The Power of People in Digital Banking Transformation

The Power of People in Digital Banking Transformation

          
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The Power of People in Digital Banking Transformation

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  • Lesson Two: Build Evolvable Structures That Support Critical Elements of the Digital Strategy

    Business historian Alfred Chandler coined a well-known maxim in organization design: structure follows strategy. That is, organization design should grow out of a company’s strategic vision, not the other way around.

    Digital transformations can turn that axiom on its head. Certain structures are unique to digital and must be built in conjunction with setting strategy in order to fuel transformation more quickly and effectively. We see four key areas in which companies must provide digital capabilities at scale, tied together with a governance model to ensure collaboration and funding and to navigate key policy issues:

    • Digital customer-experience expertise embedded deeply within the business but coordinated sufficiently to ensure a seamless customer experience across business units
    • A big-data and advanced-analytics platform accessible to local business-unit teams but maintained and coordinated centrally
    • An ability to continuously improve end-to-end processes through the coordination of implementation experts in the business units
    • An innovation hub with dedicated business-unit resources to continually create new business models and attacker strategies

    Given the scarcity of digital talent, however, companies should not follow the traditional dictum of separating people and position. They can’t simply define these roles, particularly at the top, and then try to find the people to fill them. Rather, they need to be more flexible in shaping leadership structures around the talent that they can acquire, whether from outside the company or redeployed from the inside.

    And they should be prepared to move and evolve quickly to keep up with the pace of digital transformations. We have found that companies need to move through a series of three interim phases featuring centralized and decentralized structures. (See Exhibit 2.)

    exhibit
    • Digital Opportunism. The motto of this phase is “let a thousand flowers bloom.” To create one-off change and quick wins, the organization embeds digital experts in the segments that have a strong need for change, such as a large and influential business unit. These experts champion adoption across the business and build a groundswell of support for change.
    • Digital Centralism. As digital activities begin to spread across the organization, a strong digital unit takes ownership of them, managing initiatives from the center and building economies of scale in tools and processes. The unit leads the agenda, ensures coordination, and manages execution, being careful not to pull resources away from the business.
    • Digital Activism. While digital transformation becomes deeply embedded within all business units as a core part of the strategy, centers of excellence move to a more lean activist model, overseeing policies, tools, and processes from the center to support execution, which is coordinated and managed at the local level from within the business units. Centers of excellence push resources back out to the business.