Sunday, October 22, 2017

CIOs as Chief Insight Officer: How to Mind the Gap between the Industrial Age and Digital Age

Digital transformation is “pushed” by both visible forces and invisible forces, hard forces and soft forces from multiple directions.

Organizations large or small are on the journey of digital transformation. It is the transformation that is reshaping our thinking and recasting the way we view ourselves, the systems of which we are the part of the environments in which we live, and the way we think and solve problems. There are multitudes of gaps between the industrial age and the digital age, understanding the digital business development is multifaceted, and it is the paradigm shift which needs well-thought-out planning and takes a multidisciplinary approach.

Hierarchy vs. Platform: Traditional companies in the industrial age were often operated in the very rigid organizational hierarchy, it helps the business achieve a certain level of efficiency and place the order from chaos. However, the hierarchy largely defines the level and scope of authority; it is not an information flow chart. Information does not flow well up to an authority gradient. Thus, with the increasing pace of changes and exponential growth of information, such hierarchical structure stifles information flow and decelerate the business speed for adapting to changes. Generally speaking, human progress has been through three stages: Dependent, independent, and interdependent. The higher state being is the collaborative interdependent one. The emergent digital technologies provide unprecedented convenience to run a highly responsive, interdependent and high- performance organization which has flatter structure and fluid information. Interdependency is a premium stage. Digital platforms enabled by efficient apps and tools break down functional silos, business silos, and geographical silos, allow people across the business ecosystem to share knowledge and work more collaboratively for solving problems and overcoming common challenges. Limited hierarchy works best in a creative environment where the free flow of ideas and their prompt implementation is a key element of success. With digital platforms and powerful collaboration tools, everyone has a valuable contribution to make at whatever level in the formal hierarchy they happen to be placed, and adopt the robust processes designed for improving responsiveness and harnessing communication, and increasing business maturity via reducing process redundancy or resource wastes. Traditional hierarchical lines will phase out and a collective of business partners will emerge working collaboratively to set strategy and achieve organizational goals. The ultimate goal of the optimized organizational design is to get the mass collaboration, innovation through less hierarchy, cross-functional insight and adopt a socialization process designed for the globally connect the world. Digital organizations empower people, enforce iterative communication, and harness cross-functional collaboration to deliver better business results and unleash the full digital potential of the organization.

Command & Control vs. Influence and Empowerment: The traditional organizations in the industrial age practice Command & Control (C&C) management discipline to get works done. The management's job is to control the work by commanding the people. The problem of C&C is that you can control people’s behavior, but not their mind. The problem of C&C is not even 'command and control,’ it's the authoritarian behavior and bureaucratic decision-making. The other issue with C&C is that it’s process driven, not begin with 'the end in mind.' All these defects in C&C cause the business ineffectiveness such as, poor leadership, focus on short-term behavior correction, mistrust working environment, etc. The bigger problem of C&C style is that management blindly makes decisions without understanding the problem, and runs the business without putting in the right people at the right positions. Digital is the age of people-centricity, digital organizations look for accountability, passion for work, pay attention to both performance and potential, instead of C&C, digital leaders make influence and empower their people for achieving more via autonomy and creativity, rather than control which robs people of decision making powers and reduces them to mere execution, empowering them will help people grow into 'intrapreneurs,’ who believe that they can each make a difference to the business with “the owner’s mentality.” To empower is to give the team a means to shine. It is not about individuals, but how well the team works together.

Inside-out vs. Outside-in: Most traditional organizations running in the industrial age are inside-out process driven. It might create the gap between what customers need and what the business can deliver, or the gap between the speed of change and the business's ability to change - both strategic responsiveness and structural flexibility. The digital revolution means that channels to customers, the outside-in view is more important, because the customer's experience is about how they encounter, observe, or undergo a company's events or stages. The customer, including prospects, should be studied and observed and gain insight upon. A valid strategic objective and strategy mapping allow you to first understand your customers and what they value, and then identify how to best characterize that value through the business portfolio management, define key performance indicators, and then define the right set of measures to best assess the performance of these indicators because they show you how well they satisfy or delight customers. In the digital age, speed is crucial, as organizations that do not respond to the increasing pace of changes will quickly outcompete as more innovative enterprises take their customers. Companies across sectors must respond to the external environment as geopolitics, rapid innovation, and social expectations change the business landscape and blur the digital territories. A digital organization can bring greater awareness of intricacies and the systemic value of the organizational structure, business process, people dynamics, resource alignment, information refinery, and technological touches.

Digital transformation is “pushed” by both visible forces and invisible forces, hard forces and soft forces from multiple directions. Minding gaps between the industrial age and the digital age is a strategic imperative and it takes multidisciplinary efforts. It is a radical paradigm shift which needs to build a new set of principles and develop a series of digital management practices, through which all important business elements integrated and knitted into core business competency and move the business to the next level of the growth cycle and business maturity.


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