Insights

Reframing the Organization for a Digital Future Pt. 2

The CEO’S blueprint for transformation.

The digital challenge incumbents face today is often more of an organizational challenge than a technology challenge. The CEO must drive this reorganization and cultural change, empowering teams organized around digital platforms and the consistent customer experiences they deliver in agile fashion. Changing mindsets and skill sets is a very different challenge than the more technical or scale –driven re-orgs of the past.

Here’s a CEO blueprint for transforming from a legacy into a digital organization:

Access teams for the future

Many CEOs are starting to evaluate their executive rosters to make determinations about leadership. Who’s digitally savvy, who’s not; who looks at digital as a fundamental strategic change rather than a customer-experience issue; who can lead and take bold steps in the future, who cannot? Now is the time to evaluate and reconfigure management teams.

Almost no one is safe, and almost no one is perfect for business of the near future.

Similarly, you should review your army of employees. Organizations need to build up a whole new set of skills and capabilities around user experience, customer insight, agility and analytics. They need to move from silos and individual contribution to multi-disciplinary teams that reconfigure to fit the task. The tectonic shifts roiling business will likely affect 60-70 percent of employees. Tech people that were good in the past won’t fit the future, at least not without retraining. Orchestrators and managers must become doers. Standups and sprints replace meetings. Knowledge workers, who have survived multiple downsizings, are now being replaced by robots. Everybody needs to raise their digital quotient and tech-savviness. 

Almost no one is safe, and almost no one is perfect for business of the near future. Over the next five to eight years, the composition of the workforce will shift dramatically to embrace digitally savvy employees with a feel for both business and technology. For some CEOs, these shifts will affect 30,000, 40,000, or 50,000 people. Are your CHROs planning for this now? Do they have a plan to compete with digital natives for the top engineering and science talent?

Set strategies for the future

Ask what customers want, what they will pay for, where they will aggregate their relationships. Consider other industry dynamics and patterns that affect the flow of money and profits, and disrupt previously successful business models. Do you have plans in place that address these shifts in economics? Have your people thought through strategies for the future, or are they just adding digital channels to existing business models? Can they spot and prepare for the inflection points? It’s crucial to articulate these key questions, and seek answers to them until you are satisfied. 

People always say they have strategies, but usually these “strategies” don’t address the necessary fundamental alteration of the business model. And they may still be dependent on “heavy” legacy systems not tuned for an agile age. For example, the classic question in banking is how to add value for the customer when branches and cash are mere commodities, and when e-banking mechanisms and open-data environments make it very easy to switch providers. In this scenario, what’s the new model to sustain the customer relationship and the profits of today —and not get pushed back a step in the value chain towards compressed margins? A lot of organizations haven’t asked or answered that question.

Change culture for the future

The CEO who believes in integration may have spent the last decade centralizing functions. The CEO who believes in controlling labor costs may have spent the last decade off-shoring. But many of these paradigms of the past run counter to the precepts of agility and digital transformation, where data and IT are more democratized, and it’s less expensive to execute basic tasks. 

As CEO, how do I re-converge what I separated out 10 or 20 years ago? And how do I instill a cultural mindset that runs counter to established paradigms? I know I need new talents and skill sets, but how do I get there? I know I need new strategies, but how do I know I have the right people to develop them? Do I have the right collaboration and delegation approach, as well as a ruthless mindset for speed, and a willingness to test and fail? 

To move the organization forward, the CEO needs to communicate a vision for the future that pulls people along, without creating fear of obsolescence. She or he needs to communicate a central message that reinforces the need for change and that specifies the magnitude of the ambition. And then repeat, repeat, and act in accordance. Weave the new culture into all leadership, talent management and recruiting mechanisms of the firm.  Root out complexity in method and process that are obstacles to speed and agility. To break silos and encourage team building, re-organize the physical space to reflect a more “democratic” layout.

Look in the mirror – for the future

Ask yourself the same tough questions you asked your executive team. Are you technologically savvy? Digitally savvy? Identify your knowledge and intuition gaps, and put remedies in place. Devote a chunk of your time mixing with people that will educate you. If you’ve divided your time with x% for analytics, y% for business review, z% for strategy and so on, how can you carve out 20-30% of your time to focus on digital trends and insights? Consider bringing on a trusted digital advisor who is not part of the management team, but who can act as a real-time sounding board as you make decisions. 

Bottom line: Think more about your people and organization than the technology. The right people will adopt and embed the technology they need—on the fly—to meet their business needs.