Designing Digital Organizations

Designing Digital Organizations

          
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Designing Digital Organizations

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  • Spend a minute with Jean-Pascal Tricoire, the chairman and CEO of Schneider Electric, as he describes the opportunities that digital technologies have opened up for his electrical-equipment company: “Connectivity is not new for us. We started to connect things to the internet in 1995. But what is happening today is that we are connecting from power plant to plug—everything connected to the internet. In a nutshell, all products will be connected, all the data is getting aggregated, and we are deploying analytics to automate or support decisions. We were coming from a customer relationship that used to focus on projects and service on demand. Now we stay connected 24-7. That means we can bring new value, new capabilities, and a lot of new services.”

    Tricoire told the Davos audience at the World Economic Forum’s 2016 meeting how Schneider Electric had transformed its R&D organization to add software and data analytics products and services to its customer offerings. He described how the company had set up an autonomous division for digital solutions that serve both Schneider Electric and third parties. He discussed how the development of software and analytic solutions required the company to change not only what it was doing in R&D but also how it was doing it. “Before, we used to make a spec and then spend two or three years on the product. Now, we have to go fast into the market with a minimum viable product.”

    He also talked about partners: “When we went into digitization, we knew connectivity, and we knew software. But when you go to the cloud, you can’t do everything alone. Today’s world is very prone to partnerships—the big bets are about choosing the right partners. Your success depends on you, but also on the ecosystem you are choosing.”

    Founded in 1836, Schneider Electric is today as much a digital business as any 21st-century high-tech company. As it proceeded to digitize, the company changed the design of the business on multiple dimensions. Management decided to connect as many products as possible to the internet, add information-based services to the customer offerings, adopt agile product development processes, establish a new digital services organization, and update the sales force’s interactions with customers. A successful old-line company transformed itself into a digital business.

    Many companies that are facing digital disruption and considering digital transformation look to digital natives for models and roadmaps. But they can learn as much, or perhaps even more, from traditional companies, such as Schneider Electric, that have embraced and executed digital-induced transformation—some of them even before the phenomenon was well recognized. They can also learn from first-generation internet companies that have redesigned their business and operating models in order to stay relevant as their markets evolve. The experiences of these companies provide a new perspective on transformation and the design of digital organizations and provide lessons for companies not as far along the digital adoption curve.

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