A shift 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

1. Structuring the Digital Team
As business models in every industry have become increasingly tech enabled, companies have shifted focus from a centralized
approach focused on digital to a hybrid model that facilitates end-to-end collaboration and connectivity among functions and
business 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 shift 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. And
while more than 80% of companies now have a unique digital leadership position, only 10% say this person is responsible for
setting the full strategy—CEOs continue to play a critical role.
The digital organizational models differ in three key areas: setting 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 the
opportunities presented by digital. Additionally, there has been a steady increase in the percentage of respondents who
perceive 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 embedded
solely in functions and/or market
and/or lines of business
CENTRALIZED
A single leader with hard-line
responsibility for all digital activity
HYBRID
Digital
Experience
A centralized group, but with some
digital capabilities embedded in
the wider organization
Digital
Experience
Digital
Department
Digital
Department
Changing Prevalence of the Three Digital Team Structures (over 5 years)
Who Is Responsible for Setting 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 and
strategy are set by:
Percentage without
a digital leader:
Percentage of digital leaders
reporting to the CEO:
The Path Forward
Digital
Experience
In 2018, 55% of leaders identified
organizational inertia, understood
as functional departments being
too fixed in their ways, as a
significant barrier to becoming an
effective digital business.
Fewer than a third of leaders responded
that their business is aligned on its
various digital capabilities, and nearly
half identified absence of a coordinated
digital strategy as a significant barrier.
Not having a single leader of the digital
agenda is increasingly becoming seen
as a barrier.
In 2018, just over half of leaders saw
both lack of digital skills/expertise
and ineffective crossfunctional
collaboration as significant barriers.
Absence of a coordinated
digital strategy
Organization inertia
No single head of digital
Lack of digital skill/expertise
Ineffective crossfunctional
collaboration
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% CEO
23% CIO/CTO
13% CDO
10% CMO
55% 5%
38% CEO
19% CIO/CTO
13% CDO
9% CMO
62% 11%
50% CEO
17% CIO/CTO
11% CDO
4% CMO
65% 25%
Centralized
Hybrid
Decentralized
Organizational
Inertia
Clarity of
Strategy
Skill &
Alignment
Gaps
Create a unifying strategy and
vision for your tech-enabled
organization
Assess your current digital
organizational structure
Encourage collaboration to
drive innovation and
transformation
Considerations
Is there a clear understanding of current
digital and technology initiatives across
the organization and how they are
integral to the overall strategy?
Do parts of your organization resist
adopting new digital and tech initiatives?
How can you persuade everyone to buy
in?
Considerations Considerations
How can you break down functional silos
to ensure critical collaboration in the
development and execution of the digital
vision and strategy?
Are your functional leaders aligned along
a unified, forward-looking vision?
Which leader/team in the organization is
best positioned to develop a digital
strategy and vision that will allow you to
take full advantage of digital and
technology opportunities and propel you
beyond your competitors?
Do you need to create a new team,
restructure or upskill in order to find the
solution?
IT Digital Marketing Business Unit
Digital
Marketing
Artificial
Intelligence
Cybersecurity
Back-end
Technology
Digital
P&L
Labs &
Innovation
Product
Management
Marketing Digital
Digital
Strategy
Data &
Analytics
Digital Program
Management
Ecosystems/
Partnerships/Ventures
IT
Business
Unit
There is a great deal of variation when it comes to what is defined as a digital capability, but ownership of the
following 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 unit
were 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 and
digital 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
Europe
37%
North
America
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 consistently
rely 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 these
companies continue to rely on a centralized digital function for their digital strategy and for digital program management and
data & 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