To successfully transform into a Digital Enterprise, an organization must exhibit its readiness across Four Dimensions. Organizations will only be ready to transform themselves into true Digital Enterprises when they possess:
- Operational Sustainability – Your organization has a stable operational base
- Organizational Agility – Your organization can quickly adapt to change
- Strategic Agility – Your organization can anticipate change
- A “Disruptive” Culture – Your organization is receptive to implementing change
In this article, we examine how to assess the first Dimension of Digital Enterprise Readiness, Sustainable Operational Performance.
Sustainable Operational Performance
The first, foundational dimension of readiness is a stable and sustainable business process and technology operations model. If an organization’s business processes and technology operations are not running in an efficient and sustainable manner, there is a limited likelihood that they will successfully endure a transformational effort. You must first make your organization fit before you can undertake a fundamentally stressing and taxing effort to transform into a Digital Enterprise.
It is also important, however, to note that being “operationally sustainable” does not necessarily equate to the highest levels of operational maturity (using whatever scale of measurement) or completely robust process definitions and operations. The objective is to have a business and technology operation that is efficient and scalable while not being overly rigid or constraining to the organization.
Operational Sustainability is necessary to provide foundational organizational discipline. Business and technology operating models are intended to provide the “instrumental value” of achieving specific organizational goals and purposes through conformance to rules. Too much adherence to business and operating models could result in displacement of goals by making them an end in themselves. When this happens, the organization sees discipline not as a measure serving a specific purpose, but as an immediate “terminal value.” We designed the Attributes of the Operational Sustainability Dimension to measure whether operating models provide “just enough” discipline to continue to deliver the instrumental value intended.
The Operational Sustainability dimension does not assess typical measures of maturity found in legacy assessment models. Rather, the seven attributes of this dimension, described below, focus on organizational capabilities. Measuring the capabilities represented by the seven attributes has a profound impact on an organization’s ability to perform with a sound base of foundational processes. These capabilities provide the foundation that enable the organization to then achieve organizational and strategic agility.
Strategic and Functional Clarity
This Attribute examines whether the individuals and the team understand the overall mission of the organization, understand how the organization creates value, and can effectively communicate that information across the organization. It further examines whether the team understands and can communicate its role in fulfilling that mission and delivering that value. This Attribute also goes beyond the mere understanding of the mission and value proposition. To fully understand and deliver the mission and value, individuals and the team need to develop, maintain and monitor relationships across the organization.
Finally, Strategic and Functional Clarity measures whether the team can translate this deep understanding in mission and value into rapid adjustments in operating processes and models to account for changes in internal relationships, customer preferences and overall organizational strategy. In other words, at the highest end of Fully Exhibiting this Attribute, the organization so understands and is tuned into mission and value, that it can continually align processes, operating models, and even day-to-day decisions.
An organization that exhibits Strategic and Functional Clarity can constructively communicate and execute the mission. It uses this understanding to extract value for both the customer and staff. Further, a deep understanding of Strategic and Functional Clarity enables the organization to go beyond the mere implementation of operating and process models, but enables it to execute value-added activities to comply with the spirit of the mission. Not having Strategic and Functional Clarity often leads to “malicious compliance,” which is intentionally inflicting harm by strictly following operational and business processes, knowing that compliance will not have the intended result. This behavior usually implies following of process in such a way that ignores its intent but follows its letter.
Without Strategic and Functional Clarity, the organization lacks the ability to deliver basic functions that directly support the mission. Activity takes place with no value; processes are measured with Key Performance Indicators (KPIs) that add no value to mission; and productivity is meaningless.
The Inter-Functional Integration attribute examines whether integration points between the teams are understood. It examines whether the team understands which other teams or roles are dependent on the team’s operating processes and models to properly provide services. In addition, it examines the team’s understanding of how its processes and models are interconnected and how they act individually or collectively with other processes to deliver organizational mission and value.
