Digital drive: the future of organisations

Business, Editor's Choice, Technology | Thu 20 Jul | Author – Business & Finance

A truly digital organisation relies on more than technology, writes Dr Stephen McLaughlin.

There is a growing drive to transform organisations and businesses into ‘digital’ entities… but what exactly does this mean, and what does a digital organisation look like? Is the term ‘digital’ just another buzz word to be attached to the front of words like ‘business’, ‘marketing’ or ‘commerce’, the same way ‘e’ and ‘mobile’ were back in the nineties?

Is the term ‘digital’ just another attempt to push new and untested technologies on to businesses? These are pertinent questions that I have been asked by many sceptical business leaders just looking to get on with the day-to-day job of managing their own business. Like these business leaders I’m also sceptical of new terms that fail to really describe their intent or value to an organisation, and seem to be driven by recent technology advances.

However, it cannot be denied that technology is no longer just an enabler for faster and more efficient processes, but is fundamentally changing the way we work and interact with one another on a truly global level.

Technologies such as cloud, data analytics, and the internet of things don’t just facilitate an improvement in steady-state performance, but also provide real opportunities for businesses to shift into new markets, with new products and services.

Yes, but the advent of Web 2.0 also allowed businesses to reach new markets and develop digital products such as e-books, music downloads and online professional services such as education, legal and medical advice, and assessment. So what’s new with ‘digital’, and what differentiates an organisation as being ‘digital’?

After all, it’s hard to find an organisation that doesn’t use technology to support their core business processes: does that mean all businesses, by default, are ‘digital’ organisations’?

internally alignedORGANISATION IS EVERYTHING

Well, the key word in the term ‘digital organisation’ is not ‘digital’, but ‘organisation’, and people make organisations work, not technology. To that end the focus is not anchored to a particular technology, but to how people, collectively and individually, use technology to interact and get things done.

What makes the ‘digital’ discussion interesting is not the technology underpinning it, but the questions and concerns it is raising within organisations (both in the public and private sector). Listed below are some comments I have received that help encapsulate the nature of what it means to be digital:

  • “This is no longer a topic of conversation solely relating to IT.”
  • “Everyone has a view of what ‘digital’ means.”
  • “No one is really sure who should take the lead in implementing a digital programme.”
  • “Technology is fundamental to digital, but it is not the only thing for consideration.”
  • “The focus for digital is the subtle shift from moving from managing data to accessing information.”
  • “The technologies at the heart of the digital discussion have yet to be fully understood in terms of their impact of organisational performance.”

One must realise that everyone including academics, consultants, software and hardware providers, IT professionals, and marketers will have an opinion that will be shaped by their own view of their organisation’s technology and performance needs.

What is causing this differing perspective is the way in which the digital discussion transcends all aspects of the organisation.

BUILDING RESPONSIVENESS

Fundamentally, ‘digital’ is about improving access to information that will enable more timely and cost-effective decision-making, which in turn will build a more responsive, customer-focused organisation. In short, the goals of any ‘digital’ agenda or strategy should encompass at least the following:

  • Providing access to information for better business decision-making (improved decision-making).
  • Developing a responsive customer-focused organisation (improved customer engagement/retention and acquisition).
    Developing flexible and responsive business models (improved organisational responsiveness).
  • Developing demand-sensitive products and services in a cost- effective manner (improved cost of producing digital products and services).

Therefore, digital is more about the ‘intent’ in terms of what is required to improve organisational responsiveness and performance. It is not so much about the technology used to achieve the goals outlined above. Technology will continue to change, and improve, and organisations will continue to try and understand how best to adopt and integrate it into their businesses.

‘Digital’ is not important because of the technology that currently underpins it, but because of the way it is causing organisations to rethink how they view technology, and the role it plays in enabling their businesses.

FUNDAMENTAL CAPABILITIES

Re-aligning the IT function to deliver digital-enabled systems can provide a new competitive advantage for organisations. As we have seen, what is appropriate for each organisation will be different. Therefore, there is no ‘one size fits all’ template to follow.

However, there are also some capabilities that are absolutely vital if the ability to flex and respond to new opportunities is to be developed and sustained. These capabilities are not new but they are fundamental to building a digital organisation, and the focus they bring to an organisation helps develop an end-to-end business perspective for assessing, implementing and managing technology for competitive positioning.

These are important areas to focus on to ensure that technology is aligning to the needs of organisations, and is driving more value in terms of overall business performance.

Skills alignment
capability performanceIn order to get the new technologies, workflows and work practices embedded within the organisation, new skills will be required. The organisation needs to be aware of what these skills are, and have a plan in place to acquire them – whether through external sourcing or internal development.

Effective communications (up and down)
Getting the message right for the right stakeholder groups. Different members of the organisation, as well as customers, vendors, investors and strategic partners, will need to have the initiatives explained to them in ways that address their concerns, and these will differ among the stakeholder groups. Without support from the stakeholders it will be difficult to implement any change, irrespective of how beneficial it will be.

A customer-centric view of all business processes
In a highly competitive world differentiating what you can do for your customer is very important, and therefore the customer must be at the heart of everything the organisation is about. If you cannot express what you are doing in terms of the value to your end-customer then you need to seriously reconsider. 

An aligned IT and business strategy
Rapid time to market and scaling to meet increased consumer demand requires lean infrastructure operations and an elastic, cloud-based infrastructure.

Effective governance and leadership
Ownership and commitment at a senior level are vital to the success of any key initiatives. As projects focused on the development of any digital capabilities will have organisation‑wide impact, it is important that all the key stakeholders know that the organisation is committed to delivering against them.

Effective collaboration across the organisation
Delivering high-quality end-products quickly requires new ways of working, including agile development, rapid release cycles, automated testing and deployment, and a “test and learn” approach to changes.

Surprisingly, organisations often find that the greatest challenge here is not within IT but in persuading the business to adopt this approach.

Also, it is important to develop a more inclusive and open working relationship between IT and other business functions, and the end-customers (external and internal to the organisation). This will help identify innovative ways to engage with products and services that are driving demand for the organisation’s offerings.

Performance monitoring and management
Sophisticated technologies such as customer relationship management systems require high-quality data that is unpolluted, maintained by the business, and integrated into a single data set.

One solution is to launch a joint business-IT programme that identifies priority data, measures data quality, and agrees on remedial actions to reduce data pollution.

Risk handling/management
Thinking up new ways of doing business, and how technology can be used to support these new approaches, is not without some risk. Organisations, and their senior management teams, must be prepared to fail, but fail fast.

Pushing ahead of the competition takes courage and being prepared to take some risks. However, this does not mean that risks should be taken without some level of assessment and mitigation.

Skills balancing
In order to get the new technologies, workflows and work practices embedded within the organisation, new skills will be required. The organisation needs to be aware of what these skills are and have a plan in place to acquire them, whether through external sourcing or internal development.

The key word in the term ‘digital organisation’ is not ‘digital’ but ‘organisation’

These aspects of capability performance are not dependent on technology, but on the development of the core skills such as business skills, interpersonal skills and technical skills.

This gets back to what is at the core of being a digitally enabled organisation: the ability to understand what is required by the business or organisation and to effectively engage with workers, customers and any other stakeholders in order to rethink how they use technology to build competitive, innovative products and services in a way that develops competitive advantage.

So even if you’re not running with the latest cloud or social media software – perhaps because of the way you are internally aligned – your organisation is a lot more ‘digital’ than you thought.  


About the author: Dr Stephen McLaughlin is Deputy Head of School and Director of Teaching and Learning at Edinburgh Business School, Heriot-Watt University

Stephen McLaughlin

Dr Stephen McLaughlin