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Structuring the Digital Team
As business models in every industry have become increasingly tech enabled, companies have shi�ed focus from a centralizedapproach focused on digital to a hybrid model that facilitates end-to-end collaboration and connectivity among functions andbusiness units.
© Copyright 2018 Russell Reynolds Associates. All rights reserved.
Digital Pulse 2018: Organizational Structure
In the past, digital transformation focused on adding new digital capabilities to help organizations capitalize on mobile, social and big data. Today, technology-enabled disruption is compelling companies in all industries to think and act more like technology companies. Incremental, front-end changes are no longer enough—the new business ecosystem demands the rethinking of most companies’ strategies from end to end. A shi� in organizational approach to digital over the past five years indicates that companies have become increasingly aware that they must eliminate structural barriers to realize the opportunities presented by technology enablement. In the fourth annual Digital Pulse, Russell Reynolds Associates surveyed 1,300+ senior executives to learn how digital is transforming talent and leadership needs in organizations around the world.
Brief Summary of Respondents
The Evolution of the Digital Organizational Structure
Comparing the Digital Structures: Vision and Leadership
Originally marketing’s purview, ownership of the digital vision and strategy increasingly belongs to technology leaders. Andwhile more than 80% of companies now have a unique digital leadership position, only 10% say this person is responsible forse�ing the full strategy—CEOs continue to play a critical role.
The digital organizational models differ in three key areas: se�ing the strategy and vision, the reporting structure of digital leadership and the presence of digital leadership.
Fewer than one third of respondents reported that their organizations are structured effectively to capitalize on theopportunities presented by digital. Additionally, there has been a steady increase in the percentage of respondents whoperceive structural concerns (and intrinsically linked cultural challenges) to be the foremost barriers to transformation.
Placing the Digital Strategy at the Heart of the Business
DECENTRALIZED
Digital capability is embeddedsolely in functions and/or market
and/or lines of business
CENTRALIZED
A single leader with hard-lineresponsibility for all digital activity
HYBRID
DigitalExperience
A centralized group, but with somedigital capabilities embedded in
the wider organization
DigitalExperience
DigitalDepartment
DigitalDepartment
Changing Prevalence of the Three Digital Team Structures (over 5 years)
Who Is Responsible for Se�ing the Digital Vision and Strategy?Only predominant answers included
Reporting Lines for Digital Leaders
Job title Industry
26%38%38%
57%
22%16%
13%22%
50%44%
41%29%
2018
2017
2015
2014
Centralized
Hybrid
Decentralized
Comparing the Digital Structures: Functional Ownership of Digital and Technology Initiatives
CIO/CTO
2014 2015 2017 2018
Structural Barriers to Building an Effective Digital Business
Digital vision andstrategy are set by:
Percentage withouta digital leader:
Percentage of digital leaders reporting to the CEO:
The Path Forward
DigitalExperience
In 2018, 55% of leaders identifiedorganizational inertia, understoodas functional departments beingtoo fixed in their ways, as asignificant barrier to becoming aneffective digital business.
Fewer than a third of leaders respondedthat their business is aligned on itsvarious digital capabilities, and nearlyhalf identified absence of a coordinateddigital strategy as a significant barrier.Not having a single leader of the digitalagenda is increasingly becoming seenas a barrier.
In 2018, just over half of leaders sawboth lack of digital skills/expertiseand ineffective crossfunctionalcollaboration as significant barriers.