Inter-Functional Integration also looks at whether there is effective and efficient communication among the teams, whether there are sufficient relationships among them to act as communication conduits, and whether the team is monitoring and measuring the hand-off points between itself and other dependent teams. At the highest level of Inter-Functional Integration, the organization remediates faulty integration points so that it continually achieves its mission and realizes the value gained from Strategic and Functional Clarity.
The speed of communication in the Digital Era will out-pace the normal bureaucratic mechanisms of the traditional organization and therefore threaten the value chain. Inter-Functional Integration maintains a synergy with Strategic and Functional Clarity such that rapid changes in operating and processing models can be transmitted, received, and understood – as well as performed.
Harvard Business Review (Mankins, et al., 2014) estimates 15% of an organization’s collective time is spent in meetings—a percentage that has increased every year since 2008—and the Project Management Institute (Rajkumar, S., 2010) estimates about 90% of the time in a project is spent on communication by the project manager. Lack of Inter-Functional Integration could undermine the agile communication needed to survive and thrive in the Digital Era.
Operational Discipline addresses the basic tenets of Information Technology Service Management (ITSM), but from the perspective of Service Capabilities. Traditional ITSM “maturity” frameworks deal with the life cycle of Strategy, Design, Transition, and Operations, but do not examine the more important development of delivery capabilities. Measuring capabilities is consistent with the Digital Enterprise Framework goal of measuring instrumental value rather than terminal value. This also addresses the need for Operational Sustainability, which is about an organization’s ability to perform with a sound base of foundational processes.
Operational Discipline integrates the capabilities, processes and roles that result in well planned, properly protected and continually optimized services; this enables the successful planning, testing and implementation of new services that meet the organization’s or customers’ needs; and sustains practices to enable portfolio, service level, service catalogue, demand, supplier and financial management. Surrounding all these capabilities is Continual Service Improvement (CSI) enabling proper measurement, oversight, and control capabilities.
Fully developing the attribute of Operational Discipline delivers consistency, cost savings, self-improvement, and improved operational performance of existing organizational standards, processes and procedures. Further, these capabilities help ensure that the organization captures, shares and adopts its best practices so that staff can be rapidly reassigned throughout the organization without retraining or knowledge loss.
Without Operational Discipline, there is no model or baseline from which to measure and ultimately improve.
The Governance attribute addresses whether the organization knows how to make decisions, clearly identifies who is responsible for making which decisions, and whether decisions are made in a timely manner. Also, important in the decision-making process is understanding the events that may trigger a decision and how to initiate the decision-making process.
A good Governance decision-making process is necessary, but sometimes insufficient. Good governance also addresses whether the organization makes decisions within the bounds of appropriate impact, urgency, and risk. In other words, does the organization distribute governance so that decisions requiring more scrutiny receive it and decisions requiring less scrutiny do not. Finally, the organization should allow for controlled and documented decisions made outside of the normal process to provide for the agility and innovation required of the Digital Enterprise.
Governance provides the mechanisms of organizational transparency and principles of disclosure that directly address staff, stakeholder, and customer need to know. This will ensure greater success as this process will align the goals of decision-makers with the goals of the organization. Governance also reduces waist, risk, and mismanagement thereby ensuring value and reputation with customers and staff.
Without Governance, effective decision-making is compromised if not severely jeopardized.
Metrics Driven Management
Metrics-Driven Management measures whether there is key performance indicators (KPI’s), whether those KPI’s are understood, and whether the organization collects sufficient data by which to measure them. A Key Performance Indicator is a measurable value that demonstrates the effectiveness of an organization in achieving key business objectives or critical success factors.
This attribute also examines whether these measurements align to organizational objectives, whether they are periodically reported, and whether the results impact organizational decision-making and objectives. KPI’s should be used to generate organizational knowledge and, ultimately, organizational wisdom. Finally, this attribute assesses whether the organization uses KPI’s as predictors of future events and to hold staff accountable for their performance.
