The CIO and COO face some of the greatest challenges in adopting agile ways of working, according to new global research from Workday. The study “Organizational Agility at Scale: The Key to Driving Digital Growth,” conducted by Longitude, surveyed almost 1,000 business leaders across Asia, Europe, and North America. It found that a third of these leaders say their organization’s approach does not enable it to respond to external market shifts.
The research focused on how organizations can translate their digital transformation investments into the right business outcomes. The findings highlight a strong correlation between digital revenue growth and organizational agility—a set of behaviors that help leading businesses drive digital revenue growth and shift digital transformation from a one-time event to an ongoing, new way of operating.
In the survey, Workday identified a group of leading organizations whose characteristics indicate they have embraced agility as part of their day-to-day operations in order to successfully transform their business for digital revenue growth. This group, the “leaders,” make up 15% of the global survey sample.
By contrast, those that show significantly slower progress or are yet to begin their transformation to a more agile way of operating, the “laggards,” make up just over half of all respondents. The remainder—those that have yet to embrace organization-wide agility, but are on the path to doing so—”aspirers”—make up the final 30% of the sample.
In the study, we found that there are five best practices that set the leaders apart:
Continuous planning. They plan in a continuous, real-time manner, which gives them the speed, agility, and dynamism they need to innovate successfully.
Fluid structures and processes. Leading organizations build fluid organizational structures and processes. Nearly half claim the ability to reallocate people quickly to where their skills are needed.
Building the future workforce. Leaders are much more likely than laggards to have plans to upskill the majority of their workforce and push specific initiatives to increase employee engagement.
Informed and empowered decision making. At 80% of leader organizations, all employees have access to timely and relevant data and are empowered to make appropriate decisions.
Measurement and guidance. Leaders have made significant progress in developing tools and metrics to measure the performance of digitally driven innovations. This is giving them a “fail fast” mentality: 94% say they are able quickly to steer away from unsuccessful projects.
Let’s break down where the CIO fits into organizational agility in each of these five best practices.
Dynamic planning helps organizations react quickly to changing market conditions and potential threats to the business, according to our research. Businesses can’t wait 12 months to discover if a product or service is profitable or achieving market share. The parts of the business that rely on revenue through digital efforts, in particular, require rapid and continuous planning cycles.
Overall, we found that the main obstacles to real-time planning are inflexible legacy technologies (which leaders often cited as their biggest roadblock) and bureaucratic organizational culture (most often cited by the laggards). The IT leaders surveyed agreed that a bureaucratic culture is the biggest obstacle to moving to a more comprehensive, real-time planning system.
Interestingly, when compared to other functional leaders, CHROs tend to agree with the CIO outlook on bureaucracy, whereas CEOs and CFOs say that it’s unskilled employees, not red tape, that’s keeping the company from moving to real-time business planning.
A change in business plans often forces changes to organizational structures or business processes, or even the creation of completely new ones. Businesses demonstrating organizational agility are able to quickly realign their two most important assets—people and financial resources—to meet organizational requirements.
Our research found that leaders build flexible structures and processes to adapt to changing business plans, including having the systems in place to understand skills gaps in their business, while laggards do not. Once again, inflexible technology and a culture of bureaucracy also prevent businesses from building agile structures and processes.
Most of the functional leaders surveyed (CEO, CFO, CIO/COO, and CHRO) name inflexible technology as the main barrier to updating business processes. But the CIO, either truth-teller or cynic (or both?), once again blames bureaucratic culture.
The CIO/COO is also most likely to say that their company’s back, middle, and front office processes are not “completely integrated.” Furthermore, 38% of CIO/COOs say these systems are “somewhat or not at all” integrated, and 62% say these systems are “completely integrated.” CHROs seem to have the brightest outlook on integration, with 71% of them (followed by 70% of CEOs) saying the back/middle/front offices are completely integrated.
Many organizations have discovered that vast proportions of their recent revenue are directly linked to skill areas that didn’t exist even five years ago. Skills are constantly changing, with new ones appearing while others become obsolete. Businesses have to help their workforces develop new skills to support and deliver new digital revenue streams.
In our study, leaders were four times more likely than laggards to have plans to upskill at least 75% of their workforce in order to meet talent requirements in the future world of work. More than three quarters of respondents agree that, to retain talent, their organization needs a more fluid approach to growing and deploying their people.
