Innovation is a must, that is clear. Igor Beuker does not waste time with this in the beginning of this publication: “The problem is that we all look at the ROI (return on investment, editor) of innovation and we conclude that we don’t know. I flip it and say: what would it cost if you stay put and do nothing?” His answer is: it would cost you your complete business. In other words: adjust, otherwise you will be out of business. While I do not always agree with Igor, I completely agree with him in this case. Let’s get to it. Towards the new simplicity!
Using the digital assets
Without realising it, we joined various networks with different people and objectives that we utilise today to get more out of life. New organisational forms will have increasingly more influence on society. The advent of the internet has seen an infinite potential of information provision. New initiatives exist, that are totally different to the hierarchical structures that we know now. Adjusting and organising your organisation around the digital ecosystem and the relationships within it is therefore necessary. After all we live in the relationship economy.
As an organisation it is essential to be busy with the internet ecosystem and to consider this ecosystem to be a business ecosystem. It is necessary to be aware that the three key elements (force, power and potential) form the basis of your organisation. Only then will it be possible to create the new value model and the optimisation of the earning models from the framework. Only then are the digital assets, force, power and potential used. The new simplicity of the organisation arises automatically!
When an organisation starts to actively work on the internet ecosystem, the organisation must approach itself as a platform. The platform consists of, among other things, the own web or app environment, social channels, service provision channels and other e-commerce or digital channels and the offline environment. The steering group, which we will discuss later, which focuses on the platform within the internet ecosystem will need to become self-sufficient. It achieves this thanks to the revenue that is generated, which therefore turns it from a cost item, into a source of revenue. People work together on the new simplicity and are jointly responsible for the digital assets.
Speed as a hindrance
Organisations that have become large in the 20th century now struggle with the digitally-driven change, while this is actually required to make an impact in the 21st century. They understand digital technology and have good ideas, but struggle with the execution. In addition, they have hierarchies or are set up according to old principles concerning maintaining the existing situation and limiting risk. Two characteristics that hinder the speed of learning and adjusting to change.
Digitisation changes the business model, the behaviour of fans and clients and the position in the value chain. The implementation of new digital technologies is extremely important, but not critical for success. After all, the change that comes from it, is human work. The transformation to a digital-driven organisation concerns a fundamental switch in thinking, acting and organising. Managing change means influencing in a smart, subtle way. Not from control and management, but by providing direction and space in combination with the creation of space for innovation. It is not the task of leaders to create followers. It is the task of leaders to create other leaders.
If a company wishes to make the digital transformation, they have to focus on the strategic importance of information in the digital economy. In this case, two disciplines must be added to the company, namely that of data management and digital management. Digital management is responsible for the fan or digital client and oversees both the digital strategy and the technology that is required for this to achieve a positive, digital experience. Data management is concerned with data and will use the exponentially increasing amount of data and analyses, to be able to gauge and improve decision-making and therefore create new opportunities for the company.
Change is done together. Changing together includes more than involving everyone in the organisation, creating support and clear communication. Together means: bottom-up, getting everyone in an organisation to cooperate and sharing their thoughts, arrive at a vision and searching for solutions together, creating a feeling of togetherness where also the feelings of ‘minorities’ are considered. In short, when changing together, an attempt is made to involve the wisdom of the entire organisation and to listen to everyone, both advocates and opponents of the change.
Organisations are forced to rediscover their business model and become part of the internet ecosystem. A traditional, hierarchically organised company no longer fits this development. Currently, the market has its own dynamic, where it is almost impossible to identify how a business model has come about.
The success factor of your new business model is the redesign of your organisation. Your organisation must be set up as a partnership; a so-called network organisation, which often operates in an informal manner. It also signals the current and future bottlenecks in the areas of policy, awareness and legislation, among other things.
A network organisation must be seen as an organisational form where mutual members of organisations (so-called nodes within the network) collaborate, to reach the greater objective, both on a joint and individual level. Set up the organisation as a partnership and learn from each other. Use each other’s strengths is the motto.
A good project combines like-minded energy around the realisation of the digital assets. Such a project involves all contacts and relationships between the involved people and/or organisations within the network. A network organisation seems to be organised in a non-obligatory way but works in a compelling way due to the ‘fetching and bringing’ principle, which is based on mutual dependencies and joint agreements. The organisation consists of non-hierarchical units. It is based on teams that have their own relationship with the environment and respond quickly to changes in that environment or to questions from the community. The units work autonomously. They are facilitated rather than managed.
Which conditions should also be met?
- The rules of the new organisation, as described earlier, have to be crystal clear (excellent internal and external communication);
- A convincing, professional vision of the future about the new business model and the digital assets (as described before) must be created, where everyone works towards the same objective and can commence achieving digital assets;
- The performance of every member of the network organisation on the basis of the framework must be strictly assessed, the 5 objectives and 12 analyses are used for this;
- The members of the network organisation must be coached (intensively if necessary) on (professional) competences to achieve the 5 objectives.
No inward focus
If you as an organisation stick rigidly to the points of departure from the past and keep an inward focus, you will encounter serious problems. You cannot adjust quickly and proactively to the changing market. A common mistake made by companies with an inward focus is to only focus on reducing costs in the case of decreasing sales. In practice, that appears to only be a temporary solution that delays the decreasing sales. When you do not work on the new business model and the organisation surrounding this, the company will stagnate in the long term. The strength of the organisation will never be fully realised.
