Wednesday, September 23, 2020

Tensions between Standardization and Multiple Digital Characteristics

 Digital management needs to take a holistic discipline with a mixed style to handle the variety of standardization tensions adequately in order to improve business efficiency, effectiveness, and maturity. 

Digital organizations today are hyper-connected and interdependent, with many moving parts and an ever-expanded business ecosystem. To improve business maturity, standardization is a process of embodied technical knowledge accessible to all types of businesses that enable effective and efficient product and process development, and enforce the variety of standards such as industry-standard codes, language standards, engineering standards, or performance standards, etc. The digital management needs to deal with the following tensions well in order to build up a people-centric and high-performance business.

The tension between standardization and flexibility: Standardization intends to generalize or figure out a “common formula” for dealing with certain business issues such as product or process development. Flexibility is about taking alternative ways to solve problems. Ideally, standardization should provide benefits through reuse that accelerates solution implementation and reduces expenses and risks. Flexibility enables the business to do things better, and faster, etc. In order to survive and thrive amid constant change, companies must reclaim the right balance of standardization and flexibility for building strategic and operational agility into their business foundations.

The traditional overly rigid hierarchical setting makes the standardization process and practice challenging due to the silo mentality and lack of cross-functional communication and collaboration. Standardization should be done at the solution level and should only occur when the functional requirements for the different groups are the same or where there is a core set of functional requirements that all groups need and additional requirements are easily added without causing any significant side effects. For example, standardization perhaps has an adverse impact on the performance of the solution for those groups that do not need these added functions. Or it imposes addictions cost - dictating modifications to something that has already been implemented in order to be consistent with a specification. Thus, business management needs to be flexible and understand both sides of the coin for improving business efficiency and maturity.

The tension between standardization and customization: Digital is about options and people centricity. Building a customer-centric organization is at the top business executives’ agenda in any forward-looking organization. With unprecedented convenience brought by emerging technologies, customers are selective, you have to provide customized solutions to tailor their needs, to have the gain from the change via value perceived by customers. On the other hand, to improve business efficiency and speed, you need standardization to achieve cost optimization.

Usually, companies need standardization of internal reasoning via the capitalization of previous experiences, cost control, convenience, etc. It’s also important to meet customers’ expectations. The "dosage" of standardization and customization in the new product is the key, meeting target costs in the product design phase engineering is the path worth following. Forward-looking organizations develop trustful relationships with suppliers, collect feedback from customers, and engage employees to improve their productivity, with the goal to improve the people-centricity of the company.

The tension between standardization and innovation: Organizations can make a profit either through standardization (volume) or through innovation (diversification). The right tension between standardization and innovation is actually healthy because organizations indeed need both, and in fact, cannot really exist without a healthy balance of both. A “stable core" with standardization practices does facilitate incremental innovation on top of that core via “doing things” differently.

In fact, to improve organizational maturity, the business management should switch the mentality from standardization “versus” innovation to standardization “and” innovation, and develop a set of best practices to strike the good balance of both. Increased standardization facilitates innovation in an environment where the rate of focus and priority change exceeds the production cycle and ROI deployment. Once the core is stable, the organization is free to build durable innovation. Enterprise Architecture needs to develop further architecture standards that are valid where a multi-enterprise context is a norm rather than the exception, to deal with the tension between standardization and innovation smoothly.

Digital organizations are “always-on,” hyper-connected, and over-complex, exhibiting digital characteristics in various shades, extensiveness, and intensity. Digital management needs to take a holistic discipline with a mixed style to handle the variety of standardization tensions adequately in order to improve business efficiency, effectiveness, and maturity.


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