Three digital dilemmas facing leaders in large established organizations

working in an office using desktops

Written by Professor Alan Brown, Strategy Advisor, Entrepreneur, and Professor in Digital Economy

There is no doubt that the adoption of digital technology has helped all organizations maintain their current operations in times of crisis. Digitizing previous ways of working was seen as necessary to survive the shockwaves of the Covid-19 pandemic. Yet, it is becoming clear that this is insufficient to deal with challenges that lay ahead. A digital transformation is essential. This requires leaders in digitally transformed organizations to drive change and adapt to evolving conditions by maintaining closer ties between the business strategy and the delivery of new capabilities into production. Significant redesign of organizational structures and processes already underway must be based on the availability of a clear end-to-end view of the organization’s activities to support effective decision making.

Consequently, meaningful transformation at scale involves coordinating a wide range of activities at all levels of the organization. This is complex enough for leaders in these organization. However, what makes this task even more difficult is that the principles and practice of leadership for a digital transformation are being questioned. Where are the key areas of focus for leaders wanting to drive meaningful, sustained organizational change?

Working with Large Established Organizations (LEOs) over the past few years has highlighted three high impact digital transformation dilemmas for leaders, each of which demands significant attention as they survive and thrive in the digital era.

The first dilemma that LEOs face is related to a need to shift from digitizing current ways of working to widescale adoption of new approaches optimized for digital products and services.

How do LEOs incrementally improve current activities while disruptively driving radical change for the future?

As the ‘digital maturity’ of organizations increases, we are seeing the emergence of a much more complex and subtle change dynamic at play. Current systematic change management programs are being disrupted through greater agility and flexibility based on accelerated feedback from all stakeholders, and involving improved collaboration across all stakeholders enabled by digital channels of communication. Leaders must take care in establishing the right balance between incremental improvement and tearing up the rule book.

The second dilemma is caused by the fact that much existing research downplays the importance of organizational and cultural inhibitors to change. In particular, in the context of LEOs, embedded structures and deep-rooted practices hinder change and limit the impact that disruptive ideas can have beyond their originators.

As LEOs digitize, how do they manage the scope of the transformation they must undergo?

The experience of leaders in LEOs highlights the importance of addressing the broader cross-domain themes impeding their digital transformation, and ensuring alignment within and outside the current organization. Many organizations have been deeply affected by the speed at which digital disruption is changing organizational boundaries. This is emphasizing the challenge for leaders to change the direction not only their own organization, but also those of the business ecosystems in which they participate.

Business ecosystems are emergent alliances of organizations with no pre-determined, centralized or hierarchical governance models. They work together to create and capture value and share it with their customers. These collaborative systems play an important role in LEO success, but their impact is frequently undervalued by many leaders in refining their digital strategies. Leaders must find ways to influence these networks to ensure alignment.

The third dilemma is related to the increased need for LEOs to understand the fundamental paradox between rapid deployment of emerging digital technologies to improve working life and the increased volatility, uncertainty, complexity, and ambiguity (VUCA) that accompanies these developments.

How is the practice of leadership shifting to offer stability and resilience to the organization while embracing change?

Leaders must create healthy organizations capable of being able to thrive and adapt during the difficult times ahead. Organizations undergoing digital change are recognizing that technology is only one element in the complex set of issues that must be addressed to succeed in a digital world. In recently formed organizations, this awareness is pushing many towards new, wholly digital approaches, involving lightweight processes, minimal investment in capital assets and a flexible workforce.

However, leaders in LEOs face an additional set of challenges. Drive too slowly and the organization can be left behind. Drive too fast and you risk over stressing the people and processes you rely on. More responsible approaches to ensure organizational health reduce individual stress and highlight where trust relationships are being eroded and manipulated within and across firms. Recent experience shows that one approach being adopted by leaders is a new emphasis on sustainability — of the environment, of people and of business approaches.

In summary, it is worth repeating that all large established organizations face significant challenges in today’s pandemic effected digital world. Driving change to deliver digital transformation is complex and often unpredictable. Recent experiences indicate that raising the focus on the three dilemmas highlighted here will help your organization to navigate the difficult waters ahead.

Originally posted here

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