With growth elusive across industries and digital disruptors biting at their heels, traditional players are developing disruptive business models to compete. Yet many struggle because they do not fully align their operating models with these new disruptive business models.
To become more agile, traditional enterprises need digital operating models that integrate business, operations and technology into autonomous businesses-within-the-business called domains. These domains boost agility so companies can be truly disruptive in new areas while also supporting their traditional lines of business.
Adapting to today’s market
Digital operating models need to be as adaptive and fluid as today’s market landscapes are:
- Change is non-negotiable. New business models call for capabilities that radically change operating model requirements. But less than one-quarter of executives think their operating model can respond to changing market conditions.
- Domains drive new value. Like independent businesses-within-the-business, domains bring together business, technology and operations to address the unique needs of customers, channels, products and revenue models.
- Scale is the missing link. Domains make traditional players more agile and competitive in markets dominated by disruption. But only if companies go beyond organizing and implementing domains in limited or isolated pockets of the business.
Leadership and culture
To evolve to digital operating models, companies should:
- Be deliberate about leadership. Companies should appoint a domain owner who is responsible for the end-to-end functioning of the domain.
- Diffuse culture shock. Companies must support difficult conversations, new collaboration and agile ways of working.
- Build the future workforce. Domains will require upskilling of current employees as well as gathering new talent via today’s workforce.