The Future Shape of Digital Business (with Video)
Organisational innovation will be as important as technological innovation to capture the benefits of digital investments according to Didier Bonnet, Professor of Strategy and Digital Transformation at IMD. Leading in Turbulent Times, IMD July 14, 2023.
Goodbye Digital Transformation
Our previous post, Goodbye Digital Transformation, argued that the term digital transformation has reached its sell-by date and we should stop using it.
One of the ten reasons provided was the argument that there is no such thing as digital transformation. There is only digital-supported transformation. Digital on its own transforms nothing. A wide range of non-technology-related issues is equally, if not more, important with the main barriers to successful transformation being organisational, people, cultural, and leadership related; legacy organisational structures, legacy leadership and management thinking not just legacy technology.
With successful transformation programmes requiring the integration of strategy, organisation, people, culture, leadership, as well as technology, why do we persist in calling it ‘digital’ transformation?
The Future Shape of Digital Business
With this in mind, I would highly recommend the above recording of a live presentation by Didier Bonnet, Professor of Strategy and Digital Transformation at IMD, and co-author of the pioneering book ‘Leading Digital: Turning Technology into Business Transformation’ published almost a decade ago.
The main thrust of Didier’s presentation is the critical importance of organizational innovation alongside technological advancements for companies to fully benefit from digital technologies. Put simply, companies need to adapt their organizational structures and ways of working to capitalize on technological progress effectively.
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Supporting our own argument that digital on its own is not enough, Didier argues that technological innovations alone are not sufficient to generate productivity increases in the workplace.
“Technological progress is brilliant, but we ought to focus just as much, if not more, on adapting our organizations to really take advantage of these technological advances, because otherwise we are not going to see the benefits……Economic history shows that technological innovations alone do not generate productivity increases in the workplace, because productivity gains require investment not just in physical and human capital, but also in the many aspects of organizational capital — competencies, processes, decision-making, job definitions, teamwork, and organizational learning — and this takes time. This is why it took many years for the benefits of the steam engine, electric motors, and computers to feed through to productivity statistics.”
To become fully digital businesses, companies will need to overhaul ways of working to become simpler, more adaptive, and empower front-line decision-making. We need to build future ready “augmented corporations” that can leverage three key drivers: automation, data science, and work orchestration. This will require major changes in how we organize ourselves:
- Automating key processes and workflows.
- Leveraging data science to improve decision-making, ultimately leading to decision automation e.g. when car insurance companies adjust monthly premiums in response to changes in driving behavior.
- Work orchestration, especially the use of existing and emerging technologies to overcome the traditional trade-off between tight central control and front-line autonomy.
Conclusion
Overall, Didier concludes that the fully digital organization of the future will be more scientific (using data science for decision-making), more orchestrated (with more automation in its operations), and more self-organizing (with greater job fluidity and team autonomy). This will require humans and machines to work together so that tasks can be carried out in the best possible way.
Our Take
Didier’s 2014 ‘Leading Digital” book had a major impact on my own thinking in this area. I still refer to it during the executive workshops I deliver so very much enjoyed watching the video embedded above.
A small but important point is that I personally would not use the term “digital business” or “fully digital organisation”. For reasons outlined above, my preferred terminology is the future ready organisation.
Technology is the foundation for building future readiness but on its own, it is not enough.
As always, comments and feedback are very welcome.
Take care.
The IMD page for the video can be found below…..
