Are there distinct differences between the way traditional organisations operate and organise themselves vs the fast growth, digital organisations? In our digital transformation consulting work with clients, we have the opportunity to observe and study some of these differences. Let’s examine these differences and discuss how traditional organisations can digital transform themselves so that they are well positioned for today’s digital economy.
New Products/Services Development
Traditional organisations tend to create new products and services without sufficiently validating whether there is real demand for these products/services first, and think they can “push” these products into the market through various aggressive marketing and sales tactics. Often sales of such products diminished quickly after its initial hype.
Many successful digital organisations strive to validate product ideas before they invest in large-scale, high-cost product R&D efforts. They recognise that product ideas are hypothesis that need to be validate with actual market data, and not simply based product and business decisions on just internal management’s opinions.
Traditional companies often aim to launch new products with a long list of comprehensive features, which they spent large amount of resources and time to develop. Many of these features often offer little value to their users, and end up hardly being used at all. Whilst digital companies adopt a “beta culture”, aim to launch minimal-viable-product (MVP) with short time-to-market, and iterate new versions based on real customers’ feedbacks and needs.
Many traditional companies adopt a long, time consuming “waterfall” product development methodology They define what they can develop around constraints of their own internal resources. On the contrary, digital companies go with agile, iterative methodology, and capitalise on partnerships, platform approach and API-enabled ecosystem to build products that goes beyond what their own internal resources could accomplish alone.
Organisational Structure
In traditional organisations, it’s often a case of functional teams working in silos. Many digital organisations have cross-functional integrated teams, and uses various digital tools to support them in efficient communication and alignment.
Organisational structure of traditional companies tends to be hierarchical, with a substantial middle-management layer, while digital companies commonly has flat organisational structure, which can minimise bureaucracy and maximise productivity of the teams.
Decision making
Management of traditional organisations rely on their past experience for decision making. Digital organisations uses data analytic based decision making. Data driven methods, such as A/B testing of product feature hypothesis with consumers, are used to support better decision making.
Decision making is often bureaucratic and top-down in traditional organisations. Digital organisations rely on transparent, fast decision making to effectively manage risks, communicate and align teams behind decision made and execute.
Traditional organisations’ mindset tend to be process and task orientated whilst digital organisations are result and user experience oriented.
As we can see, there are distinct differences between the traditional and digital organisations. Check out our sharing on how traditional organisations can embark on their digital transformation journey.
Askvisor provides family businesses, SMEs and non-profits with digital transformation consultancy – supporting the organisations to leverage suitable digital solutions, innovate new products/services, adopt agile and lean management, and build a learning and innovative organisation culture, so that organisations can stay ahead in the Digital Economy. Need some help with your digital transformation strategy and implementation? Contact us at: hello@askvisor.com