Organizational Models

Organizational models should be adopted and leveraged in support of the operating model and its stated goals. In contrast, many traditional IT operating models were designed around existing hierarchical, silo-oriented, organizational models. Value Management Through Product-Centricity detailed the limitations of these technology management models, and it is key to understand that, by being so closely entwined, both traditional technology organizations and their broader operating models were inherently anchored to and limited by their silo-orientation. Today’s digital business and the Digital Product-Centric Reference Operating Model present an entirely new set of requirements for organizational structures; chiefly to support Agile, dynamic, cross-functional, working teams whose main priority is supporting Digital Products as vehicles to create value and reduce risk.

Challenges and Requirements

Prior to the shift to Digital Products and the widespread digitization of the business enterprise, technology could be managed by a centralized, hierarchical organization that was defined by functional and technology domain silos. The management of resources and alignment to workflows was simple and straightforward:

Workflows were largely predictable and could be assessed and easily forecasted through operational assessments and quarterly/yearly program and project approvals
Demand planning and prioritization required limited effort and could be performed by functional managers
Resource capacity planning was typically done yearly, required multiple levels of approvals, and was based on long-term operational assessments and forthcoming projects for the coming year(s)
Delivery resources largely operated within their assigned organizational team (silo); cross-functional collaboration was limited to explicitly defined Program and Project teams
Role performance evaluation and work assignments done by a functional manager
Resulting organizations were hierarchical, simple, and static – changes were rare, and typically approved and driven by the highest levels of management

The permanent shift away from silo-oriented operations to cross-functional teams aligned to products presents a new set of requirements for organizing and managing resources:

Workflows are highly dynamic and unpredictable; forecasting and adjusting resource levels at pre-determined calendar intervals will not support the agility required by Product teams
Demand planning is more complex, requires continuous consideration, can have significant impact across multiple products and supply chains, and must be performed by both Product and Delivery teams
Resourcing capacity must be Agile, highly elastic, require fewer approvals, and be based on product and product line prioritizations

Delivery resources regularly participate in dynamic, self-forming teams in support of the development, delivery, and ongoing operation of Digital Products
The dynamic and cross-functional nature of both development and operations means work assignment and role evaluation will be more complex
Any supporting organizational structure must be more flexible, with increased tolerance for complexity

Any organizational models or reporting structures capable of supporting these workflow characteristics are likely to be more complex than traditional hierarchies. At the same time, increased complexity in the organizational structure can be managed with proactive education and communications, and will be more than offset by the numerous advantages afforded to the digital business. It is worth noting that a significant shift in organizational structure also changes the attributes of resources best suited to adapt and be successful in the new structure. Some of these resource attributes include:

Proven capacity for self-management, including proactive work prioritization and active voluntary engagement with available workflows
Tolerance for increased complexity in organizational reporting structure for work assignment, approvals, and performance evaluation
Flexibility and creativity while maintaining alignment to delivering value through the support of Digital Products
The acceptance of regular change and welcoming of new learning opportunities
Multi-discipline resources will now be actively leveraged and represent a value-add for the Agile, flexible organization

Finally, note that the potential increase in organizational complexity, alongside the implications for multi-discipline resources add further justification for a dedicated Digital Talent Resourcing function. The same goes for new tools and processes that can help to efficiently manage dynamic workflows and resourcing throughout the lifecycle of Digital Products across the business.

2-Plane Organizational Models

There is no single organizational model capable of supporting the unique demands of the Digital Operating Model. There is, however, a way to view the organization as two separate planes, one dedicated to Product & Value Management, and another dedicated to the delivery and operations of those Digital Products. From there, each plane can be addressed with purpose-fit solutions for its unique goals.

Figure 1. 2-Plane Organizational Models

As shown in 2-Plane Organizational Models, the first organizational plane is dedicated to Product & Value Management, and the resources in this plane shoulder the accountability and responsibilities for owning the value and risk of Digital Products across the entire business. The type and number of roles found in this plane can and should always remain limited. The primary role is that of the Product Manager or Digital Product Line Manager, responsible for applying a General Manager mindset across a logically related set of Digital Products. These individuals own the final accountability for the value and risk of products aligned to them. In most cases, they will leverage additional Product Owners and/or Product Managers, typically consulting them as SMEs or delegating responsibilities specific to different phases of the product lifecycle. Teams managing complex products are likely to include dedicated Product or Solution Architects.

Optionally, some Product teams may also include dedicated delivery resources. These resources can support any domain of expertise, and would typically be justified via overall workload engagement and/or unique knowledge of a specific product, customer-base, or industry or business unit. These domain experts still adhere to centrally established strategy or governance for standards and practices relative to their delivery activities.

Organization of Digital Product lines and Product teams:

Level 1 – Executive: Chief Technology Officer (CTO), CIO, CISO, or business executive
Level 2 – Digital Product Line Managers
Level 3 – Product team: Product Owners, Product Managers, Product/Solution Architects
Level 4 (optional) – Dedicated Delivery: any technology domain expert(s)

These teams are simple, small, and largely flat (only 2-3 levels), but widely duplicated across the business. While simple in structure, the visibility that will fall on these teams and the potential impact of their successes or failures to the products and broader digital business cannot be understated. The level of accountability aligned to these roles and teams must be balanced with increased authority and autonomy. It is equally important that Technology Delivery teams recognize the authority of these teams, and that supporting them directly impacts the value received by the consumers through a Digital Product, reflecting a shift in priorities away from a single functional manager, common in traditional organizations. Given these considerations, a robust change leadership effort that helps to communicate the vision, drive awareness and education, and provide attentive support to hesitant resource can play a major role in the successful transformation of the organizational structure for the new Digital Operating Model.

