To successfully transform into a Digital Enterprise, an organization must exhibit its readiness across Four Dimensions. Organizations will only be ready to transform themselves into true Digital Enterprises when they possess:

•    Operational Sustainability – Your organization has a stable operational base
•    Organizational Agility – Your organization can quickly adapt to change
•    Strategic Agility – Your organization can anticipate change
•    A “Disruptive” Culture – Your organization is receptive to implementing change

In the first article in this series, we discussed the foundational dimension of Operational Sustainability. In this article, we examine how to assess the second of Dimension of Digital Enterprise Readiness, Organizational Agility.

Organizational Agility

The second dimension of readiness is developing the capability of Organizational Agility. Organizational agility is not just about the ability to change direction. It is the ability to rapidly adjust the structure, operating processes and functions of your organization to adapt to changing market conditions. It demands that organizations and their leadership can reduce structure and process, as necessary, to enable the organization to respond more rapidly and effectively. As with Operational Sustainability, it comes down to balance. The organization has created just enough structure and process to ensure stability, while removing anything that may inhibit the organization’s ability to pivot and move as fast as is necessary to seize market opportunities or respond to market risk.

The organization must be tactically flexible to exploit opportunities within their strategic boundaries and without compromising the instrumental value of the operational and business processes. Using operational governance processes in a constructive manner coupled with proper organizational taxonomy gives organizations the flexibility and autonomy to make rapid decisions. Autonomy leads to organic leadership and teaming. In this environment, self-forming leadership and teams are extremely constructive because they operate in the open rather than in the shadows typical in a mechanistic organization focused on the terminal value of maturity models. Organizational agility encourages risk taking and leaders are not afraid to be vulnerable to their peers and subordinates.

Organizational agility builds on the Operational Sustainability dimension and is influenced by the balanced use of operational and business processes. Organizational Agility is also influenced by taking advantage of digital communication channels and technologies that facilitate the collaboration needed to support the team autonomy and organic leadership so necessary for this Digital dimension. The seven attributes of this dimension, described below, focus on tactical agile capabilities. These capabilities depend on Operational Sustainability described in Part 1 of this series and enable the organization to then achieve strategic agility required in the Digital Era.

Organizational Taxonomy

This attribute measures whether the organization maintains and effectively utilizes a clear mapping that connects delivered business value to the supporting business processes and the underlying functional teams that execute those processes. An Organizational Taxonomy provides a basis for accurate and consistent business processes and their execution.

Organizational Taxonomy measures the roles and areas of responsibilities within an organization with respect to the activities of business processes and the control flow that describes the order of execution and the dependencies among the various activities across organizational processes. The aim is for the processes to have goals that achieve defined business objectives aiming to create value to customers.

An Organizational Taxonomy can help improve the efficiency and reduce the cost of process integration and knowledge management initiatives. A taxonomy provides a shared language for different parts of an organization and reduce the amount of time spent on duplication and reinvention, by making existing intellectual capital resources more visible and accessible.

When an organization properly organizes and classifies its assets, processes, and information through a Taxonomy, those classifications can be used as a strong foundation for adapting and even creating new groupings to meet changing business needs.

Communication and Coordination

Communication and Coordination examines whether organizational teams have clear and open lines of communication through which opportunities to pivot and the potential risks and ramification of changes are shared and coordinated.

Communication and Coordination measures whether there is adequate overall communication and coordination, there is a good balance between written and oral communication, and whether there is sufficient communication and coordination about organizational change. Additionally, is there a balance of horizontal and vertical communication and communication that can overcome geographical and cultural boundaries.

Communication and Coordination among staff helps people manage, create and sustain organizational operations. Organizational communication happens in many forms, including conversations, emails, memos, and websites. Ideally, organizational Communication and Coordination facilitates sharing of information, planning, project coordination, business process execution, and social interaction. Poor communication or nonfunctional communication systems leads to confusion, lowered morale, and loss of productivity.

Communication and Coordination promotes motivation by informing and clarifying for staff about the task to be done, the manner they are to perform the task, and how to improve their performance if it is not up to the mark. Communication also plays a crucial role in altering individual’s attitudes. A well-informed individual will have better attitude than a less-informed individual and thus will be able to adjust to changing business needs and processes.

Team and Organizational Autonomy

This attribute looks at whether team leaders can make rapid, preliminary decisions regarding potential changes to operating models, structures and processes prior to submission to a larger governance process.

Team and Organizational Autonomy measures whether leaders form and disband teams as required and whether teams can self-form to solve business problems. Leaders emerge rather than are assigned in a traditional hierarchical manner. As a result, recommendations can be turned into solutions without formal governance so long as they are reasonable.

Team and Organizational Autonomy provides faster actions and decisions since traditional organization theory may lead to bottlenecks; individual and team development since team members understand which skills and knowledge they need to acquire and go about on their own to acquire them; better redistribution of work because planning and tracking tasks are taken up by the team rather traditional leadership models; and finally the overall use of full human potential because there are more opportunities to explore and uncover hidden or unused talents of staff.

