Digital competition may dictate a new organizational architecture in which emerging digital processes coexist with traditional ones. When a retailer recently tried to launch a new e-commerce business, it found itself stymied by the fact that IT-spending amounts were capped as a percentage of revenue and by a lengthy and cumbersome approval process for new projects. The company’s goal of launching the business in two months proved hopelessly optimistic.
This retailer’s time-to-market problem is symptomatic of a dilemma many companies face as they seek to develop new products at a faster tempo, digitally optimize processes, or otherwise place major strategic bets in response to the digitization of their businesses. Digital competitors are now biting into a range of industries, creating a need for a rapid response. Yet the technology processes running many large-scale businesses are also mission critical. There’s no room for compromise on the performance of current technology-enabled (and often transaction-oriented) operating processes, even as organizations try to increase their pace of digital innovation.
The retailer’s board responded by creating a new budgeting and approval process in which projects supporting major digital strategic thrusts are now treated separately from the rest of the IT budget. Solutions like this, in our experience, are an effective means of addressing digital timing challenges. Many companies need to create a two-speed architecture—a fast speed for functions that address evolving customer experiences and must change rapidly, and a transaction speed for the remaining functions, where the pace of adjustment can remain more measured.
Although this sounds simple, it is anything but. Pulling off this split typically means confronting a framework of IT practices and organizational processes that have evolved over time and are at the core of the technology that keeps businesses running. In a separate article,1 we offer a detailed road map for IT leaders hoping to maintain the transactional world’s large-scale systems while pursuing daily deployments of digital features, customized cloud-based solutions, and real-time data analytics. Here, we’ll briefly lay out some broader management principles that are important for a wider cross section of executives to keep in mind.
Running your company at two speeds by Oliver Bossert, Jürgen Laartz, and Tor Jakob Ramsøy
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