Organisation: Creating structural agility to enable speed
Operating models of the past relied on predictable and durable organisational structures. By contrast, success in the digital era hinges on business agility – the ability to respond rapidly to changing market conditions. Legacy structures and outdated governance policies slow incumbents down and impede them from advancing at a digital disrupter’s pace.
It’s all about speed: speed to launch a product to market, speed to recruit talent, speed to allocate funds and speed to obtain necessary legal approvals.
A digital operating model must be supported by a non-hierarchical, risk-tolerant, customer-obsessed, and collaborative culture.
Culture: The glue that brings everything together
A digital operating model must be supported by a non-hierarchical, risk-tolerant, customer-obsessed, and collaborative culture. Embedding “Design Thinking” in an organisation’s cultural DNA is key to success for many digital disrupters. Design Thinking is rooted in empathy for stakeholders to understand their functional as well as emotional demands and needs, coupled with rapid prototyping and a risk-tolerant culture.
Capabilities: Establishing a digital foundation for success. Most challenges to implement a successful digital transformation are related to following three foundational digital capabilities.
- Digital talent
The nature of work in the digital era is undergoing a fundamental change: the way work is organised, led and managed; the talent and skills required to perform work; and the workplace expectations from the incoming workforce.
Few first-mover incumbents are adapting their operating models to accommodate a more liquid workforce, also known as “talent on demand”. More flexible approaches can be more innovative. Lego, for example, uses crowdsourcing to design new products and to test demand. Users can submit a design that others can vote for with the winning designs moving on to production  .
- Ecosystem partnerships
There are two primary ways to form ecosystem partnerships – traditional business development and platform-based capabilities for sharing of APIs. API partnerships are fast gaining popularity because they are more scalable and are typically faster and less complex to implement. Developing an API-based architecture to facilitate ease of information-sharing between core business and external third parties can lead to a truly one-of-a-kind digital capability that can support future strategies and new business models.
- Intelligent automation
Consider a digital disrupter such as Amazon, which disrupted the retail supply chain by successfully employing intelligent automation  . Not only does it now use drones and robots in its warehouses, it also uses intelligent automation at most of its point-of-sale customer promotions that are completely automated by machine-learning algorithms.
Contrary to popular belief, there is more to intelligent automation than cost optimisation and efficiency improvement. The ultimate advantage is its ability to interweave various internal systems and diverse strands of internal and external data together and then use AI to empower human employees to make better and smarter business decisions while enhancing customer experience.
Without the ability to match the fast pace of digital disrupters, traditional companies will consistently lag in their ability to innovate and drive growth.
- Re-shape organisation structures and governance to allow for speed
Without the ability to match the fast pace of digital disrupters, traditional companies will consistently lag in their ability to innovate and drive growth. Choosing an appropriate organisation structure, along with cross-functional and cross-business digital governance capabilities that incorporate digital-specific KPIs, provides the foundation for either select pockets within the organisation to serve as digital innovation hubs, or a centralised “Digital Hub” to enable a holistic change across an enterprise’s organisation and culture.
- Invest in fundamental digital capabilities regardless of your digital strategy
With the pace at which companies are pursuing digital strategies, specialised digital capabilities provide greater certainty that strategic execution will be successful. For example, rapid prototyping coupled with a deeper understanding of customer needs allow project teams to develop and rollout products and services quickly at lower operating costs.
- Transform corporate culture to accommodate open ecosystems, innovation, risk-taking, openness and customer obsession
When aligning digital strategies with digital operating models, cultural change is needed to realise truly meaningful and impactful results. Start-ups rarely face this issue as their company culture naturally evolves with their business development. Traditional companies, on the other hand, are rooted in “the way we’ve always done things”. Transforming traditional corporate culture will require executives to lead by example by even allowing some initiatives to fail quickly to allow companies to propel forward. In this fashion, traditional firms can successfully incorporate start-up-like practices and philosophy into their corporate DNA.