Team and Organizational Autonomy facilitates the ability of staff to search for and use information, learn new skills, and feel comfortable in ambiguous work situations enabling the Organizational Agility required to adjust to changing customer and business landscapes.

Operational Experimentation

The Operational Experimentation attribute measures how organizational teams embrace and effectively execute concepts such as Lean Startup, Minimum Viable Product, and Fail Fast to employ rapid testing and experimentation around potential changes to operating models, structures & processes.

Operational Experimentation is based on a sound technological prerequisite to utilize standardized, comparable, and integrated technologies and information systems. From there, Operational Experimentation measures how the organization handles change as both opportunity and chance and is driven by staff that is multi-skilled and learns from one another as well as the customer.

An organization that exhibits Operational Experimentation accepts change even where there is wide impact and informs staff of changes swiftly and accordingly as well as rewards staff who not only accept change, but foresee it. Finally, an organization that exhibits Operational Experimentation has management and senior leadership that recognize the relationship between innovation and learning.

Operational Experimentation allows organizations to try new things quickly, enable change more rapidly, and save money by avoiding big failures. It also allows organizations to entertain creative ideas that would be too risky for a normal life-cycle models as well as implementing prototypes and pilots first that allow the discovery and refinement of approaches. Finally, Operational Experimentation allows the organization to be resilient through a large pipeline of ideas that makes you ready to adapt to change.

Collaboration

A Collaborative Organization is one where teams exhibit an openness and willingness to work together constructively with others during their experimentation or testing and change efforts, especially when those efforts impact or will impact their functional domain.

A Collaborative organization is one that is generally proactive, responsive, trusting, and supportive of proposals and decisions of employees as well as exhibiting collaboration between departments and functions and as a result is “continually improving.” There is a participative approach to decision-making between management and non-management and collaboration is facilitated by the Organization’s commitment to training in and the use of interpersonal skills. A collaborative organizational environment also means having other training and education resources available for employees as well as evangelists within the organization.

Collaboration looks at how an organization listens to the ideas of staff, their needs, and their suggestions and integrates their feedback into technology and strategy. A Collaborative organization thus can quickly adapt organizational structures and processes to implement changes and stay competitive.

Mission-Driven Governance

Mission-Driven Governance is characterized by teams embracing a mission-driven approach to decision making in which the overall needs and benefits to the organization are the primary evaluation criteria of any decision to change operating models, structures or processes, even when change decisions span multiple groups or business units within the organization.

Mission-Driven Governance looks at the shared leadership and vision throughout the organization and how well that shared vision is communicated consistently. Organizations with Mission-Driven Governance show a high degree of follower loyalty, self-accountability, and self-leading causing high leadership influence. Staff have high self-accountability and self-responsibility of commitment to organizational decisions. As a result, organizational adaptation and change is essentially accomplished by self-leading staff.

A key intangible benefit of Mission-Driven Governance is the ability to function in a productive and efficient environment in which all organizational elements work together toward a common strategy. But there are also tangible benefits of Mission-Driven Governance such as revenue, reputational protection, and customer attraction. Ultimately, Mission-Driven Governance assists the organization to confidently take on reasonable risk because decisions are based on better information.

Adaptive Leadership

This attribute measures whether an organization’s leadership team encourages change, celebrates experimentation, protects appropriate risk takers and ultimately takes responsibility and accountability both for failed experiments and for the failure to appropriately pivot.

Adaptive Leadership is like the organizational concept of “fail fast” to avoid major commitments to efforts that may not be successful. The difference is that Adaptive Leadership focuses on the leader and the leadership team as a facilitator for the fail fast organizational practice.  Adaptive Leaders make decisions based on achieving reasonable positive results and avoiding the “pseudocertainty” effect observed in multi-stage decisions (the tendency for people to perceive an outcome as certain while it is actually uncertain), in which evaluation of outcomes in a previous decision stage are discarded in subsequent stages. Additionally, Adaptive Leaders consider both the consequences of inaction with the consequences of action.

Adaptive Leaders can operate in chaos and make decisions in the face of uncertainty with an aim towards reducing risk over time. They are not constrained by traditional organizational hierarchies. Adaptive Leadership elicits high performance from staff which drives many of the other Organizational Agility attributes.

Conclusion

In Part 1, we described the characteristics of Operational Sustainability and the importance of a stable base. But having a stable base is not enough in this rapidly changing world. You need to be able to quickly adapt and change in response to Market and Business requirements.  Those companies that can not or will not adapt are doomed to perish.

“Extinction is the rule. Survival is the exception.”  – Carl Sagan

P.S. Anyone remember Polaroid?

In Part Three, we will examine the third Dimension of Digital Readiness, Strategic Agility. 

About the Author: