Designing Digital Organizations

Designing Digital Organizations

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Designing Digital Organizations

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    Ways of Working

    Several of the companies in our study are specifically changing what they call their ways of working, which relate as much to company culture and organization as to business process reengineering. Ways of working describe how people in the company work together, without specifying inputs, activities, cycle times, or outputs.

    Speed is the key factor that companies need to consider: digital organizations move fast. In large and complex companies, this means reducing reliance on hierarchies, and leveling hierarchies requires reliance on collaboration. For many companies, this is a big organizational and cultural change, and implementation is difficult. Companies that get it right design guidelines at the top, which establish the boundaries within which empowered employees can collaborate and make great things happen.

    The most common new approach is to adopt at least some aspects of the agile methodology. Agile ways of working include multidisciplinary teams, short sprints to accomplish something valuable, new roles such as “scrum master” and “product owner,” and other design features that differ in concept and approach from traditional ways of working, especially in large organizations. We have observed that rather than impose specific methodologies, many large companies apply agile’s general principles, paying special attention to the integration of agile teams into the rest of the organization. When large companies get agile right, the results can be impressive. Productivity can improve by a factor of three. Employee engagement, measured in quantitative surveys, increases dramatically, too. New product features are ready for release within weeks or months rather than quarters or years. Rates of innovation rise, while the number of defects and do-overs declines. As companies apply agile principles to activities other than software development, agile can become a journey of continuous improvement. (See “Five Secrets to Scaling Up Agile,” BCG article, February 2016.)

    Becoming more collaborative is another goal of a new way of working. For example, Salesforce encourages massive collaboration using both digital and physical means. The company is organized in a traditional pyramid, but it operates like a very flat organization. There is no expectation that work will get done through a command-and-control hierarchy. The top three or four layers act as a network. All employees are expected to collaborate in order to help one another meet the expectations in their V2MOMs. John Wookey, the executive vice president of industry applications, says, “I report to the president, but I also report to our product lead because I am building products. I meet with the person who runs services every two weeks. Employees on my team sit in on the staff meetings for some of the sales organizations. I sit in on the staff meeting the head of cloud services has each week. There is a hierarchy, but in practice, it is more of a network.”

    Lean approaches and methodologies also have an impact. Although it is already a large company, Intuit has embraced the “lean startup” way of working. Detailed by Eric Ries in his book, The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Businesses, this way of working “provides a scientific approach to creating and managing startups and getting a desired product to customers’ hands faster.”

    Several of the companies we studied focused specifically on changing their cultures. Near the beginning of Intuit’s transformation to an ecosystem-focused company, CEO Brad Smith decided that a “refresh” of the Intuit culture and values would help bring the right focus to the change journey. One of the values he stressed was winning together, which for Intuit was to be quite different from winning within the business units because the ecosystems they wanted to build and support cross business units and product lines.

    Once each month, Smith sponsors One Intuit Forums, through which the company’s top 400 leaders participate in a 90-minute videoconference. Each meeting includes CEO remarks—Smith’s teachable points of view or recent external learning. His remarks are followed by a high-level review of company performance that considers key stakeholders—employees, customers, partners, and shareholders—and takes a detailed look at one of the company’s six strategic priorities. Each Forum drives shared consciousness and accountability across the company, and the 400 leaders are expected to pass this along to their teams.

    At Davos, Marc Benioff pointed to Klaus Schwab’s book, The Fourth Industrial Revolution, and told the audience that the fourth industrial revolution starts with one very important point—trust. He argued that employees need to realize that customers will not buy a company’s products unless they trust the company. This, he stressed, will be a big change. “You are about to define a new level of trust between yourself and your employees, between yourself and your customers, between yourself and your key stakeholders and shareholders, and … between you and your partners. This is a cultural revolution for organizations that are not built on trust. Because when we talk about trust, talk about growth, and talk about innovation, we have to talk about them in that order,” he said.