People + Strategy Journal

Fall 2020

Insight into Action

How then do you navigate organizational design in a digital age? Embrace cycles of learning, prioritize value creation, leverage teams, disrupt status quo and design based on performance.

By Marc Sokol
boat sailing

Navigating the Future of Organizational Design in a Digital Age

While it is common to contrast present with anticipated future when focusing on change, this issue of People + Strategy offers a different image of how we move toward organization design for a digital age. Think of yourself as having to navigate toward the future; the path is not a straight line. You will, in fact, need to tack back and forth, embracing the seas and winds that surround you. You learn as you go, making adjustments and keeping your crew aligned as you discover the way forward. Here are some implications I see from contributors to this issue.

There are many paths forward. As Bob Johansen notes, the future will combine digitally amplified humans and human-centered machines. The easy part is recognizing where automated process and technology dramatically adds value and clearly should replace human action. Also easy is where digital capability enhances human insight, but human-centered performance must remain at the forefront. Robo-advisors at the low end of wealth management and personal advisors at the high end is just one example. Harder to determine are situations where it depends, requiring us to discover how we offer unique value. HR can partner with technology and finance groups to facilitate such evidence-based discovery, mitigating emotional resistance away from or overzealous movement toward digitally-based designs.

Organizational transformation for a digital age requires a multi-dimensional playbook. Rebecca Macieira-Kaufmann offers a compelling view that this requires a team, whose members bring each other along, and where leaders understand how to engage those at different ends of the change spectrum. With help from HR, leaders then manage tensions that arise when we jointly rethink customer experience and business operations as integrated digital processes, and as we balance customer, employee and shareholder expectations. Ingrid Estrada shares the story of how Keysight Technologies achieves world leadership via innovation in digital design with a clear leadership model that guides action at all organization levels, and by engaging employees and customers as partners in process evolution.

HR can prioritize a climate to engage and learn as central for the journey. Christopher Worley reviews how agile practices enable learning and change. The Coca-Cola Company similarly provides real life examples of being a learning organization at scale. Quoting one of their leaders, the core competency is being “okay with not knowing the ultimate answer, being clear on principles and strategy to get started, then let learning and agility drive our answers.”

Purpose powers performance. Joe Whittinghill and CEO Satya Nadella of Microsoft each share a perspective for organizations of the future. They believe the soul of organizational design in a digital age lies not in technology alone, but also in each employee’s experience of purpose and meaning. Yes, digital capabilities will allow companies to emerge from the pandemic faster and stronger, but the real winners will equip their people to be agents of ongoing design and foster a culture of collaboration. Start with why and let the ensuing organizational design enable values into action. As leaders draw attention to these actions and what they represent, we see culture become more coherent and stronger across the enterprise.

Organizational design in a digital age needs to balance compliance, influence and value creation. The path to rethinking digital design starts with changing our mental maps. Metaphors like “navigating the journey” are helpful. Niels Pflaeging, Silke Hermann and Brad Winn also suggest we change our visual images, getting beyond those rooted in the traditional organization chart. That still has value for its capacity to suggest control, but other visuals are just as important, such as social network models of how people are really connected and influence via relationships. They advise us to also visualize a customer value chain where external reputation drives design. Digital design, extending from this perspective, embodies all three mindsets, designing for control and compliance, for influence and for value creation.

Manage the level of tension to drive change forward without derailing it. Executive Roundtable participants reflect on their lessons of leading change. While there are many, one to remember is that senior executives have to create enough discomfort to shake people out of old patterns of thinking, but not so much that they become paralyzed. It’s like a chef turning up the temperature to get a good simmer going while things cook while not letting it boil over or cool down prematurely.

How then do you navigate toward organizational design in a digital age? Five elements seem essential:
  1. Embrace PDCA (plan-do-check-adjust) cycles of continuous learning.
  2. Prioritize value creation, looking to informal networks and hierarchical controls to be in sync. 
  3. Leverage teams for innovation and an enterprise mindset to drive overall system performance.
  4. Be willing to disrupt status quo, challenge sacred cows and increase others’ anxiety up to point where it isn’t paralyzing.
  5. Design based on the core principle to enable, not just control, performance.
All have existed well before the current century. Digital capabilities however accelerate all five, allow increased insight and transparency, and permit us to move beyond geographical and brick-and-mortar constraints of the past. As you navigate your company’s future, focus on digital execution of these practices, and you will surely find yourself sailing in smoother waters.  

Marc Sokol, Ph.D., is Editor-at-Large for People + Strategy and Founder and Principal Consultant at Sage Consulting Resources, LLC.