Take the example of Toyota which successfully aligned business strategy and operating model. For the past few decades, robots have been responsible for less than 8% of the work on Toyota’s assembly lines. Toyota was applying a scale-oriented enterprise operating model, and, to remedy many mistakes, it embraced an adaptive enterprise operating model in which people on the production line have greater autonomy.
As a CIO embarking on a digital business transformation, you know that any business transformation leads to changes in business strategy and enterprise operating model.
CIOs play a key role in aligning the business strategy and operating model to scale digital business
“Many of you are telling us that your organizations are stuck in the early stages of the attempt to transform. Others struggle to scale their digital business because they have not evolved their operating model to execute the new strategy,” says Lee Weldon, Gartner managing vice president at Gartner Symposium/ITxpo in Cape Town, South Africa.
Scaling a digital business requires a fully aligned strategy and enterprise operating model. An enterprise operating model is the manner in which an organization aligns its assets — people and culture, information, technology, ecosystems, and capital structures — with a particular business model.
In addition, each operational area — for example, marketing, supply chain and IT — has its own operating model. “As your business strategy changes, each of these individual operating models also needs to change,” says Weldon. “Otherwise, your organization’s business units are working in different directions that the digital business requires, increasing the risk of failure.”
Orchestrate operating model changes
Increasingly, the CIO plays a key role in overcoming misalignment between business strategy and operating model to help scale digital business. The CIO can help C-level executives achieve alignment by:
- Advising the entire organization: The CIO is the enterprise leader best placed to see how digital technology interconnects the enterprise as a whole. He or she can supplement this insight with an understanding of how the digital era is reshaping the relevant industry and the wider economy. Consequently, the CIO can act as an executive advisor to senior business leaders about how digital technology can support the required enterprise operating model.
- Enabling CxO colleagues to transition their operating models: Operational leaders will inevitably turn to the IT organization for support. To avoid being caught unaware or misunderstanding their requests, the CIO should have an advisory role to support his or her peers. In this role, the CIO can discern common attributes and patterns of, for example, governance, ecosystem, financial results and talent that impact current systems or require new systems. With this insight, the CIO can prepare his or her own team for a shift in business expectations.
- Implementing changes to the IT organization: The CIO should manage the IT operating model but acknowledge when a strategy requires a change to that model. For example, an efficiency model may call for a multiyear enterprise resource planning (ERP) consolidation project, but if the operating model shifts in order to scale, that ERP project would become a barrier to growth; this would force the CIO to put the project on hold and shift resources to alternative projects that support scalability.