How do organizations restructure themselves to take advantage of the digital workplace?

January 29, 2020 by

Modern digital workplaces and the individual tools within them have the potential to transform organizations and the way they operate. Real-time dashboards of critical data should enable laser-sharp decisions. Communication and collaboration tools should accelerate the decision-making process. Social networks should cut through the layers of hierarchy to make things more efficient and drive a culture of experimentation. Together, this should add up to both organizations and individual teams being faster and more agile, allowing them to respond to customer needs and market conditions more efficiently, to create innovative products and services more easily, and to be better positioned to deliver excellent service.

Organizational structure as a barrier to digital innovation

However, in most organizations, it doesn’t really work like this. A variety of barriers can impact an organization’s ability to exploit the digital workplace to its full potential. These include organizational culture (and the culture of different teams and functions within it), levels of digital literacy, and the way in which the organization is structured. The importance of this last point can not be stressed enough. The speed at which a large monolith of an organization with 300,000 people and eight layers of management can operate or a start-up with 20 employees can react are going to be very different. Hierarchy can impact decision-making but so can the maturity of processes, particularly relating to managing risk.

Being in a large organization has both advantages and disadvantages. Inertia and slowness to respond are generally not  ; this is something of which many larger organizations are acutely aware and want to do something about. They want to speed up processes, reduce the time taken to make decisions, drive efficiencies, stimulate innovation, get close to customers and make themselves more agile, both in a general sense and also in applying agile methodologies to the way they run projects.

Organizations continue to restructure and reorganize

Of course, one of the things organizations do to make themselves more agile and innovative is to introduce digital workplace tools that will enable change. But many realize this alone is not enough. Some also introduce digital literacy programmes and related culture change initiatives, while others undertake some kind of restructuring that will support the investment in the digital workplace tools.

Paul Miller, DWG’s CEO and Founder, highlighted this restructuring as his “super prediction” for 2020, arguing that: “Organizations continue to structure themselves – spurred on (in part) through digital workplace innovation”. Paul says that he is starting to see more examples of this happening, and that the impact can be profound.

[Paul Miller will discuss his 2020 digital workplace predictions in our forthcoming Open Knowledge Exchange on February, 13 – register here.]

In more detail, Paul writes: “The drivers behind restructuring reflect a view that we have been (and still are) pouring new technologies into old (often no longer fit-for-purpose) structures, so limiting the ability for those innovations to be fully utilized. We need new designs, power systems and structures in order to liberate work in a period of digital acceleration.”

When we talk about organizational restructuring and design, there are many different processes and policies that may also change, including performance management, recruitment and even the way in which an office is designed. So, there may be something akin to what we might refer to as “digital transformation” or “business reengineering” – or somewhere between the two.

The ways organizations restructure

Of course, organizations restructure all the time. Mergers and acquisitions, demergers, one-company initiatives, reorganizations around becoming more of a matrixed organization, reorganizations to drive a redundancy programme or simply shifts around at the top are all commonplace.

However, in general, we are seeing four main types of “restructuring” that can help support investment in the digital workplace.

1. Organizing around agile delivery

Agile methodologies for delivering projects have proved to have a huge influence on the way organizations structure themselves. This doesn’t just mean IT functions and support divisions like HR, but core business units and lines of business as well. Even large, traditional organizations in sectors such as Financial Services are making themselves agile, although the stage of maturity ranges from dipping their toes in the water to a fully-fledged organizational transformation. Often the driver for this is a better ability to design and deliver products and services in response to customer demand.

One (well-publicised) innovator is ING, which undertook a wholescale agile transformation, starting in 2015 in its Netherlands HQ, which involved reorganizing core parts of the business into 350 nine-person teams across 13 wider “tribes”. Each team has a certain level of autonomy with corresponding tribe leads and agile coaches, who perform a range of roles including senior decision-making, knowledge management, training and coaching. This radical change has not been without pain – everyone had to reapply for their jobs. In line with this, ING has invested in a digital workplace that facilitates the agile way of working and is also managed in an agile way. This sort of restructuring with  teams, which may also be cross-disciplinary, is something we are seeing more commonly within DWG members and clients.

2. Flatter structures

Some companies may try to reduce their hierarchy to have a flatter structure in order to accelerate decision-making and communication, and to support engagement. There are plenty of examples of innovation and experimentation in this area, from companies being part of the holocracy movement (or taking aspects of holocracy), to company structures that are flatter from day one.

A well-known example is Buurtzog, a Dutch company that provides nursing and homecare services, where local teams led by nurses have considerable levels of autonomy supported by a flat organizational structure. The high standards of care, reduced costs and happy staff are inspiring similar experiments in nursing care across the world. Here the digital workplace has played a role, with the CEO using social and collaboration tools to drive a close dialogue with staff.

3. Internal start-up

Another interesting pattern is the idea of the internal start-up, a ring-fenced organization or unit within a larger one that has some autonomy to operate in a different way, usually facilitated by the digital workplace. This idea is not new and has been a catalyst for innovation for a number of years. A recent example of this is DWG member Liberty Mutual Insurance, which created a separate company, Workgrid, to market its innovative digital workplace assistant originally developed for internal use.

Inevitably, a small, autonomous unit can be disruptive – both in a positive transformational sense, but also in a negative sense as a source of tension. For example, IBM set up a more agile-focused unit called IBM Studio, which was ring-fenced as an internal division. This did things differently and was partly intended to be a “cultural trojan horse” that would influence more agile working practices across IBM. However, this led to some issues, with more agile practices rubbing up against the typical inertia of a huge monolithic organization.

4. Investing in start-ups and forging strategic partnerships

Large companies can also work with smaller start-ups and other innovative companies through direct investment or running innovation initiatives that encourage close relationships and strategic partnerships. For example, Unilever Foundry is a programme through which Unilever partners with start-ups from around the world in different ways, from pilot schemes through to investment. Meanwhile, DWG has partnered with Avanade in an exciting partnership, which is proving to be a win–win, not only for the two organizations, but for the clients with whom we work as well.

Organizational structure matters

Organizational structure is one of those elements that matters when it comes to the effectiveness and impact of the digital workplace. Innovation and agility are what many organizations aspire to;  certainly have the tools in place to help that, but do we have the structures in place to enable teams to flourish? Many organizations have a long way to go, but others are already driving a more agile culture by taking radical action and reorganizing themselves in ways that help them to achieve these goals.

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Categorised in: Collaboration, Digital workplace, Strategy & governance

Steve Bynghall

Steve Bynghall is a freelance consultant, researcher and writer specializing in the digital workplace, intranets, knowledge management, collaboration and other digital themes. He is DWG’s Research and Knowledge Lead, a benchmark evaluator and research analyst for DWG.

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