Metrics help to clarify performance expectations for functional teams and for every role in the organization. Metrics provide objective measures of performance and this data enables organizations to “manage by fact.” Metrics-Driven Management provides managers more confidence in their choices by enabling them to point to data that supports the likelihood of decisions leading to desired results.
What gets measured gets done. Employees are faced with many competing demands on their time. When they know the small handful of Metrics that grade their performance, it keeps them focused on doing the right things.
Continual improvement is a theme that permeates the attributes of Operational Discipline and Metrics-Driven Management. The attribute of Operational Flexibility measures how the organization initiates and acts upon improvement initiatives. The basis for Operational Flexibility is the ability for staff to feel comfortable questioning existing operational and business processes and the organization’s receptiveness to proposed changes to those processes or their supporting technologies.
Operational Flexibility also measures how the organization evaluates proposed changes and continually measures the impact of those changes on business value and future business demand. This evaluation and measurement provides an indicator of “intelligent disobedience,” where you question or sometimes even defy authority when you have good reason. This is indicative of a disruptive culture necessary for a Digital Enterprise. Finally, the Operational Flexibility attribute measures whether the organization implemented the improvements in a timely manner and if those improvements delivered the intended business value.
A rigid, mechanistic organization cannot adapt, so it falters when challenges arise. A flexible organization is willing to try new approaches, even when the old ways are working fine. Continuously refining its operational and business processes helps an organization identify new and better ways of getting things done and fostering innovation.
Operational Flexibility allows the organization to become more efficient over time, which translates to higher profits and lower costs.
The Team Dynamics attribute measures whether the staff know and understand their various roles in operational and business processes as well as how their roles support the mission and value proposition of the organization. It also examines whether the staff understand how their roles support the organization’s vision for the future.
An organization with positive Team Dynamics self-identifies skills gaps and growth opportunities and willingly proposes and seeks training and professional development assignments to fill those gaps and promote personal growth. Organizations exhibiting healthy Team Dynamics also understand the need to mentor and retrain staff with aging or outdated skills. In other words, staff are not afraid to show the vulnerability necessary to overcome ignorance of roles and responsibilities and build trust.
Good Team Dynamics leads to a positive team atmosphere in which employees feel empowered. In such an environment, team members are more comfortable taking calculated risks and seek out innovative solutions to complex problems. Establishing an environment in which employees can thrive without conflict involves improving the group dynamic so that team members listen to each other, value individual experience, and consider other perspectives before making impactful decisions.
When team members feel safe, they are willing to help others succeed, which fosters a collaborative environment where employees trust each other to get work done.
This is part one in a series of articles. In part two, we examine the second Dimension of Digital Readiness, Organizational Agility.
Mankins, M., Brahms, C., and Caimi, G. (2014). Your scariest resource. Harvard Business Review, May 2014.
Rajkumar, S. (2010). Art of communication in project management. Paper presented at PMI® Research Conference: Defining the Future of Project Management, Washington, DC. Newtown Square, PA: Project Management Institute.
About the Author:
Chief Scientist & Institute Fellow
Dr. Frank Granito is Chief Scientist and Lead Fellow at the Institute for Digital Transformation. He has over 40 years of experience in the Information Technology field and has successfully implemented IT Service Management transformation solutions for Government and Commercial clients. Dr. Granito holds a Doctor of Management from the University of Maryland University College with a thesis on Organizational Culture.
As Lead Fellow, Frank selects current transformational topics and leads the monthly discussions with all of the Institute Fellows, parts of which are available on our YouTube Show “Digital Transformation Unplugged“. In his role as Chief Scientist, Dr. Granito created the analytical model that is the basis of the Digital Enterprise Readiness Framework. He designs, creates and produces the analysis of our Snapshot Research. He is also one of the hosts of the YouTube Show “Snapshot Research Brief“.