Operating Models will Change

The stars are aligning in a way that promises to drive change to long standing operating models. Why? The Venture community speaks of forcing functions that drive adoption of new innovation. Let’s analyze the forcing functions that likely drive change to industrial age processes and organizational structures:

  • Consumerization
  • The far reaching implications of Mobile, Social, Cloud, and Big Data convergence
  • The blurring boundaries  between personal and business computing, industries, and enterprise functions
  • The emergence of the engagement era and the associated adoption of systems of engagement
  • Hitting the efficiency wall

While these forcing functions each play a role in driving future change to organization structure and process, it’s the convergence of business and technology factors that drive the compelling need for organizational evolution. Future Competitive advantage will have very little to do with serial processes that were designed for an economy focused on making things. Instead, competitive advantage will go to those that effectively embrace these Digital Enterprise characteristics:

  • Open, agile and collaborative
  • Powered by knowledge, creativity and ideas
  • Fast, iterative and experimental
  • Ability to listen, adapt, and respond
  • Engagement and insight driven

Transforming the enterprise to exhibit these characteristics is not easy. So much of current day structures work against us: command and control models are the norm – but open, agile and collaborative require us to move decision making closer to the point of interaction. Traditional development methodologies are slow and costly – but fast, iterative and experimental require a more agile approach. An economy that was once driven by making things is increasingly powered by knowledge, creativity and ideas – and enterprise processes are not set up for this. For these reasons, it is hard to imagine the status quo as an effective strategy. Additionally, this is not strictly a technology fix. Although the convergence of innovations will usher in the next generation of efficiency, it’s the ability to drive effectiveness that makes the convergence a game changer – and the future is more about effectiveness.

It is this combination of factors that will drive the change to long standing operating models. We are already seeing the foundation of change taking shape:

The CMO-CIO alignment imperative – all these factors are driving a business imperative for CMOs and CIOs to come together. Leading marketers are extending their role beyond marketing (blurring boundaries) and have a significantly better relationship with IT. This is a Very Topical Issue and gives us a glimpse into possible structural changes ahead. A recent IBM Marketing Survey sheds some light on the changing role of the CMO and the CMO-CIO relationship dynamics.

New executive roles – the CMO-CIO alignment issue only talks to one piece of the challenge. Digital is permeating the entire business across all stakeholders (customers, employees, partners, other). The breadth of C-Level involvement will ultimately reach beyond the CIO and CMO. The talk of new executive roles complicates the discussion, but speaks to pending functional changes – witness the recent Gartner prediction that by 2015, about a quarter of all companies will have created a new seat at the senior executive table: Chief Digital Officer.

Business technology – Gartner says ninety percent of technology spending will be outside of the IT budget by the end of the decade, In contrast, only 20 percent of technology spend was outside of IT as recently as 2000. This shift will drive change to the current structure of enterprise IT. This Sea Change in IT is yet another sign that the time has come for real change.

The status quo won’t cut it. The transformation term is thrown around a lot these days. But I would submit that we have never experienced the type of transformation ahead.

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