The Knowledge Hub of IMD
Share
FacebookFacebook icon TwitterTwitter icon LinkedInLinkedIn icon Email

Brain circuits

Five questions to help you choose the right digital governance model

Published 16 September 2021 in Brain circuits • 3 min read

Choosing a digital governance model is a critical part of a digital transformation strategy. Research has indicated that governance is a key driver of financial performance for businesses that have undergone successful digital transformations. There is no single recipe for a governance model. Each company needs to balance the scope of its transformation ambitions with the dominant company culture.

Will you choose an integrated or a separate model?

This is the traditional organizational dilemma. Tight integration drives more harmonization and bargaining power, but can bog down processes. Complete separation means you are closer to the frontline, but it can also create disconnected initiatives and duplications. Neither extreme leads to successful outcomes. Hybrid models work best.

Will you use a centralized versus decentralized structure?

Our research shows that 84% of organizations have established a dedicated group to oversee their digital transformation efforts. If your company is starting a transformation for the first time with a low level of digital maturity, we recommend some form of central team to kickstart the program’s momentum. If you’ve already gone through many digital transformations, you may want to loosen the reins and give more decision-making powers to a decentralized governance structure closer to the frontline.

Should you appoint a digital transformation leader?

Some companies choose to drive transformation through existing leadership teams, which can be an easier route but often results in only incremental advances. A dedicated leader can provide accountability and clear direction, but requires alignment between operating units, clear decision rights, and resources to support the effort.

Should you create a new business unit?

A dedicated digital unit creates momentum, focus, and offers economies of scale. But, if it’s too remote from the day-to-day operations it risks isolation, leading to “ivory tower” syndrome.

Should you build or buy digital operations?

Building a greenfield or buying new digital operations allows for separate financing, staffing and technology stack, or even branding. It can significantly accelerate your time to market, but it doesn’t transform the traditional business and risks cannibalizing the existing offerings.

While there is no right model, these questions will help put you on the path to choosing the right governance form for your company. Don’t leave it to chance. It won’t happen naturally.

 

Authors

Michael Wade - IMD Professor

Michael R. Wade

Professor of Innovation and Strategy at IMD

Michael R Wade holds the Cisco Chair in Digital Business Transformation and is Director of IMD’s Global Center for Digital Business Transformation. He directs a number of open programs such as Leading Digital Business Transformation, Digital Transformation for Boards, Digital Execution, Digital Disruption, and the Digital Transformation Sprint. He has written ten books, hundreds of articles, and hosts a popular management podcast. In 2021, he was inducted into the Swiss Digital Shapers Hall of Fame.

Didier Bonnet

Professor of Strategy and Digital Transformation

Didier Bonnet is Professor of Strategy and Digital Transformation at IMD and program co-director for Digital Transformation in Practice (DTIP) and Leading Customer Centric Strategies (LCCS). He also teaches strategy and digital transformation in several open programs such as Leading Digital Business Transformation (LDBT), Digital Execution (DE) and Digital Transformation for Boards (DTB). He has more than 30 years’ experience in strategy development and business transformation for a range of global clients.

Related

What is your EQ?

23 September 2022 • by Silke Mischke in Brain circuits

It is important for executives to understand that emotions allow them to put things in context and have a larger view of what is happening. It also helps build valuable connections with...

How resilient are you?

19 September 2022 in Brain circuits

As leaders we train ourselves in many ways, but it is often the small, overlooked skills, like resilience, that will serve us best....

Learn Brain Circuits

Join us for daily exercises focusing on issues from team building to developing an actionable sustainability plan to personal development. Go on - they only take five minutes.
 
Read more 

Explore Leadership

What makes a great leader? Do you need charisma? How do you inspire your team? Our experts offer actionable insights through first-person narratives, behind-the-scenes interviews and The Help Desk.
 
Read more

Join Membership

Log in here to join in the conversation with the I by IMD community. Your subscription grants you access to the quarterly magazine plus daily articles, videos, podcasts and learning exercises.
 
Sign up

You have 4 of 5 articles left to read.