In this segment of “Office Optional with Larry English,” Larry discusses digital exhaust – what it is and why it’s so valuable to your business.
The pandemic led to the disruption of many companies as their employees suddenly transitioned to working remotely. To work together effectively, they needed to install digital tools to communicate and collaborate with everyone once they became so spread out.
This digitalization of organizations created a benefit that never existed before. Companies began creating immensely rich data on how their organizations operate. For the first time, they had a detailed x-ray of their organizations: how communication happens, how data flows, how the organization is functioning.
This “digital exhaust” is incredibly powerful, and it has the potential to provide a tremendous competitive advantage. But organizations are just now starting to understand that they have it and how to use it.
For years, Dr. Phanish Puranam, the Roland Berger Chaired Professor of Strategy and Organisation Design at INSEAD, has been studying how organizations can use a data-driven approach to better design themselves.
Dr. Puranam says that prior to the pandemic, organizational data was limited and hard to acquire. Organizations had to wait until a problem emerged and then rely on internal surveys, interviews and other tools to gain a very shallow, limited view of how their employees were really working.
The forced digitalization of organizations created massive amounts of data that record every employee interaction. For example, Microsoft’s O365 and Teams collect data across eight categories from 11 popular apps, including Outlook and Excel. Every interaction is recorded, from what information is sent to who you are connecting with and how they respond.
Awareness that organizations now have this visibility is also raising privacy concerns — even when data is not tied to individual users. If you want to begin using your company’s digital exhaust, you will have to think through your approach to privacy and the very tricky issues surrounding ethical data uses, consent and not compromising employee trust. But because the potential benefits are so great, companies should strive to find the right balance.
The Power of Using Digital Exhaust
Dr. Puranam believes that how companies use digital exhaust will soon become a major field of competence. Because it may not be obvious how powerful this data could be, I will share a few low-hanging-fruit examples of what your organization can do today with its digital exhaust:
- Delayer your organization – Digital technologies can accomplish much of the coordination and monitoring that middle managers have traditionally done. The data from these interactions can be used to increase the supervisor’s span of control, allowing your managers to oversee many more subordinates with fewer layers. Dr. Puranam believes delayering is a very likely outcome of the distribution of work the pandemic created: “Distributed organizations lead to digitalization of the organization which can lead to flattening of the organization. I think it is almost inevitable for organizations.” That doesn’t necessarily mean more autonomy, though – it could mean fewer managers exert more control.
- Identify your organization’s linchpins – In most organizations, many of the most critical people are not the ones with a formal title in a box on the org chart. Digital data from collaboration tools show how communications flow through your organization, highlighting the major connectors through whom all communication flows. For the first time, your organization can see who the linchpins are: Those people who, if you were to lose them, would cause the organization to fall apart. You can then use that data to enable more effective design process flow, organization design, and retention and promotion approaches.
- Proactively identify weak spots – Digital exhaust allows organizations to unlock many new insights that would never come to light in an analog world. For example, one organization used it to identify gender imbalances caused by the pandemic, such as when burdens disproportionately fell on women. The data revealed that women were working beyond their normal working times, or that they were working more hours than their male counterparts. As this company did, organizations can now head off such problems before they spiral.
- Accelerate process improvement and team functions – Organizations now have data and tools to become much more effective at process improvement and organization design. As Dr. Puranam says, “Organizations are going to quickly improve processes, get smarter about the composition of teams, how to run teams, how to coordinate things, and how to use people’s time efficiently when they’re working in different locations. All of that is just bound to improve with more and better data, if we only know how to use it.”
- Measure company mood – Because digital collaboration technologies create a recordable history of what employees are saying, your organization can measure overall mood collectively. For example, Gitlab, a company Dr. Puranam and his colleagues have studied extensively, was all remote for many years before the pandemic. It built a small vocabulary of emoticons that are specific to the company’s culture for employees to use. The company asks employees regularly to share their current mood using the emoticons, allowing leaders to capture at any time their employees’ feelings and which cultural attributes are being lived.
An organization’s digital exhaust is one of your most valuable assets—and its value is only going to grow. If you want to gain a competitive advantage, embrace this new field of competence now and get a big head start.
