Placement in the organisation
Article 1 of 5 in the series "The management's 5 steps to digital transformation".
We asked a number of online managers from different companies what they thought their biggest barriers were to creating progress and results in the online channel. Here is their response:
The channel is forgotten or not sufficiently prioritised in different projects and processes in other parts of the organisation
Unclear authority and multiple interfaces with greater influence on decisions than the channel managers
Online channel initiatives don't always support the business strategy.
Do you recognise any of these situations in your company? Why are so many online managers experiencing the same challenges?
A big reason is that in more than 80% of companies, the responsibility for the digital/online side of the business is based in Marketing or Communication.
If you work in Marketing or Communication, I want to quickly emphasize that this doesn't mean that Marketing/Communication is not capable of handling the digital side of the business. On the contrary, marketing and communication people typically work with the customer focus and the holistic business vision, which is vital for the digital channel.
BUT, there are some limiting beliefs about Marketing...
Belief 1: Marketing is a service function
If an organisation believes that Marketing exists to help other areas succeed in their jobs and targets, and the digital channel is part of Marketing's toolbox, then it's no wonder that the channel doesn't have any specific target or direction. Marketing is only expected to join in when internal 'customers' need help.
Then there's the challenge of unclear authority and too many opinions about which jobs are priorities
There tend to be just as many opinions on which initiatives should be prioritised as there are functional areas with their own goals. This creates another challenge: too many jobs, too few resources.
Belief No. 2: Marketing is a cost centre
The classic belief about Marketing is that it's a cost centre. Sales is considered a profit centre, customer services is seen as the contact point with customers, and Marketing is seen as a cost with only indirect influence on the company's revenue.
This is a belief that has a critical effect on both resource and budget allocation, and on the challenge of lack of time versus the number of jobs.
Belief No. 3: Digital is Marketing's responsibility
So where do you place the digital responsibility to digitally transform your business?
Digital transformation is still a new concept. And the definition and scope of 'digital' is constantly changing and growing. That's why there is still no best practice for the optimal organisation when it comes to digital transformation. Companies across the world are already logging their first digitalisation experiences - both good and bad. Companies tend to try out one of the following 3 models:
Model 1: Chief Digital Officer
We see an increasing number of companies employing a chief digital officer or chief transformation officer (CDO/CTO) alongside other functions that report to the CEO and whose job it is to manage the company's digitalisation. The benefits of this solution are:
- You focus on the digital task and results right up to senior management level
- The function isn't just linked to one silo/functional area in the organisation
- This allows you to create a digital transformation for the entire business
But, a frequent challenge for this solution is:
- The responsible CDO/CTO cannot transform the entire organisation on their own and often finds it challenging to get the organisation to follow the necessary change processes.
- Equally, the CDO/CTO often lacks the mandate to achieve the desired results.
Model 2: The Danske Bank Model
Danske Bank is an example of managing digitalisation and innovation "from the sidelines of the organisation". Companies that use this model set up a special task force whose job is to innovate by using digital opportunities. The task force works alongside the original organisation, structure, goals and processes.
The benefits of this model are:
- The new digitalisation unit operates with a type of exception status and possesses the necessary parameters and authority to innovate and think out of the box.
- Digitalisation and innovation are not hindered by the limited targets, decision-making processes, chains of command and budgeting from the original organisation.
However, the challenge is:
- This little task force has been set up to innovate and develop, not to handle operations. This means that you are still dependent on the old organisation when it comes to adopting and running the new solutions and processes.
- But integrating the new, innovative digital solutions and processes in the old organisation can be a struggle, because the old organisation still has to operate under existing targets, decision-making processes, chains of command etc.
Model 3: Digital is integrated in all departments
IBM has chosen a third model that tries to integrate digital skills and digital focus in all departments of the existing organisation.
The benefits here are:
- The digital responsibility is not limited to one department, but rather is run from all departments of the organisation
- The focus is on transforming the entire company - from within Both responsibility and authority are given to each department
The challenge can be:
- Ensuring a consistent direction across the organisation
- That the responsibility is drowned out or downgraded in the amount of 'usual' jobs, whose targets and incentive structures are not designed to focus on the transformation required.
Step 1 to success with digital transformation
So if you want to succeed with your digital transformation, my advice would be to begin by looking at the digital placement in the company:
- How are you defining digital responsibility?
- Which parts of the business do you want to digitally transform?
- Where can you put "digital" in the organisation to achieve the desired transformation as best as possible?
There are undoubtedly more models for placing the digital responsibility than the ones I have listed here.
Regardless of which model you try, it's essential that you learn about the pros and cons of each. Equally, when placing digital responsibility in the organisation, you define the scope the digital transformation should have in your company.
Would you like some help with your digital initiatives?
Then send me an e-mail for a no-obligation chat about the opportunities in your organisation.