The Mountains are High, The Emperor So Far Away

August 19th

The Emerging Dynamics of the Integrated Digital Enterprise

Triumvirate

A recent report on Being Digital (versus merely Looking Digital) from Accenture’s Institute for High Performance, presents a vision of the future of decision-making and organization that will challenge many traditional expectations about leadership.

With emerging technologies, we are poised on the edge of a second digital revolution. Market leaders have moved from experimenting with one-off digital applications to creating integrated digital enterprises. But while the new style of digital enterprise is going to be vastly more efficient and more effective in identifying and serving customers, the dynamics of the new enterprise are going to change the agenda for future leaders, at least the successful ones.

We are all being spoiled by the experience of being customers of Apple and Amazon. We expect service to be omnichannel, seamless and swift. Ubiquitous data streams are becoming routine and advanced analytics and modeling combined with rich data representations, the authors from Accenture anticipate, to create a new kind of enterprise.

One of the most striking differences to be seen in the emerging Integrated Digital Enterprise will be the way that the new technology can empower individuals by augmenting their natural human capacities.   The augmented cognitive, physical and collaborative worker of the future will be supported by mobile intelligence, 3D printing and robotics among other new capabilities. The future worker will operate in organizations where such crucial questions as “who” makes decisions, “where” decisions will be made and “how” work will be structured and located are going to change.

Critically, there will be an opportunity to move decisions to the edge of the enterprise, closer to the action.  The authors argue “Information and decision-making authority formerly the exclusive domain of a centralized authority will increasingly be pushed out toward the boundaries of the firm.”

In some sectors such defense, military planners who are now concerned with fighting in anti-insurgency conflicts, have been talking about decision-making at the edge for some time. And these ideas are important. In an information rich workplace there will be a growing need to grant greater autonomy to local decision-makers. They will demand it.

Of course, such devolution of authority flies in the face of centuries of tradition. Strategic decision-making from the time of the Ancient Greeks has made strategy the work of generals. Strategy has determined the deployment of resources against long-term competitive threats in war, in government and in business. A central concern of future leaders in a world where edge centric decision-making is possible will be how to reconcile the traditional top down and the new bottom up.

Even in the best of worlds where the leaders from the provinces cooperate in aligning their actions with the Emperor’s central authority, their independent, empowered decision making is not always going reach the conclusions that are the same as the ones that would be reached in the capital. The top down vision of the central leadership may be prescient. Yet the world often looks different closer to the action and pushback is going to become a common occurrence. There are going to be a growing number of instances reminiscent of the ancient Chinese proverb. When the Emperor is far away, you can often do what you think is best.

If adopting new technology were all that mattered, there might be little news to report here.   But in fact, in organizations that have moved decision-making to the edge, the local leaders are going to demand a role in shaping policy rather than merely implementing it; and where these democratic impulses are suppressed, the dynamics of the future enterprise will create problems.

No one should miss the fundament challenge that this shift is going to pose to traditional governance structures. Once the decisions are moved to the edge, there will be a need to recognize the democratic impulse and to respect it.

One of the principle challenges that this view of the future is going to represent comes from the fact that “Boards still don’t see the value of digital” writes Walter Frick of the Harvard Business Review Press. Boards will need to see the significance of the tipping point and the emerging integrated digital enterprise. Embracing the implications of the new dynamics of the democratic enterprise will challenge future leaders ar to think top down and bottom up simultaneously.

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Notes:

  • From Looking Digital to Being Digital: The Impact of Technology on the Future of Work Robert J. Thomas, Alex Kass and Ladan Davarzani, Accenture Institute for High Performance, April 2014
  • Strategic Principles for Competing in the Digital Age, Martin Hirt and Paul Willmott McKinsey Quarterly May 2014.
  • The Seven Habits Of Highly Effective Digital Enterprises. Tunde Olanrewaju, Kate Smaje, and Paul Willmott, McKinsey Quarterly, May 2014
  • The Digital Tipping Point, Results of the 2014 McKinsey Global Survey. McKinsey Quarterly.
  • Digital Transformation, Creating New Business Models Where Digital Meets Physical, IBM Institute for Business Value, Saul J. Berman and Ragna Bell, 2014
  • “Boards Still Don’t See the Value of Digital”, Walter Frick. HBR Blog Network citing the results of the McKinsey Global Survey, July 3, 2014.
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