Rigid, hierarchically designed organisations are slowly vanishing and have no place in the digital future. Pillars, silos, power games at the top and layers that are only busy with themselves and hinder innovation: they increasingly belong to the past. You need a flat organisation. In this way, it can already be a solution to sever the fixed ties between the directors with their Board. Increasingly more organisations do this. The managing director is then surrounded by a few people from the organisation with whom he will manage the departments. This can only be achieved by giving more trust and responsibility to the lower and middle management and the project and programme managers.
Organisations must be designed in a non-hierarchical way. They function better when they are set up as a network. A network organisation consists of non-hierarchically linked units or teams that have their own relationship with the environment. The advantage of such an organisation is that they can quickly respond to changes in the environment and to questions from clients. The units work autonomously, they are facilitated rather than managed. Characteristics of network organisations are clear relationships between client and contractor, (self-managing) teams, a facilitating management and a higher level of knowledge of the staff. Less managers are required in network organisations. Staff members manage themselves, possibly as part of (self-managing) teams.
Networks require another method of management, without direct and formalised connections. Not ‘he is my boss’, but ‘I accept his or her leadership’ or ‘I accept that he or she takes responsibility for a specific part of the work’. It primarily concerns shared leadership. In fact, those involved within the network appoint their own leader. For a leader within the network it primarily concerns trying to find balance and harmony. Power, or striving for it, is not the issue.
Flexible and flat
The management of an organisation must change from a degrading, soulless machine to a flexible and flat, value-creating network. The creativity, effort and resolving power of people in and around the organisation must make him or her stronger. The various parties involved must be equal and treat each other as such. They must achieve the 5 objectives from the framework in a researching and collaborative manner.
Collaboration, supplementing competences, trust and shared ambition are essential characteristics of the new organisational form. The people within the network organisation work autonomously, they are facilitated rather than managed. The organisation and the various involved internal and external parties that work with each other must work as equals towards a joint objective. Forming a steering group is the solution for this.
The management (or the directors) of an organisation must form a steering group. The steering group has the following assignment:
- The steering group is focused on creating support for the policy and the strategy (realisation of the digital assets).
- The steering group advises the network organisation professionally about the course to follow, the policy and the strategy (based on 5 objectives);
- The steering group supports the network organisation with all the necessary aid and expertise during the implementation phase (the 9 steps);
- The steering group is the sparring partner for the network organisation (on the basis of the 12 analyses).
Please remember: the steering group requires professional advice from experts to function. In essence, the steering group must be managed as well. The majority of directors feel slightly desperate when they are not supported by experts. It is not desirable that directors, owners of companies or managers interfere in processes without having knowledge about the content. The steering group is central to providing direction and giving advice to the network organisation and to ensure the policy and strategy. To achieve the ultimate goal: the realisation of the digital assets.
Shopping streets that are steadily emptying, new business models such as Airbnb and Uber that were unthinkable a few years ago, people who first reach for a smartphone to communicate, social media that can make or break an organisation … these are turbulent times. Everyone in an organisation sees the digital opportunities, but struggles with terms such as big data, cloud, customer journeys, disruptive innovation, the internet of things and many other umbrella terms.
The increasing interaction between daily (offline) life and internet technology ensures major changes and new digital opportunities. These new opportunities can be created by the rapid developments in data analysis, mobile applications and social media, among other things.
Digital transformation takes place quicker in certain industries than others. The entertainment and music industry faced threats from digital competitors at an early stage. They have now undergone significant changes. Still, even more challenges and changes are imminent. Look at the advent of blockchain technology. At most organisations, people feel the need to combine new roles and processes, so that people can collaborate better, and the distribution of content and embarking on relationships with fans and clients proceed smoother.
Anticipation determines success
Stagnant water stinks: everybody knows this. Sustainable success is primarily determined by the level in which a company anticipates change in the digital world. Especially in an era full of disruptive technology, the innovation of services, products and the business model is essential for the organisation’s right to exist. Digital forces are developing rapidly and cause disruption to industries, while at the same time creating opportunities to meet the changing needs of fans, clients, employees and suppliers. The new simplicity is a fact.
People are starting to make more use of the digital developments and some are already adjusting their organisations and the way of doing business to it, as you have read. Technology changes the way in which fans and clients are treated and influences almost every internal and external process. It even leads to a new or adjusted business model. This must assist getting the most out of the new technological developments. This benefit can lead to revenue growth, more efficient and increasingly effective processes. But it can also lead to developing new services and products, both for existing or new markets and for fans and clients. And therefore, even to new company value. The digital assets.
For this publication, I have spoken with many people with whom I work with, how everybody provides their own substantiation to the framework. I have also looked at organisations who have consciously or perhaps unconsciously provided substantiation to the framework. It is clear: they are all busy achieving the new simplicity. The digital assets. The force, power and potential of their organisation.
- This post is a pre-read of the epilogue of my new book ‘Digital Assets’ the translation of the Dutch publication ‘Digitaal Vermogen’.
- Also read the publication ‘EDM and the Digital Domain’