Three habits of highly effective digital enterprises

IBM study finds only 20 percent of companies ready to move to the digital realm. Here's how they are doing it.

We're rapidly lurching into organizations that are highly distributed, virtualized, digitized, and network-driven. This is obviously all possible because of information technology. However, organizations -- that is, people -- aren't quite ready to go there yet. Many of us are still caught in organizations designed the old-fashioned way, with top-down, command-and-control hierarchies. Attempts to do end-runs around these crusty old structures to get things done or create new innovations are often met with confusion and pushback.

Buildings-New Rules cropped 2New York Nov 2013 cropped 2 photo by Joe McKendrick
Photo: Joe McKendrick

However, there are organizations that get it, and are making the most of digital ways of working. The challenges and opportunities were surfaced in a new IBM Institute for Business Value survey of about 1,400 professionals in 48 countries, which identified the building blocks and obstacles to managing in this new environment.

The survey finds that 74 percent of IT executives feel that "individuals in their organization are not fully prepared to adapt to an increasingly digital work environment, either offline or online." Only 20 percent feel they are adept at change management.

At the same time, everyone wants to evolve to become a digital enterprise -- the quicker the better. The survey finds that for 88 percent, "a major focus over the next five years will be to leverage new technologies that make organizations more customer centric. This poses a significant disconnect between the desire of leaders to embrace technology and their organizations’ ability to follow suit."

The survey's authors -- Hans-Henrik Jorgensen, Oliver Bruehl and Neele Franke -- took a close look at the 20 percent of organizations -- the go-getters -- who seem to be successfully changing their corporate culture, processes and technology foundations to move into the new digital realm. In the process, they identified the following three habits of highly effective digital organizations:

In highly effective digital organizations, everyone is involved in driving change, not just the higher-ups: "Driving successful change starts from the top and includes the entire organization -- top management sponsorship, middle management empowerment and an overall corporate culture that promotes change at every level of the organization," Jorgensen, Bruehl and Franke write.  For example, a majority of the digital go-getters report having top management support, shared vision and supportive corporate culture. This is made possible through "role modeling" throughout the organization and engaging employees with a compelling case for change.

In highly effective digital organizations, change is real and measurable -- not just more hot air:  A lot of organizations talk up a storm about "change" and how they're embracing it with everything they've got. But in many cases, it's a lot of cosmetic change, essentially re-arranging desk chairs on the Titanic, rather than redirecting the ship's course. Often, change means employees being cut, and more work being piled onto the remaining employees. In the IBM survey, a majority of respondents said any efforts at change management in their organizations lacked clarity.

Typically, change is measured against milestones or status. What highly effective organizations do differently, the study's authors state, is measure change progress against adoption. Go-getters measure project progress mainly against skills and behavior adoption, understanding of organization benefits, and ownership of change.

In highly effective digital organizations, change management is baked into every process, and isn't just a one-time thing: "IT is getting tougher to manage, especially as it becomes a more essential piece of day-to-day business. "Organizations cannot address the increasing pace and magnitude of change today by reinventing activities and roles ad hoc or on a project-by-project basis," the study's authors state. Highly effective digital enterprises instead have developed ways to "formalize change expertise and systematically build enterprise-wide change capabilities."