Sunday, July 9, 2017

Achieve Digital Equilibrium via Delicate Balance

The challenge for organizations is to manage its portfolio of relevant cross-border strategic synergies and organizational interdependence, achieve the digital equilibrium via delicate balance.

Digitalization means hyper-connectivity, over-complexity, and interdependence; it blurs the geographical borders, functional borders, organizational borders, industry vertical borders and knowledge domain border. Many come to believe that boundaries are not tangible places of resistance but are only self-imposed limitations we place on ourselves to hide our own fear to move forward. The black and white boundaries continue to diminish in the 21st century due to the occurrence of increased economic integration, digital dynamic characterized by the movement of information, people, and businesses. Therefore, it is more critical than ever to maintain the right level of digital balance. In fact, striking the right digital balance is a never-ending business life cycle.  

Digital organizations have to strike the delicate balance between solid and flow: Compared to traditional organizations with overly rigid organizational hierarchy and structure, digital organizations have to be solid enough to keep the business running, but fluid enough to enable idea and information flowing with expanded digital ecosystem with the accelerating speed. Digital is all about the rapid changes, blurred business territories, expanded business horizons, so the high responsive digital organizations have to be solid enough to give some sort of form/meaning and open enough to its environment and respond to changes dynamically. The emergent digital technologies such as enterprise platforms and tools are enabling not only the structured processes of the past but also the unstructured processes of the digital normality, for enforcing cross-functional communication and collaboration, harnessing innovation. The 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 high mature digital organizations that can strike the delicate balance between solid and flow have a flexible structure, with the attributes such as “full open communication,” “integration,” “ownership,” “digital readiness,” “self-adaptation,” and "resilience."

Digital organizations should make a balance between standardization and innovation: Digital is the age of innovation. Innovation is how to transform novel ideas to achieve its business value. And it is the “must have” core business capability for the business today. While standards are a form of embodied technical knowledge accessible to all types of business that enable more effective product and process development. Innovation makes the business differentiate from competitors, standardization enable the organization to improve productivity, quality, and efficiency. To have the gain from the change (value perceived by customers), you need innovation. To have the gain in cost (low),  you need standardization. A strategic approach to standardization and innovation should be done either for the new products or the processes of existing products. In fact, to improve the organization maturity, the business management should switch the mentality from standardization “versus” innovation to standardization “and” innovation, and develop a set of practices to strike the good balance of both. For example, the "dosage" of standardization and innovation in the new product is about meeting the target cost via standardization in the engineering design phase (innovation). From an innovation management perspective, it is important to set a framework with a certain standard to keep focus, leverage the limited resources and talent and maximize the business value.

Digital organizations also have to manage complexity and convey “just right” simplicity: Nowadays, organizations are complex, people are complex, and digital business ecosystems are complex. There are many shades of corporate complexity today, such as hierarchical complexity, information density, network complexity because of the number of nodes and connections in the organizational environment. Complexity can be managed to convey “just right” simplicity, and in the core of simplicity lies complexity. In the ever-evolving digital world, the more simple people perceive in any system, problem or living being is inherently more complex. Externally simplicity is directly proportional to internal complexity. Complexity is neither all good nor all bad, it is one of the key characteristics of digitalization that has to be managed effectively.  On one side, the greater organizational complexity improves adaptation to the changes; on the other side, the undesired complexity can make things over-complicated and stifle creativity. Thus, the digital leaders and managers just have to understand the multifaceted complexity systematically and strike the balance of “Keeping things simple,” and optimizing complexity to achieve digital equilibrium.

The challenge for organizations is to manage its portfolio of relevant cross-border strategic synergies and organizational interdependence, achieve the digital equilibrium via delicate balance, fine-tune the structure to improve changeability, encourage people to step out of the comfort zone, engage digital talent, balance effectiveness and efficiency, and orchestrate the digital transformation seamlessly.


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