How the digital hierarchy transforms your leadership position
Updated: Mar 25
Guest writer: Arjan Dams Operations Manager Scaldis.
How does your leadership position transform due to new technology impacting your organisation? Read this article and let us know your thoughts and insights.
Many articles talk about the digital organisation, they divide this topic in people, processes, structure and culture, as described in this MIT Sloan/Deloitte article, but what about the hierarchy governing all these organisational aspects?
Our assumption is that your business strategy is partly or completely digital meaning that technologic possibilities like; Artificial Intelligence, robotics, big data analytics and future Quantum Computing (QC) are included in the strategy and implemented in your organisation.
This article reveals how the hierarchy transforms while implementing your digital strategy, creating the digital process organisation.
A digital strategy and its consequences
MIT Sloan explains two digital strategies an organisation can pursue; a customer engagement strategy or a digitized solutions strategy. A third digital strategy, Operational Excellence, is also mentioned. According to the authors this operational excellence is the minimum requirement for doing business digitally, otherwise your company could be in jeopardy.
Our article focuses on the consequences using the available technology for your digital operational backbone and effecting your hierarchy. There are two phases in this strategy, divided by the usability of technological breakthroughs in your organisation.
The organisational impact when adopting a digital operational strategy
This first phase consists of AI and robotic technologies and will mainly reduce the number of blue-collar workers within companies. The second phase of digital technology is impacting the white-collar workers. The huge numbers of data, from all kind of sensors, applications and internet-use will grow exponentially. Human minds are not able to extract useful insights from these amounts of data. But when the developing technologies, like Quantum Computing in combination with AI becomes available to analyse big data looking for patterns, trends and deviations, the results will be beyond your imagination.
The first digitalisation phase impact is visualised by the orange colour in every hierarchical box in fig 1. It depicts the decrease in human labour working at the various hierarchical and operational levels due to digital technologies described above. The box size equals the number of people performing tasks at every organisational level. We assume that the rate in our example is 10 blue-collar: 1 white-collar. The general view is that blue-collar workers are the first to experience the impact of digitalisation. Research from this article suggests that 47% of all jobs have a high risk of being replaced by AI.
The hierarchy transformation and tilting of your organisation We conclude that that the first phase of the digital operational strategy has a higher impact on the blue-collar workers than the white-collar workers, resulting in a dramatic change from 10:1 to 5:1. This top-heavy organisation as depicted in fig 2. with too many leaders has a detrimental effect on both the company’s performance as the decision-making speed. Speed is crucial to survive in the digital era and it is interesting to see how both small and big decisions will be positioned in organisations, creating the new decision-making process as discussed in this LinkedIN blog.
We expect your organisation to choose between two paths:
1. Shrinking the hierarchy to an acceptable size, but still functioning as in the industrial era, on top of the blue-collar workers.
2. Your organisation transforms and becomes truly digital as shown in fig 3.
The tilted organisation and hierarchical consequences
Tilting your organisation means literally shifting your focus from a vertical focus up and into the hierarchy towards a horizontal focus connecting to the next department in the digital process, all adding value to the final product or service.
Your small and partly big decision making is now integrated in the digital organisation and you are ready to compete in the digital era. Accenture’s article "latest thinking" elaborates about decision making on page 11. One big decision area made outside the core delivery process is strategy development and execution. The group responsible for these decisions and implementing the changes deemed necessary consists of people with strategic insight, for example the Enterprise Process Expert. Participation in this group is dependent on your ability to contribute, because we assume that position and title have little to no meaning anymore in the digital era. The roles you perform are based on the skills and knowledge you as an individual must develop continuously. These will be decisive for which big and/or small decision-making role you play in the digital process organisation.
Summarised, implementing a digital strategy can result in tilting your organisation, creating the digital process organisation where every individual contributes directly to product/service delivery, also known as holacracy.
Your digital strategy should include either reducing the hierarchy, or tilting the entire hierarchy, integrating it in the digital process organisation. As a leader, you should evaluate your position and consider other roles when decisions are made about a reduced or a tilted hierarchy.
New technology adding momentum to your digital strategy
Applications built on an adaptive technology developed by Dynamic Integrations will be available in 2018. In a new article we explain the possibilities enabled by this adaptive technology.
Guest writer: Arjan Dams Operations Manager Scaldis Salvage & Marine Contractors NV, Oil, Gas and Renewables industry
Writer: Fredrik the Frisian CEO Dynamic Integrations, Software and AI Development