Absence of a coordinateddigital strategy
Organization inertia
No single head of digital
Lack of digital skill/expertiseIneffective crossfunctionalcollaboration
26%
N/A N/A
42%47%
55%
18%25% 25%
35%39%
50%49% 51%52%
24%31%
35%40%
48%
2014 2015 2017 2018 2014 20142015 2017 2018 2015 2017 2018
CDO
CMO
CEO 34%
27%
14%
7%
39%
20%
14%
6%
40%
13%
14%
10%
42%
19%
9%
10%
8%report to the
CMO
11%report to the
CIO/CTO
60%report to the
CEO
40% CEO23% CIO/CTO13% CDO10% CMO
55% 5%
38% CEO19% CIO/CTO13% CDO9% CMO
62% 11%
50% CEO17% CIO/CTO11% CDO4% CMO
65% 25%
Centralized
Hybrid
Decentralized
OrganizationalInertia
Clarity ofStrategy
Skill &Alignment
Gaps
Create a unifying strategy and vision for your tech-enabled
organization
Assess your current digitalorganizational structure
Encourage collaboration todrive innovation and
transformation
Considerations
� Is there a clear understanding of currentdigital and technology initiatives acrossthe organization and how they areintegral to the overall strategy?
� Do parts of your organization resistadopting new digital and tech initiatives?How can you persuade everyone to buyin?
Considerations Considerations
� How can you break down functional silosto ensure critical collaboration in thedevelopment and execution of the digitalvision and strategy?
� Are your functional leaders aligned alonga unified, forward-looking vision?
� Which leader/team in the organization isbest positioned to develop a digitalstrategy and vision that will allow you totake full advantage of digital andtechnology opportunities and propel youbeyond your competitors?
� Do you need to create a new team,restructure or upskill in order to find thesolution?
IT Digital Marketing Business Unit
DigitalMarketing
ArtificialIntelligence
Cybersecurity
Back-endTechnology
DigitalP&L
Labs &Innovation
ProductManagement
Marketing Digital
DigitalStrategy
Data &Analytics
Digital ProgramManagement
Ecosystems/Partnerships/Ventures
ITBusiness
Unit
There is a great deal of variation when it comes to what is defined as a digital capability, but ownership of thefollowing capabilities most commonly falls into these categories:
Respondents indicated that the digital capabilities most likely to be owned, at least in part, by a business unitwere those which were more nebulous. However, these are also the capabilities most likely to require cross-functional collaboration, and additional ownership varies by structure. Data & analytics, digital strategy anddigital program management are the functions most likely to have divided ownership.
45%
23%
32%C-Suite Executive
Senior Executive(SVP, EVP, etc.)
Junior Executive(VP, Executive Director, etc.)
Company size Location
Consumer
1–249
250–999 1,000–4,999 5,000–10,000 10,000+
Industrial Technology
Financial Healthcare Non Profit
26%
24%
22% 18%
17% 11% 6%
15%10%
33%
18%11%
Asia Pacific
8%
Latin America& Caribbean
2%
8%34%
Africa &Middle East
Eastern &Northern EuropeWestern
Europe37%
NorthAmerica
0% 20% 40% 60% 80% 100% 120% 140% 160%
0% 20% 40% 60% 80% 100% 120% 140% 160%
0% 20% 40% 60% 80% 100% 120% 140% 160%
The least reliant on business units to drive digital capabilities, organizations with centralized digital models consistentlyrely on IT as much and, in some instances, more than their digital team.
Hybrid organizations are expectedly matrixed—nearly every capability is owned in significant part by a business unit but thesecompanies continue to rely on a centralized digital function for their digital strategy and for digital program management anddata & analytics.
Business units, of course, have significant ownership in decentralized models, but IT is also responsible for data & analytics and digital program management in more than a third of organizations—and marketing continues to play a role in the digital strategy.
Digital Strategy
Labs & Innovation
Ecosystems/Partnerships/Ventures
Product Management
Digital Program Management
Data & Analytics
Digital P&L
Digital Strategy
Labs and Innovation
Ecosystems/Partnerships/Ventures
Product Management
Digital Program Management
Data & Analytics
Digital P&L
Digital Strategy
Labs and Innovation
Ecosystems/Partnerships/Ventures
Product Management
Digital Program Management
Data & Analytics
Digital P&L
Hybrid
Decentralized
Centralized
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