Building a Digital Organization with Strategic Flexibility ~ Future of CIO

Sunday, February 10, 2019

Building a Digital Organization with Strategic Flexibility

10:29 PM Pearl Zhu No comments

The digital organization should be able to assess to what extent the business has the flexibility, adaptability, and capacity to change in terms of people, finances, and manageability.

With rapid changes and fierce competitions, forward-thinking organizations today aim to move into a more advanced stage of digital deployment by tailoring their own unique strength and business maturity. Running a digital organization means high-responsiveness, high-performance, and high-innovativeness. Because the ways of doing business and meeting customer expectations both tend to be more adaptable than the siloed industrial age. The reality is that organizations that do not respond to external environmental changes will quickly outcompete as nimbler and more adaptable companies catch up and take their customers. How to build a digital organization with strategic flexibility?

Take the flexible approach with the adaptability to solve existing or emerging business problems: Technically, flexibility is about figuring out alternative ways to solve problems; psychologically, being flexible is simply an ability to learn and adapt to changes, an intelligence to explore new possibilities, take further responsibilities but also and above all, in the effectiveness of its initiatives. From the organizational management perspective, flexible organizations tend to have business managers with the right mix of digital leadership traits and a variety of skills. They are clearly comfortable with ambiguity and respectful of processes, without being slaves to them. With today's "VUCA" digital new normal, never assume you know what the problem is. Never think there is a short list of solutions you can pick from. The culture of flexibility advocated by effective leadership is about bringing out the best in others, improving quality thinking, explore different views, fresh knowledge, and multiple perspectives in order to gain an in-depth understanding of certain topics or problems that occur and develop a systematical approach to overcome the challenge.

Achieve strategic flexibility by developing the proper module design architecture, with reusability and process flow: Unlike the closed mechanic system, digital organization are like the living system, spontaneously self-organizes, generates patterns, forms structures, initiates business activities, and above all, creates novelty over time. Loose coupling makes it possible to change the component without affecting the entire system, as long as the structure and interface are kept stable. Thus, digital organizations achieve strategic flexibility by developing the lego-like module design architecture and capabilities with quality and reusability, with internal processes being broken into modular service components that have a standard open interface. The digital technology is highly powerful but nimble and lightweight, as the “superglue” to weave all necessary business elements into the building blocks of the recombinant organizational competencies. The allows them to experiment with new business models, keep business processes flowing, and digitize the touch points of the customer experience with speed for achieving strategic flexibility.

Improve the organizational structural flexibility to break down silos and enforce cross-functional collaboration: Flatter structures will help to speed up organizational response to changing markets. The degree of business responsiveness depends on how business systems and subsystems interact with each other, and those interactions can be structural, technical, informational, or human. The flexible organizational structure is implemented via the virtual team setting well mixing with the physical structure to achieve a balance between 'virtual worlds' and 'the human connections.’ Going forward, it perhaps requires changing both official and unofficial structures into a hybrid organizational structure that can improve strategic flexibility. Everyone has a valuable contribution to make at whatever level in the formal hierarchy they happen to be placed. The goal for the optimized organizational design is to improve accountability, get mass collaboration, and harness innovation through less hierarchy. An organization can approach the flow zone when the positions in its hierarchy have clear and accountable tasks and an optimized organizational structure helps to empower people, enforce cross-functional communication and collaboration to deliver better business performance at higher speed. The digital balance to human nature will need to have some combinations of structural design and incentives, to fully support a digital transformation journey.

The digital organization should be able to assess to what extent the business has the flexibility, adaptability, and capacity to change in terms of people, finances, and manageability. The high mature digital organizations, no matter large or small, are highly dynamic and flexible, to manage its portfolio of relevant cross-border synergies, strategic flexibility, and organizational interdependence, for accelerating its performance and maximize its potential.