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.
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