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“Success in the digital landscape is not for believers but for those how invest in their own analysis and know the digital business. Those who dare to innovate on all levels and challenge their “selected truths” and their heritage. Those who dares to establish a digital governance. The question is what you believe in?”

A couple of weeks ago, I had the chance to learn about the corporate culture of a successful digital business. I learned about self-governing tribes, strong vision and culture, and common governance reduced to a minimum. The key question was how to implement common routines in the tribe without interfering in the successful self-governance and thereby the identity of the company.

The described organizational set-up and governance is not uncommon among the fast growing digital companies. We see more and more companies breaking free from traditional “command and control” governance to do something different (digital governance). The main difference is how they view the world and how they treat the employee. Digital Governance is based on knowing the digital business and acknowledging the fact the fact that success comes from engaged employees. Driving innovation and motivation! It is based on the fact that it is the employees (not common processes or tools) that define the business and deliver great customer experience. The survival of the digital company is often based on its ability re-shape through highly engaged employees.

The “digital governance” is very similar to the democratic society that most of us live in. A society based on democracy and liberalism where citizens have the freedom and opportunity to live our life as thy see fit (very simplified). A society that many people still fight for and offer their lives to live in. The remarkable finding is that where we for ages fought for democracy and liberalism, most of us happily spend 50% of our time awake in a “totalitarian system” at work – where senior management defines our role, tasks, pay and thoughts. The “command and control” corporate culture based on the ideas of Taylorism or Scientific Management that has conquered the world and seen as the absolute best way to organize people. Today we see the effects of the system with an engagement rate of 14%, silo organizations and the inability to adapt to the digital age. It does not work any longer! It is time to redefine us.

My point of view is that many large organizations have higher belief in the corporate system (and highly paid consultants) than in the employees’ ability to deliver value to the customer. The belief is that it is the system that will save them when the market changes. This could not be further from the truth! I am not saying that all companies should adapt an anarchist approach to governance but rather that is necessary to understand what creates highly engaged employees that are will to go the extra mile for a customer – and hence create Great Customer Experience in each moments of truth. It is engaged employees that will transform the company to a success in the digital era. An unengaged employee will create an unengaged customer! And the upside of engaged employees and customer are enormous!

Some interesting statistics:

  • —  55% of customer with a bad experience will choose a different vendor.
  • —  50% of financial decisions or purchases are based on emotions.
  • —  75% of customer are willing to spend more with company that delivers great customer experience
  • —  The company ignored 79% of customers of complaints of bad customer experience on Facebook or Twitter!

(Source: American Express Global survey 2012)

The symptoms of traditional governance are scary! The main reason for continuing with traditional governance and organizational structure is the corporate legacy. As the company grows in size, a “command and control” system was needed to keep the company under control. The amount of bureaucracy and “red tape” increased rapidly minimizing the importance and engagement of the employee. The efficient process, not the employee, was key for success. Values becomes something artificial in the “save yourself” culture. The problem is that this kind of organization has no future in the digital era.

So, what to do? It is a difficult question as many organizations have a long legacy and shareholders that demand a certain type of business model and governance structure. To change governance and organizational structure is probably impossible. However, it is necessary to understand that fast-moving digital companies with flexible business model and governance will challenge your corporate governance and culture. It is just a matter of time – and the moment is approaching rapidly. The question to ask is how you want to meet that situation. A good idea is already now set up a competing business with new dynamic governance structure and business model, that and fight the new competitors in the coming digital war. It is just a matter of time before the new company has more customer, higher revenues and customer engagement than the parent company. It is not a recommendation – it is a necessity!

Recommendations:

  1. Understand how the digital era affects your business model and the need for change.
  2. Ask yourself: how do we raise engagement of our employees so that they will create Great Customer Experience in the moment of truth?
  3. Set up a new competing business based on a digital business model, dynamic governance, and self-governing and limited top management interference.
  4. Involve CMO and CIO to define the digital strategy to meet new digital customers.
  5. Contact The Goodwind Company to discuss this further!

There is a clear differentiator between the traditional companies and the digital ones in how they view knowledge. Traditional companies believe that have the right approach (through advise from expensive consultants) while digital know that they are right (by understanding the “new normal” market place). Success in the digital landscape is not for believers but for those how invest in their own analysis and dare to innovate on all levels and challenge their “selected truths” and their heritage. The question is what you believe in?

– Hans Gillior

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