Digital is the ability to capture data at source in electronic form, store and process them using software tools, and analyze them using analytics, with little or no human intervention.
In a well-defined process, technologies take care of moving data from being captured to being analyzed, very quickly and automatically. Hence, data is always ready for analysis in the digital world, which is used for planning, forecasting and serving other management needs. This explains the popularity of analytics and higher speed of operations in the digital world!
Understanding how digital works
When data moves quickly from source to analytics, it increases operational speeds -Enhanced Efficiency. This efficiency triggers an increase in the scale of operations – access to newer markets, products and strategies - Scale. The combination of efficiency and scale leads to managing unknowns of a higher order, exposing operations to larger variations - Complexity. The unified demand of speed, scale and complexity leads to using more automation, which triggers the vicious cycle of capturing, storing, processing and analyzing more data, faster.
The unified demand of speed, scale and complexity leads to using more automation, which triggers the vicious cycle of capturing, storing, processing and analyzing more data, faster
The working of stock exchanges is a classic example of a digital organization. Their processes are well-defined by rules and operations are regulated by policies. Their processes are optimized for operational efficiency and also to deal with known variations – spikes and troughs in transaction volumes. The business activity per se, consumes a lot of data, which needs to be processed and analyzed too, very quickly. Without automation, their business activities cannot function at the scale and complexity they are currently working at. Stock exchanges continue to invest in technologies to bring in greater precision, become more responsive to their environment and provide better transparency into their operational processes. One of the stock exchanges that started operations when Indian government opened up its economic policies in the early nineties, grew from a less than 100 crore turnover to over 2400 crore in about 2 decades. For a 24X growth, its manpower grew less by than one-third of that, although business complexity and transactional speed had increased manifold. Their lean structure continued but the roles kept changing periodically, necessitating their employees to get constantly reskilled. Such a behavior will be more visible in the future when more organizations become digital and scale fast.
There’s another impact of digital besides efficiency, scale and complexity – need for new skill-sets in employees. This is because our traditional hierarchy is on the assumption of data moving less rapidly from source to analysis and the transformation is facilitated by human interventions at various points, especially at the point of collection. When human intervention is minimised and data moves fast, hierarchical structures experience two distinct phenomena – coalescing of roles and collapsing of layers.
Coalescing of roles refers to multiple roles getting consolidated into one. Tasks that required multiple skill-sets, knowledge and perspectives residing individually in different people will, in the digital world, require one person with multiple capabilities. For instance, during internal automation like ERP and CRM, concepts of end-to-end process linkages became popular - Order-to-Cash (on the customer facing side), Procure-to-Pay (on the supplier facing side), Hire-to-Retire (on the internal people facing side), etc. These processes required people with different skills to work as a team to complete all the tasks defined in the process. Such a process-oriented approach had clarity on roles, responsibilities of interlinkages, expected time to complete and a non-ambiguous understanding of start and completion of tasks.
Digital is collapsing structures, coalescing roles and bringing in a new divide between repeatable and non-repetitive functions
With technology becoming intelligent, automation will do these well-defined tasks. Human beings will be required only to manage exceptions or those situations for which rules have not yet been defined. Thus, the person in the process, needs to have an end-to-end understanding of the process to manage the technology. Activities like customer order, billing, managing delivery date, shipment, tracking, etc. which now will get automated, will collapse into one role of customer experience management. Additional tasks such as customer engagement and satisfaction will also become part of the job description, thus making one person with multiple skills in operations, decision-making and communication work end-to-end in an order to cash process.
The other aspect of digital is, collapsing organization structure– the levels in the organization will reduce significantly as data moves speedily from operations to decision making. Since data is now available for analysis the moment it gets into the system, the hierarchy needs to be able to analyze and make available inferences for top management’s decision-making. The time to do this gets shrunk on account of automation and hence the hierarchy gets flatter. Again, the experience here is that roles have all the components of ‘doing’ and ‘thinking’, which earlier was demarcated as entry level -doing, and top-level -thinking.