CEOs are significantly more likely than CIOs/COOs to have plans to upskill more than 50% of the workforce in the next five years to contend with the evolving world of work. In fact, only 44% of the CIO/COOs who responded say they plan to upskill more than half their workforce over the next five years. As befits the more optimistic view of the future, the survey found that among CEOs, 69% plan to do the same upskilling. The CIO is the only functional leader who says they do not plan to upskill any workers over the next five years—a paltry 4% plan to do no upskilling whatsoever.
Functional leaders expect different skills to be a priority to their role over the next five years, with CIOs putting data engineering and data warehousing at the top of their wish list, whereas the CFOs name “cognitive agility to contend with constant change” as the most valuable skill in their function over the next five years.
Functional leaders are largely in agreement that their ability to succeed in the marketplace is closely tied to keeping employees engaged. CHROs are significantly more likely to be driving this agenda (88% in agreement). CIOs are the second most in agreement with this notion, at 85%.
Ultimately it’s the workforce that will drive successful execution of business plans—including digital, the focus of this study. Workers need to be empowered with the right information at the right time to make the best possible decisions for the business.
Data is absolutely key in empowering decision making closer to the customer: Laggards say that out-of-date information and siloed teams are major barriers to the democratization of decision making. Among leaders, 80% say all employees have access to timely and relevant data without gatekeepers blocking access to such information, compared to just 24% of laggards.
CIOs/COOs are the least likely of the functional leaders to say that people do have “full access” to the data they need to make the best possible decisions for the business, with 42% of respondents in this function saying this is the case. This may hinder democratized decision making in the function, or, it may be that the CIO/COO does not think that the free flow of information necessarily leads to better decisions.
As it turns out, CIOs have the least confidence that the free flow of information facilitates democratized decision making; 54% of the CIO/COO respondents rate the free flow of information as “effective” or “extremely” effective in this regard, a full 30% less than the CEO.
Agility and speed are dependent on robust, accurate, and timely measurement and control. Businesses need to know quickly whether a new product or service is performing well—in which case it could rapidly need additional financial and talent investment—or performing badly, signaling that finance and talent may need to be reduced or reallocated, and the product or service changed or terminated. New metrics may also be required to supplement traditional financial metrics to truly understand the impact of digital strategies on the organization.
Our study shows that businesses recognize they don’t have the right measurement frameworks in place for the new digital world of work—and the CIO/COO are least likely to say they have the tools to measure the performance of new digital product and service lines. In fact, just 25% of all respondents say their organization has made significant progress establishing performance metrics to measure digital revenue growth performance. This is crucial, because the research found that fast action on failing investments (which could mean pulling the plug on the project or giving additional resources to make it a success) reaps higher returns.
CIO/COO respondents are the least likely to say that their orgainzation is quick to act on failing investments in new technology. The good news is that even with this sober view of things, a full 69% of them say their companies do cut losses quickly, compared to 86% of CEOs who say the same.
The majority of organizations with anticipated digital revenue growth above 50% in the coming three years (77% of respondents) agree that their organization is fast to act on failing investment in new technologies.
Although it seems that the CIO/COO is the most pessimistic in the C-suite, we’d argue that their view across the organization gives them a more realistic picture of how things get done, as the IT function is quite literally, as programmers say, “closest to the metal.”
We’re reminded of a perennial team-building exercise where participants have to choose personality types to populate a desert island. The facilitators often remind groups that it’s worthwhile to have a naysayer, because not all ideas are good ones, and a clear-eyed perspective can save everyone a lot of time. This may be out of fashion in our “visualize it and it will appear” zeitgeist, but as recent history has shown, dreamers who lacked a realist whispering in their ear tend to take spectacular falls.
What’s certain is businesses today must deliver on digital transformation and the growth opportunities it brings—and the entire C-suite needs to be moving in the same direction to lead this effort. The evidence from the research is clear: Those leading the race to continuous digital growth are those that have successfully embraced most—if not all—of the capabilities of organizational agility. For those playing catch up, there is still time, but the clock is ticking.
Critically, the move to agility is a continuous one—as organizations shift from siloed structures, bureaucratic processes, and traditional ways of working to embrace all five capabilities of organizational agility. Those who plan continuously, build adaptable and fluid organizations, upskill, inform and empower their workforces, and put in place the right measurement and guidance will be best positioned to harness continuous innovation, grow their digital revenue, and future-proof their business.
Interested in learning more? Check out other articles based on this research, with more coming throughout the year:
Get an overview of “Organizational Agility at Scale: The Key to Driving Digital Growth” findings or download the full report.