Extend Helix Organizations for Digital Delivery

While Product teams can execute successfully within a simple organizational structure, the Digital Delivery teams need to adapt to highly dynamic unpredictable workflows. This requires entirely new organizational structures that are more Agile and flexible than strict hierarchical models could ever be. At a high level, Delivery teams will be loosely organized and coordinated within high-demand CoE as described in Re-Purpose the Central IT Organization. Establishing the basic concept of a CoE is easy; the bigger challenge is how to organize resources to be Agile and flexible to support unpredictable demand.

One of the most promising emerging solutions is a modification or extension of helix organizations. In traditional reporting structures, the delegation of work activity and the evaluation of role performance, including an individual’s current capabilities and future progression plans, share a single line to a single reporting manager. A helix organization separates these into two distinctly separate lines, often demonstrated visually by highlighting a helix-shaped DNA molecule, which is where the solution derives its name. Helix Organization Example shows an example of a helix organization.

In practice, this visual fails to do justice for the opportunities created for the digital business by these solutions. Separating the role evaluation and development from the workflow assignment/engagement creates the opportunity needed by the Digital Operating Model for delivery resources to actively engage in multiple cross-functional teams at once. Using this approach, the requirements of the Product team(s) represent the daily work of engaging and prioritizing for the delivery resource. The CoE manager cultivates the CoE in a given domain of expertise, designating a set of roles and responsibilities needed to deliver for the CoE, ensuring the CoE has enough resources available to support the levels of demand for each role, and qualifying that specific resources can engage at a particular role and level. This includes collecting feedback from Product teams and providing evaluations, coaching, and progression guidance for the resources delivering within a respective role defined within the CoE. More importantly, this solution can be actively leveraged to promote and support multi-discipline delivery resources. For example, a Senior-Level Infrastructure Engineer could develop in the role of a Junior Software Developer and engage in work teams when demand spikes unexpectedly.

To better visualize the opportunity afforded by this organizational structure it is helpful to “detangle” the 2-strand helix and envision the separate lines for workflow engagement and role evaluation separately. In this example, a CoE for cloud engineering has recently qualified this resource to take on Level-2 work requests. Now imagine not only one, but multiple Product teams submitting different level work requests through a CoE, and an underlying resource actively signing onto these workflows based on their availability. Next, imagine the same resource developed an interest and skillset in software development, and the relevant CoE has now qualified them to handle Level-1 software work requests, which they can now do based on their availability. This is how the Digital Operating Model not only fosters, but leverages to great advantage, multi-discipline resources.

Figure 2. Helix Organization Example

Shifting to this organizational structure creates numerous benefits for the business, and even opens the opportunity to foster and leverage a “gig-worker” mentality for internal delivery resources and New Resource Types and Fostering Gig-Worker Mentality. It does also introduce an added layer of complexity, as well as the requirements for internal delivery resources to exercise higher levels of self-management.

In practice, the concept of CoE resource “stickiness” with particular Product teams becomes evident, reflecting the resource familiarity with the priorities and solutions of a given Digital Product that naturally develops through repeated support of the same Product team. This is a natural and advantageous development of these models but care should be taken that CoE resources are largely on a first-come/first-served basis, and any demands for the committed availability of CoE resources should focus on a Product team funding embedded resources if applicable.

New Resource Types

Successful adoption of this solution will require new processes and mindsets; for example, ensuring feedback is shared from Product teams to role managers. Platforms and tools will also be key to managing complexity and unlocking the full advantage of these models. Delivery resources, role/CoE managers, Product teams, and business leaders will each require visibility and access for different purposes alongside providing resource managers with a full view of available resources by role against incoming delivery demand.

Digital Culture

The Digital Operating Model will rely on and play a role in shaping the organizational culture for its success. Individuals across a digital business will need to be more accepting of Digital Products continuing to play a larger role in every area, tolerating regular change due to the presence of digital, and, ideally, to proactively seek out further opportunities to leverage digital. Key considerations for individuals in the areas of leadership, product management, and delivery are:

Digital Leadership
The Digital Operating Model places great emphasis on decentralizing accountability and democratizing, creating greater levels of authority and autonomy across a larger community of resources throughout the business. This runs directly counter to many traditional management models that tightly concentrated authority for decision-making, budgets, demand management, work prioritization, and resource development. In the Digital Operating Model the success of the highest-level leaders will primarily be linked to cultivating, coaching, and supporting new leaders, often described as a “leader-leader” model versus a “leader-doer” model. Command and control mentalities must shift to leadership enablement and communicating strategic intentions.
Digital Product Management
A General Manager mindset is key to success in these roles, it represents the best description of a strong sense of ownership, delegation, and decision-making skills needed to be successful in these roles. Note that this is a distinctly different role and mindset than either traditional team managers or that of Product Owners described by Agile methodologies.
Digital Delivery Resources
Regardless of their role, delivery resources across the business will now have product awareness and thinking reinforced in every element of their work environment. These resources will also need to embrace self-management and accountability for engagement targets with reduced levels of supervision.

Hierarchical project-oriented culture versus product-centric cross-functional culture is not a switch that can be toggled. It is ultimately co-dependent on the everyday working environment. While Agile and other methodologies have played a key role in shifting cultures to be more product and value-oriented, they can only travel as far as these methodologies are able to reflect the overall working environment of an individual or team. By communicating a clear vision for a Digital Product-c Centric Reference Operating Model, business and technology leaders can initiate the cultural shift needed to support the successful adoption of both the operating model and the true business-wide product-centered cultural transformation that lasts.