Overcoming organizational challenges with a digital operating model

Are you struggling with realizing your digital strategy and meeting evolving customer expectations? Let us guide you through some common complexities of digital transformation and introduce our digital operating model framework.

By: Nils Sjöstrand, Business Consultant, on September 5, 2024 | Reading time: 8-10 minutes

Shifting into a digital business model

Many organizations are shifting towards a more digital business model to stay competitive and meet evolving customer expectations. Making such a shift without having a carefully thought through digital operating model in place may make the process overly complicated.

Complications in moving on without doing the heavy lifting of defining a digital operating model often stem from insufficient coordination and oversight and limited team collaboration. Furthermore, if digital competence is spread out across various departments without clear accountability, it leads to fragmentation and inefficiency.

Creating a digital operating model is all about making sure your company move effectively toward the strategic direction, whether the strategy is centered growth or cost-efficiency.

Common challenges in transitioning to a digital business model

Additionally, many companies struggle with limited capacity and expertise, making it difficult to drive digital transformation cohesively and effectively. These issues may manifest in several ways:

• Fragmented Responsibilities: Without clear ownership, digital initiatives can become disjointed, leading to inefficiencies and missed opportunities.
• Siloed Departments: Limited collaboration between teams can slow down decision-making and hinder innovation.
• Inconsistent Performance Metrics: Without standardized metrics, it becomes challenging to measure success and make data-driven decisions.
• Operational Inefficiencies: Slow development cycles and outdated processes can impede progress and adaptability.

Implementing a digital operating model can help overcome these challenges by establishing an organization with common objectives, enhancing cross-team collaboration, and ensuring that digital capabilities are managed and developed strategically and coordinately.

What is a digital operating model?

A digital operating model is a strategic framework that defines how an organization operates in the digital age. It integrates digital capabilities into the core of the business, ensuring that all digital activities are aligned with the organization’s strategic goals. In short, it ensures that operations serve the strategic direction and are carried out efficiently and cohesively, thereby delivering the digital business model.

What does an operating model look Like?

To support organizations, Curamando has developed a comprehensive digital operating model framework. The framework is designed to assess and optimize operational effectiveness across six critical dimensions. Each dimension plays a vital part in ensuring that the digital transformation journey is not only successful, but also sustainable over time.

The six dimensions of Curamando’s digital operating model framework:

1. Governance – Establish clear and measurable business objectives supported by well-defined decision forums. Ensure every strategic move aligns with overall goals and decisions are made swiftly and efficiently.
2. Performance Metrics – Define the right performance metrics to drive desired behavior. These metrics should guide individual functions and ensure the organization works towards common objectives.
3. Data and Tools – Collect, structure, and ensure data accuracy. Make data readily available for analysis to support decisions and operations. Choose tools that act as enablers and avoid bottlenecks.
4. Interfaces – Align interfaces between functions and departments with overall business objectives. Ensure every part of the organization works in harmony towards shared goals.
5. Processes – Develop and refine well-defined processes to support day-to-day operations. Ensure processes are efficient, scalable, and aligned with strategic objectives.
6. Organization, Functions, and Roles – Define clear functions and roles to cover both strategic and operational tasks. Ensure the right competencies are in the right parts of the organization to enable effective operation and results.

Tangible results and a crucial step to ensure long-term competitiveness

Making the effort of creating or updating your digital operating model to enhance operations can yield significant results. For instance, we recently collaborated with a European retailer’s strategy and implementation of a new digital operating model, which, following the implementation, lead to a 60% increase in year-over-year online sales. We also found ways to reduce their campaign production time by sevenfold.

Other examples of what our digital operating model collaborations have resulted in include:

• New agency setup reducing costs and improving efficiency.
• Improved organizational setup, creating new roles and forums that boosted efficiency, enhanced strategic focus, reduced unnecessary meetings, and consolidated digital competencies.
• New media investment strategy and budget allocations resulting in increased Return on Ad Spend.
• Digital hub of excellence supporting six local sales and marketing teams, streamlining the teams’ operations.
• Implementation of online business KPIs for several functions, ensuring that data was collected, structured, and made available for analysis. This enabled data-driven decision-making and improved operational efficiency.

These examples highlight the tangible success of digital operating model enhancements. However, transforming a digital operating model should not be viewed as isolated performance improvements but as a crucial step in continuously addressing customer needs and ensuring long-term competitiveness. The key is to holistically rethink the operating model to better meet evolving customer expectations.

Key takeaways for addressing your digital operating model

• Start with a strong foundation:Ensure a well-defined strategy that is solid and well-anchored within the organization. The transformation should be driven by strategic goals, not just as a response to trends, providing clear direction for all digital activities.
• Scope carefully and start in the right end:Identify the specific areas that will have the most impact, ensuring efforts are concentrated and effective. If the strategy behind the shift is unclear or lacking, start in that end before moving further.
• Involve the right stakeholders:Engage key stakeholders early and ensure they are committed to the transformation process.
• Create a clear implementation roadmap:Outline key steps, assign responsibilities, and keep the transformation on track with a clear plan.
• Do not underestimate the work required:Implementing a new model requires continuous effort beyond just creating a report. Be prepared for ongoing work to drive change.
• Challenge the norms: Question existing processes and structures, especially if your organization has a heritage rooted in traditional brick-and-mortar operations.
• Align data and tools with objectives:Ensure data accuracy and choose tools that support analysis and decision-making, acting as enablers rather than bottlenecks.
• Define clear roles and responsibilities:Establish clear functions and roles to cover both strategic and operational tasks, ensuring the right competencies are in place.

Conclusion: The importance of a strong digital operating model

In today’s digital landscape, a robust digital operating model is crucial for any organization aiming to stay competitive. It provides the necessary structure and clarity to drive successful transformations, enabling your business to adapt and grow. Whether you operate in D2C, B2C, or B2B, and regardless of your industry, having a well-designed digital operating model is vital.

At Curamando, we help clients at every stage of digital maturity, from strategy to full implementation, ensuring they achieve their goals and maintain a competitive edge in their industry. If you have any questions or are considering a shift to a digital operating model, please feel free to reach out!