The combination of coalescing and collapsing is that fewer people will be doing more tasks for which they need to have requisite skills of end-to-end process knowledge and understand the impact at the decision-making level at the entry level point of capturing data. This is in the context of the business activities being done fast, at a higher scaled and dealing with greater complexity.
What would these mean to structure and skills?
The structures are getting flatter and roles are overlapping. Top management’s greater involvement into day-to-day operations leads to a tussle between the top and middle managements’ responsibilities. Middle management feels the stretch in their roles from top and bottom levels and they are suddenly expected to handle all sorts of exceptions. Entry level roles are getting highly skilled without the skilled workers knowing about the application of their skill or its impact on the organization’s output. Since organizations are expected to respond to external changes faster, smaller structures give them the agility and efficiency to do so. The result is, organizations will prefer to hire – even on short term basis - ready-made skills than to provide training to its existing staff, causing a concern to the employees. A variant of this is where the staff picks up skills on its own and the organization financially supports this when the staff’s skill is put to real use.
Digital is also influencing communication and decision-making to become more precise, objective and data oriented. Judgements and feelings are smothered because data can speak, and hence, people feel that their roles are becoming either monotonous or ambiguous. There’s a sense of unsettlement at the workplace as there’s no clarity of roles and responsibilities let alone the prospects of career progression! These are but one part of the digital world we are entering into!
The other part is, roles are getting more creative, multi-skilled and not driven by processes and outcomes! Human-beings are highly skilled, empowered to take decisions and even define outcomes, and they work in small teams that have the requisite components of skill – full-stack.
Emergence and relevance of new skills
As automation increases and traditional organizations too start behaving like the digital stock exchanges, work for human beings will get more and more creative, complex and ambiguous. The common aspect to all three is that, outcome cannot be accurately predicted – it can only be desired! This is in stark contrast to the process-oriented approach where roles were clear and so were the expected outcomes.
Just like in Cricket, as a player, you are playing a new game every day, experiencing new situations which demand new strategies and ideas, and different skills which need to be quickly deployed. In essence, this is working in the digital world
Digital is collapsing structures, coalescing roles and bringing in a new divide between repeatable and non-repetitive functions. Those that conform to a structure, are done in a prescribed manner and require minimal supervision, will get done by machines. However, this scope also expands to those roles that require structured thinking, managing known exceptions and providing approvals. Many of the top and middle managements’ responsibilities are becoming non-directing and non-authoritative, because directing and authority came from the principle of ‘being-in-the-know-of-things-better-than-others’- experts! In the digital era, experts will have an on-demand role with an organization and they would therefore be contracted by multiple companies on assignment basis.
- As the environment changes rapidly, the use of experts becomes short-term and judicious. In an organization that is facing rapid changes in its environment, the role definitions for its managerial employees will be ambiguous.
- When situations to manage are not going to be similar, identical or following a known pattern, a manager’s problem-solving skills will get tested – the ability to surmount, circumvent or manage an unfamiliar situation.
- When expected outcomes are unpredictable or complex, need for creative, entrepreneurial thinking and strong emotional capabilities to spring into action even after facing set-backs and failures, will be recognized.
- When automation deals perfectly with well laid-down processes, human beings will spend more time in managing people. Showing empathy, acting in judgement, using discretionary decision-making skills in exceptional situations, will add to the leadership skills in one’s track record.
There are many more aspects to the impact of digital on structure, skill and how businesses will be done in future. What these mean to management and managerial skills, roles and responsibilities and a team comprising human beings and technologies (HuTech), will be discussed at another point in time. However, the recently concluded Cricket World Cup provides some interesting lessons: players get into the team because of a core skill, like batting, bowling or both. But they retain their places on their abilities to deal with uncertainties like toss, weather, pitch-condition, opposition and match situation – which changes with the progress of the game even though the rules are the same all through. Players need to be adaptable with their skills and even re-skill themselves to acquire new techniques or to develop new faculties - improve fitness levels, develop emotional courage to come back from a defeat to find new winning ways. One-day Cricket tells us that, the game’s format is known but the outcome is always a guess. As a player, you are playing a new game every day, experiencing new situations which demand new strategies and ideas, and different skills which need to be quickly deployed. In essence, this is working in the digital world!