 17, 2016

Three Characteristics of Digital Organizations

A digital organization can bring greater awareness of intricacies and the systemic value of business ecosystems.

Digital organizations are hyper-connected and interdependent, they need to be agile and innovative in order to adapt to the “VUCA” digital new normals. With the fast pace of changes and emerging digital technologies such as “SMAC,” companies large or small are also brainstorming and experimenting the next generation of organizational structure design, to improve employees’ engagement, productivity, as well as creativity across the enterprise ecosystem. So what are the important characteristics of digital organizations from organizational design and business innovation perspective?

Adaptability: A digital organization starts with a transcendent purpose that leads to a unique natural design, a design most fit to achieve the purpose of businesses. A digital organization is a living business which is organic, alive, holistic, vibrant, energetic, responsive, fluid, and innovative, in the relationship with its environments, customers, suppliers, and above all enhances and supports the creative human spirit. Enterprises also have always been parts of simple and complex ecosystems, so to function seamlessly, an enterprise has to be linked to the many and varying touch points between itself and its marketplace environment. Therefore, you have to look holistically at the problem domain to architect and design an adaptive organization to address business and system dynamics.

People Centricity: One key determinant of whether an organization can move to the new digital structure with high-maturity is the development level of its people. So people have to be ready to move to a more fluid structure. A digital, people-centric organization needs to embrace: Engagement - to engage employees in contributing both strategic planning and implementation more proactively. Enablement - to enable the culture of innovation, and to enable productivity via building efficient tools and processes; Empowerment - to empower employees to be who they want to be and well-align their professional development with business’s goals and long-term strategy, and to Enchanting- customers via digital touchpoints and tailored experiences. The real digital shift means principles over rules, empowerment over control, outside-in customer oriented, and dynamic over static.

Antifragility: Digital organizations are organic, complex, and living. And a complex system is not necessarily a complicated system with restricted regulations. or policies. But complex systems are full of interdependencies, hard to detect, with nonlinear responses. Digital organization as a whole is antifragile, with the better ability to tolerate volatility, it means that the harm caused by errors should be less than the benefits. The complication of traditional, hierarchical organizations is caused by layering, fractal structure, treating a business organism like a simple machine with a kind of reductionism, mechanism, or approximation, etc. While anti-fragility implies, contrary to initial instinct, is beyond resilience or robustness, so it can better adapt to the business nature of complexity and interdependence, and lift organizational maturity more significantly.

A digital organization can bring greater awareness of intricacies and the systemic value of organizational systems, business process, people dynamics, resource alignment, or technological touches. The challenge is to have a harmonized vision about organizational structure, capabilities, and business maturity. Still, people are the focal point of any business design, with the ultimate goals to improve business productivity, agility, and encourage innovation as well.


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