Organizing for a Digital Future: Opportunities and Challenges

22 Pages Posted: 4 Dec 2015

See all articles by Deborah L. Soule

Deborah L. Soule

MIT Sloan School of Management

Nicholas Carrier

Capgemini Consulting

Didier Bonnet

Capgemini Consulting

George F. Westerman

MIT Sloan School of Management

Date Written: October 10, 2014

Abstract

As the digital age unfolds, possibilities for designing, organizing and managing productive work are expected to look very different from today’s effective practices. More remains to be learned, however, about the digital organization of the future and how firms might, or even should, respond to digital developments. This report explores this issue through three questions: What is fundamentally changing because of digital? How is digital changing the opportunities and constraints of industries? How is digital changing the opportunities and constraints of organizational design?

We argue that digital technologies fundamentally change human potential to access and act on a wealth of digital information. Focusing on the impact of digital technologies and digital data – rather than on the specific features of the tools themselves, we identify four interconnected, information-based capabilities underpinned by digital technologies: collection, connection, interpretation, and automation. Since the cost of acquiring or developing these capabilities is also declining, digital technologies are democratizing the potential to access information and act on it in economically and socially significant ways.

As a result, competitive dynamics are rapidly changing in all kinds of industries – even those that seem removed from the effects of digital technologies! At the same time, the possibilities and challenges for organizing internally are evolving. These dual effects both enable and impel organizational leaders to rethink fundamental decisions concerning where they choose to operate in the value ecosystem (strategic choices) and how they design their internal organization (organization choices).

In a digital future, all firms will confront new challenges to how they generate economic value. Firms that understand and establish strong digital capabilities will gain superior flexibility to choose where and how they play in their value networks.

Keywords: digitization, industry dynamics, organization design, information capabilities

Suggested Citation

Soule, Deborah L. and Carrier, Nicholas and Bonnet, Didier and Westerman, George F., Organizing for a Digital Future: Opportunities and Challenges (October 10, 2014). Available at SSRN: https://ssrn.com/abstract=2698379 or http://dx.doi.org/10.2139/ssrn.2698379

Deborah L. Soule (Contact Author)

MIT Sloan School of Management ( email )

77 Massachusetts Avenue
50 Memorial Drive
Cambridge, MA 02139-4307
United States
617-324-9620 (Phone)

HOME PAGE: http://mitsloan.mit.edu/ide/

Nicholas Carrier

Capgemini Consulting ( email )

623 Fifth Ave
33rd floor
New York, NY 10022
United States

Didier Bonnet

Capgemini Consulting ( email )

Gustavslundsvägen 131
P.O. Box 825
Bromma, 161 24
Sweden

George F. Westerman

MIT Sloan School of Management ( email )

245 First Street, E94-1513
Cambridge, MA 02142
United States
617-253-2939 (Phone)

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