Many of today’s organizations are built on a whole set of assumptions that are fundamentally different from how the digital world works. Adapting to these new realities requires a transformation that goes beyond just new tech – one that reimagines the company’s operating model.

The goal of this transformation isn’t just to survive, but to create an organization that can thrive in the digital age – something we call an evolved enterprise.

Running a business in the digital age is different in two important ways: the market demands faster decisions, and there’s a vast amount of data available to make them. But the volume and velocity of information can be as crippling as it is helpful. Not only does it overwhelm human brains, it can paralyze old-school organizations.

Evolved organizations favor speed and agility. They adapt each dimension of their operating model - leadership roles, org structures, business processes, governance, incentives and talent – to make swift decisions and get solutions to market quickly and iteratively.

This means operating in fundamentally different ways:

Networks trump hierarchy. Flexible, multidisciplinary teams are organized around the features of a business that matter to customers, such as products and services. And they’re empowered to make important decisions. For example, USAA, with its motto “we know what it means to serve,” clusters customer-facing resources into teams around life events, like “becoming a parent” or “leaving military service.”

Turning processes “outside-in.” Traditional annual or quarterly resource allocation and planning processes are too slow to keep up with evolving market and customer needs. Instead, activities can be organized into agile “sprints” and iterate more frequently. Processes like product/service innovation take a more “outside-in” orientation, and use design thinking, data-driven insights, and journey maps to drive new product, service and experience innovations.

Building a culture of data. Making data-driven decision-making a part of the culture requires more than just the tech and talent to crunch numbers. It calls for a cultural change among business leaders as well. Former Caesar’s CEO Gary Loveman liked to joke that there were three ways to get fired at Caesar’s: stealing, sexual harassment, and running an experiment without a control group. This kind of support from senior leadership helps drive broader cultural change.

Adopting an “AI-first” approach. As artificial intelligence continues to get better, it will both substitute and complement human activity. Taking an “AI-first” approach to designing experiences and processes reimagines them to get the best out of both humans and machines. Lemonade, the insurance provider, for example, uses “AI Jim” to process claims at a blistering speed. Its record is a claim for a stolen $979 coat, which it evaluated and paid in three seconds, after it checked 18 anti-fraud algorithms. Not only does AI Jim deliver a superior customer experience, it frees up the company’s human agents to spend more time on complex claims.

Today’s digital innovations are impressive, but they’re just the opening acts to an exciting new chapter in human history. The next wave of digital technology - blockchain, Internet of Things and advanced AI – is already on the horizon. And while we can’t predict their future, we can be sure that they will create an even more strange and wonderful world of possibility.

To stay relevant in that world, organizations need to adapt. Evolving their operating models to be faster and more flexible will help them make better use of digital today, and ensure they’re better prepared for whatever comes next.

Michael Welch

Michael Welch

Michael Welch is a senior engagement manager in the New York office of Prophet, a business and technology consulting firm.
Tony Foss

Tony Foss

Tony Foss is a partner in the New York office of Prophet, a business and technology consulting firm.