The phenomenon of digital shall touch each and every enterprise in some way or the other. It shall disrupt the existing supply chains and enterprises will need to reinvent their business models to survive amid the disruption. They will have to build a digital enterprise, which provides relevant capabilities to compete and survive (& thrive) in the new order.
A lot is being talked about digital and its impact on business, yet a little is done on building a discourse within the enterprises around what to do and how to do. At Leading Digitally, our endeavor is to spark a meaningful debate at the board and the c-suite levels around digital and its implications for business growth. Our tagline disrupt, innovate & grow highlights the deeper implications and bigger relevance of digital for the enterprises.
In this article, I present a holistic perspective on building a digital enterprise by articulating 7 fundamental principles. These principles govern the becoming of a digital enterprise and have been identified through rigorous research over the past 4 years in this domain. The principles may have been discussed earlier as individual points, but here they are weaved as part of one discourse.
These seven principles are:
1. The Principle of Holism
Digital enterprise is not just about technology. Rather it is a more holistic concept. A digital enterprise is basically an enterprise and hence must be defined upon the major dimensions of an enterprise- market, leadership, strategy, capability, boundary, culture and (also) the technology. It’s a response to the new developments in technology, shifts in customers’ behaviour and new actions by the competition. Digital enterprise building needs a holistic internal readiness at the leadership, strategy, structure, culture and the technology levels.
(Also read 7 Defining Aspects of a Digital Enterprise)
2. The Principle of Multiple Phenomenon
The principle of holism suggests that a digital enterprise is embedded in multiple aspects of the context. On one hand is the customer domain, where developments in digital technologies have empowered them and defined new ways to serve them. On the other hand is the supply chain domain where digitalization is leading to better efficiencies and effectiveness. Then there are domains of operations and industrial internet (IOT) and internal management. A digital enterprise is not just about digital marketing as is popularly believed to be but its relevance is multi-faceted.
3. The Principle of Systemic Emergence
Building a digital enterprise is journey. The principle of holism suggests that it’s not just a sum of many parts but much more than that. It may start with flirting at the periphery through some small tactical digital initiatives, but with time it requires development of many other related aspects. It emerges over time through a ‘systemic’ evolution based upon multiple actions by the enterprise and others in the market. The theory of systemic emergence suggests that the outcome cannot be predicted, hence the journey must be driven by a strong leadership vision and clear goals definition.
4. The Principle of Capability Centrality
A digital enterprise is about building a set of core capabilities to compete. These core capabilities may be about driving innovation, building customer centrality, developing supply chain leadership or building cost leadership. Enterprises must clearly define the set of core capabilities it want to create using digital and deliberate about its strategic leverage.
(Also read Building Strategic Capabilities to Compete)
5. The Principle of Collective Leadership
A true digital enterprise cannot be built alone by the CIO or the CTO (though they have a big role to play). Research has shown that the CEO and other CXOs also have a big role to play. It’s a collective and a mutual interplay between technology and business context, which cannot be meaningfully handled without the involvement of the business leadership. The collective leadership in an emergent phenomenon may give rise to role fluidity (vagueness in role definition), which may be a source of power struggle. It is important that the CEO remains aware of this phenomenon and intervene to avoid the dysfunctional aspects of the struggle.
6. The Principle of New Leadership
Building and functioning of a digital enterprise requires a different set of competence among the organizational leaders. The leaders needs to learn to live with ambiguity, remain continuously inquisitive, deal with competing agendas and embrace softer bases of power. These new tenets of leadership are radically different from the traditional ones based upon relative stability, tight role definitions and hard power vested in authority.
(Also read 4 New Tenets of Leadership in the Digital Era)
7. The Principle of Organizational Inquisitiveness
Inquisitiveness is required not only at the leaders’ level but across the larger enterprise. The questions like what drives inquisitiveness (purpose), how inquisitiveness can be satisfied (process), what new skills are required (people) and what tools need to be built (technology)? A data driven culture or action orientation around information is like the nervous system of a digital enterprise.
(Also read Defining Organizational inQuisitiveness (OQ)!)
Leadership in enterprises of all kinds must initiate the digital debate within their organizations. They must embark upon a journey to become digital.
They shall soon realize that it is no more a choice but a critical need.
<image courtesy of freedigitalphotos.net>