Addressing the key research question of how organizations transform to generate new forms of public and shareholder value by leveraging digital technology.
Honored to share a chapter I authored for the book, Digitalization and Sustainability - Advancing Digital Value edited by M. Kathryn Brohman, Associate Professor at Smith School of Business at Queen’s University in Canada; Gregory S. Dawson, Clinical Professor in the School of Accountancy in the W. P. Carey School of Business at Arizona State University; and and Kevin C. Desouza, Professor of Business, Technology and Strategy in the School of Management at the QUT Business School at the Queensland University of Technology.
Practice 1. Paradoxes and progress: perspectives on collaboration for digital value
Over the last several decades, new technologies have transformed how organizations can be structured and operated for success – specifically, digital change has enabled horizontal and collaborative organizations to increase their value, relative to that typically offered by traditional vertical hierarchies. This paradigm is reshaping public and private sector enterprises in both multinational and very local settings, including government agencies using automation to improve service delivery to veterans, expand loan assistance to small business, and service families in need.
The elements of digital change that mature organizations bring involve multiple factors, especially for government organizations, including:
In Chapter 1 of this volume, the authors provide powerful evidence of the shift to horizontal and collaborative organizations, and also explore its differential impact based on organizational and technological maturity – maturity to harness digital technologies like those identified above in delivering value. Brohman et al. describe how twenty-first century companies and governments are expanding the definition of ‘value’ to fuse private and public sector objectives. Rather than only assessing value through a lens of either commercial profit or government serving the people, the authors note the importance of both and add a third lens that crosses sectors: that of a sustainable planet. Together, the three elements comprise a sort of balanced scorecard for a new age, referred to as the ‘triple bottom line’ or ‘3BL’. Sustainability represents a critically important – some would say existential – domain to measure value; the IBM Center for the Business of Government recently published two reports that address how digital technologies can outcomes across the public and private sectors.
Technological advances now allow organizations to meet these multiple objectives not through a Weberian evolution of the singular organization, but rather through an array of formal and informal networks in which people interrelate in unconventional ways to develop and apply technology innovation and analytics in achieving mission objectives. Through a networked approach, organizations can bring the power of ‘collective action’ – which occurs when technology enhances the ability to cross boundaries in order for people to interact – that drives greater value than any one enterprise could bring.
As the former US Government leader for technology policy at the Office of Management and Budget, and now as the director of the IBM Center, I have experienced and advanced successful and problematic applications of technology. These divergent paths tend to co-exist as the power of new horizontal applications does not align well with the structure of vertical organizations. They create a paradox to be managed, one where successful outcomes emerge after co-creation in the development and implementation of policy and strategy. I have witnessed this firsthand in the development of regulations to deliver student financial aid more efficiently by developing regulations jointly with student and financial institution representatives; moreover, our Center has published research on the value of co-creation for governments as well, providing a research frame that supports further exploration.
Chapters in this section explore this paradox in different contexts. Authors Reihaneh Bidar and Behnam Abedin write in Chapter 2 that ‘co-creation’ among multiple interests can provide mutual benefit for 3BL, while those same interests can also engage in ‘co-destruction’ by suboptimizing operations as part of a network. This point reflects the benefits and risks of collective action – a recent Center report on network-service delivery demonstrates the proposition that I have witnessed in working with government – specifically, bringing organizations together upfront to co-create a delivery process that can benefit those receiving services, and reduce risk of destruction from one part of the network taking an outsized role in the production of those services.
Evidence of the importance of leverage among organizations even appears when assessing value created across rural communities. In Chapter 3, authors Juuli Lintula, Tero Päivärinta, and Tuure Tuunanen study a rural area of Sweden to write about the greater value derived from ‘smart villages’ that act collectively to co-deliver services, as opposed to the traditional case where each community seeks to provide a complete set of services that are redundant with those of their neighbors. Using ‘service dominant logic’ can help smart villages find common delivery methods through ‘regional services ecosystems’ – and digital technologies exist today that bring geographically dispersed areas together in new ways. Service-dominant logic approaches service design from the perspective of the outcome being received in a way that meets a user’s expectations and capacity to access services; our Center published a report describing how this principle informed service design across a range of localities through integrating ethnographic research to support villages, including a case from West Africa.
So how do digital technologies foster collective organizational action? Brohman et al identify several that resonate with my work in and out of government. These include:
Each of these technologies can help modern companies and governments work in multi-sector partnerships to realize greater digital value – serving people more effectively, doing so more sustainably by reducing the amount of redundant technology infrastructures that expend energy in a physical location, and driving greater cost efficiency and profit. Indeed, these technologies enable co-creation: cloud computing creates value by customizing ready-made software and hardware, APIs allow capabilities across organizations to be integrated, online services can allow customers to reach across siloes and develop recommendations that inform future service improvements, and agile approaches rely on user feedback to iterate new solutions.
But, as each of the authors note, the paradox of risk and value, co-creation and co-destruction, can manifest if organizations are not well-managed – where business processes are set up to support vertical and hierarchical structures that do not match the need to collective action, and do not leverage the collective power of digital technologies like cloud computing and APIs. Based on my experience, this paradox becomes both more likely to occur and with greater impact in organizations that fail to adapt how they manage people and processes to a new era. Organizations that remain siloed will limit value and can even lead destructive outcomes; as the authors note, collaboration as a standard procedure and cultural norm can conversely expand digital value for profit, people, and planet.