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Digital Organization of the Future May 22, 2014
Didier Bonnet Vice President, Capgemini Consulting
Deborah Soule Research Scientist, CDB
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From 2011 – 2013, we have focused our joint research on understanding digital transformation
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Beyond transformation, we aim to understand the digital organization of the future
Dig
ital c
apab
ility
Leadership capability
DIGITAL MASTERS FASHIONISTAS
BEGINNERS CONSERVATIVES
How could pervasive digital capabilities change how we organize? What “digital
dispositions” might companies need to develop to sustain success in a digital world?
? ?
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Our belief is that digital will change how we organize
Historical evidence of past technology shifts leading to radical changes in work practices, firm strategy and organization
Academic evidence (theory and empirical findings) that ubiquitous, powerful digital technology will change possibilities for coordination and cooperation by changing information constraints
Contemporary evidence of digital firms and digitally-enabled organizing that contrast with more traditional approaches
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Our research approach
Develop conceptual framework from cross-disciplinary literature
• Identify organizational design characteristics • Select focal set of design dimensions
Conduct interviews to test/extend framework
Analysis of interview and secondary data • Compare and contrast organizational design choices • Identify design choice “clusters” • Explore relationships between design and performance
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Organization: design for productive interaction Organizational design characteristics
• Make or buy • Wide or narrow span of authority • Centralization or decentralization of decision rights • Differentiation or integration of skills
Organizing possibilities have been limited, often by information constraints
Fundamental Proposition: Digital capabilities can reduce or eliminate many traditional constraints, making different organizational design choices possible
… reflect efforts to manage complexity and interdependence
… embody tradeoffs around traditional design tensions
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Digitization relaxes organizing constraints by growing capability in four areas…
Bigger, Better, Data •Mobile
•Social
•Location
•Sensor
•IOT
Connected Everything • People to
People • Machine to
People • People to
Machine • Machine to
Machine
Meaningful data insights • Descriptive and
predictive Analytics
• Machine Learning & AI
Data-driven automation • Process and
Decision automation
• Advanced physical automation
• Artificial Intelligence
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Focal Organizational Design Choices …
• No touch High touch (customer interaction) • Standardization Personalization (product customization) • Consumption Co-creation (customer engagement) • Individual-brand relationship Community membership (customer retention)
Customer experience
• Routinization Adaptability (operations capacity) • Hierarchy Network (communication structure) • Centralized direction Decentralized discretion (worker autonomy) • Internal/Secretive Open/transparent (innovation and learning)
Internal operations
• Make Buy (specialization) • Owned Loaned assets (production resources) • Contract Collaboration (partner/supplier engagement) • Supplier/partner integration Platform orchestration (value contribution)
Supplier/partner
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Case: UPS Customer Experience Lo-touch Personalization ↑ Co-creation/self-service ↑ Individual-level retention ↑
Driver / Operations Routinization ↑ Hierarchical communication Decision centralization ↑ Driver discretion ↓ Internal innovation
Digital Capabilities • Data and analytics:
lat/long. mapping of 200M addresses
• Just-in-time delivery info via EDI/UPS MyChoice, handheld connected scanning devices
• Prescriptive delivery analytics/vehicle routing
• Mobile alerts and notifications
• RFID on pallets, parcels
• RFID on vehicles and vehicle telematics (sensors and analytics)
Suppliers/Partners Owned assets Contract Integration
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Case: Airbnb Customer Experience Lo-touch Standardization Consumption Community network effects
Internal Operations Routinization
Digital Capabilities • Website facilitates
visibility and coordination between travelers and hosts
• Mobile offers real-time
validation, alerts and updates
• Use of social
technologies to establish trust and legitimacy of travelers and hosts
Suppliers/Partners Leverage partner’s assets Relationships become
assets Orchestration
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Case: P&G Customer Experience Lo-touch Personalization ↑ Consumer input ↑ Individual-brand
relationship
Operations Decision discretion ↑ Open innovation ↑ Network communication
Digital Capabilities • Bayesian analysis of
social commentary to generate “Consumer Pulse” by brand
• Virtual store display to
communicate presentation standards
• Connected, automated (GDSN) ordering applications
• Data modelling and virtual simulation
• Connectedness to innovation contest sites
Suppliers/Partners Owned assets Contract Integration
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Identify organizational design profiles Customer interaction No-touch High-touch
Service customization Standardized Personalized
Customer engagement Consumption Co-creation
Customer retention Individual
switching costs Community
network effects
Communication Network Hierarchy
Worker autonomy Centralized/
Direction Decentralized /
Discretion
Operational capacity Routinization Adaptability
Specialization Make Buy
Innovation and learning Internal Open
Resources Owned Loaned
Partner / Supplier engagement Contract Collaboration
Value contribution Integrator Orchestrator
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Moving forward… Digital capabilities will allow firms to make new choices about how to produce value
• Many viable strategic and organizational design choices • Emergence of novel combinations of design choices • Evidence of digital imperatives
Effective digitally-enabled organizational design choices will be reflected in effective performance
Pre-digital Organizational
Choices
Digital Capabilities
New Organizational
Choices
Performance Outcome
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Thank you Contact Information:
• Didier Bonnet • Vice President at Capgemini Consulting • [email protected]
• Deborah Soule • Research Scientist at CDB • [email protected]