Organization Structure in the Digital World

 

Companies implementing digital transformation successful understand that people can be a much bigger obstacle than any complex technology. Therefore, they are reducing organizational resistance and effecting change by communicating the digital vision and providing incentives for employees. Companies are mobilizing workforce using enterprise-wide large scale communication such as internal social networks, webcasts, or video conferencing on top of traditional channels such as e-mail. Furthermore, the impact can be higher by offering employees opportunities to engage in real dialogue through discussion forums, wikis, blogs about the digital transformation of their companies. Employee participation in the change processes can reduce their resistance and in turn, it can enhance organizational commitment and goal achievement. Additionally, companies are changing their incentive system to clear the path for digital transformation. Companies that are performing best in their digital transformation effort are also aligning their efforts with different incentives including “soft” factors like awards and recognition and personal advancement and “hard” financial factors like bonuses and promotions among others. The management of companies are gaining the support of employees for the digitization of activities by counting every online customer order that was picked up in the store as revenue for the store. Therefore, it is important that managers engage employees in adopting new technologies and embracing digital transformation by informing and involving the internal stakeholders as active parts of the transformation.

Hierarchical leadership structures and specialized departments were efficient for organizations in the past but in the digital world, they impede the fast and agile reaction of organizations to the changing requirements. Therefore, organizations are simplifying their structures to foster collaboration and become more nimble. Companies are introducing the “fast track budgets” to simplify their budgeting processes that took up to six months to grant budget to an application for a new idea. Soon, employees submitted a higher number of ideas which lead to an increased degree of innovation within the company and as a result, several new innovative product and services enter the market. Furthermore, Adobe reduced the number of locations to make it possible for employees to work together in close proximity as they consider close collaboration a precondition to scale their business. Furthermore, changes the headquarters designed and employees begin to work independently of location by moving their desks in the building, collaborating virtually or even working remotely from home. Moreover, companies are changing their strict working time regulation that enables employees to work in a more flexible way whenever they feel most creative. Companies are becoming more agile by shifting their department structure to a project-based approach through cross-functional teams. Visa, for example, to match the speed of change in the global payment industry shifted their structure to a more horizontal and project-based by joining teams from marketing, product development, and operation to make sure that plans are executed seamlessly. By making changes in the organization structure, companies enable employees to work in a more flexible, networked, and collaborative way.

Organization culture can impact the process and success of digital transformation. To achieve a successful digital transformation, organizations must adopt a supportive culture where business and IT initiatives will flourish together. Organizations should emphasize flexibility in their culture to support digital transformation. More specifically, agility is considered an essential virtue for the organizations to adapt to an increasingly unstable environment through restructuring or adopting new management practices. However, successful transformation is possible only if the change is accepted and an organizational culture that values openness towards change will establish a change-oriented mindset (composed of willingness to embrace change and to be adaptable and curious) that is crucial for digital talent and leaders to master digital transformation. Furthermore, companies need an organizational culture focused on innovative mindset and ambition for improvement in order to continuously improve and growth through innovative product and processes. However, to be innovative requires to experiment with new technologies, take risks, and make decisions under uncertainty. Therefore, companies that embrace the risk that goes beyond the level that taking risk is acceptable lays the basis for innovation and success in digital transformation. Moreover, a customer-centric culture help companies to avoid one of the biggest challenges of digital transformation which is the lack of urgency to digitally transform. Customer-centricity is an essential part for meeting the changing needs of customers and facilities the digital transformation because it shows the readiness of companies to change. Additionally, internal focus and concern for employees is an important element to promote the willingness to learn and to increase trust. Mutual trust between the employees and organization is very important in the digitalized working environment considering that flexible working hours and working from home are becoming standards. This focus on trust further increases the tolerance for failure, which is an important element in successful digital transformation. Digital maturing enterprises are constantly cultivating the above characteristics, and digital maturing companies are actively engaging in initiatives to foster risk-taking, agility, and cooperation.