How to setup your organisation for digital business success?

There are several approaches to organise digital innovation and business development activities. In our study, we found various models and here we describe some of them. There are around 40 Chief Digital Officers in Finland. This is quite a limited number if we think about the number of companies in Finland, statistics vary between 400 000 to 1 million. Hence, a CDO is not a necessary role to be able to start creating new digital business and revenue. The organisational models vary from totally centralised to totally distributed ones.

For a digital newcomer, one organizational solution is a digital innovation program. Thus a certain amount of resources are allocated to the program and all businesses may participate in the program. There might be internal Lion Caves including pitching and competition. In this model, the inspiration for digitalisation is in business. They do not need to change if there is no need for digitalisation. This is a typical model  at very early stages of transformation phase. The challenge of this model is that does not necessarily change your core business and execute the transformation at the organization level. This model was found in services and training sector.

More permanent model is a digital center often managed by CDO. Top management has allocated a lump sum to be allocated to digital development and innovation. Digital center thus manages the portfolio and is responsible for running the programs or even in some cases all operations in digital area from service design to execution of digital products.  The business unit takes part in the projects and their resources are needed in implementation. The benefit of this model is that knowledge and skills develop around the organisation. It also enables implementation even bold ideas to find new digital business and profits. The success of this model is on the capability of this centralised to coordinate with business units. This model we found in manufacturing and in the financial sector.

Another option is to start to digitalise one unit and then extend the digital operations to others later on. In this model one business unit find new business and others may continue business as usual. This approach includes tight business orientation. The risk I see is that all the actions are with minimum risks and hence activities are more focused on improvement of current products and services, not to bold ideas. At least this model requires aspirational managers for execution and in a business unit. This model was used in one service sector company.

The latter means that business units are responsible for creating digital business and there is light or even no coordination on digital projects. This could be called everyone’s digital organisation. However, this model requires a strong vision and systematically building agility and a lot of new skills i.e. service design and change management in all business units.  Typically this is a model for digitally mature organisations. In Finland, we found this model in manufacturing and in media sectors.

In Germany, there are companies that use this approach and establish joint-ventures with companies start digital activities. I called this model in the two worlds. The positive side of this approach is that you may continue the current business and the digital business may develop on its own.  The challenge comes when you need to combine these two later on.

In summary, there are various models to organise digital execution. No model is better than the other. The organisational structure needs to reflect the strategic outlines of the company while business participation, agility, transformation and new capabilities are always needed.

Leave a Reply

Your email address will not be published. Required fields are marked *