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Tech Is Transforming How Businesses Are Run

Equifax, P&G, Liberty Mutual reshape leadership structure as they embrace array of digital tools

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ANGUS LOTEN AND JOHN SIMONS

Jan 3, 2017 10:00 am ET

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Equifax last year opened a technology development facility in Auburn, Ala.PHOTO:EQUIFAX

As more companies seek to drive growth by adopting a new generation of mobile, cloud and data technology that is emerging in Silicon Valley, many are confronting an age-old issue. By adopting the latest technology, they’re changing the way their companies are run, a shift that has many nontech firms taking on more characteristics of tech and internet ventures.

New data-driven capabilities are breaking down barriers between formerly siloed business units, flattening out management structures and streamlining production processes, prompting many firms to redraw leadership roles and responsibilities, according to IT executives, industry analysts and management consultants.

“Companies that transition from a more traditional business model to one built around technology and IT must adopt a management practice that can support this evolution,” says Dave Webb, global chief information officer of Equifax Inc. Other large corporations from insurer Liberty Mutual to consumer products giant Procter & Gamble Co., are making similar changes.

Technology is reshaping the management of Equifax in many ways as it moves beyond its core credit reporting service into newer areas. Senior leadership roles in the product and business units are being filled by former divisional CIOs. They are broadening the use of so-called agile management techniques, known for shorter and more frequent development cycles that make use of customer data.

Equifax last year opened a technology development facility in Auburn, Ala., with roughly half the number of managers per employee of the company’s other locations.

The facility, which develops automation and platform services for the Atlanta-based company’s global operations, is staffed by three managers and 33 employees organized into small, cross-functional teams made up of a mix of business and technology personnel. The managers include a vice president of global platform engineering, an automation lead, and a cloud and systems lead.

Rather than issue top-down directives, these managers instead strive to help self-directed teams leverage digitally enabled data sources, collaboration and sharing tools, and tighter feedback loops, to “get things out the door faster,” Mr. Webb says.

At Liberty Mutual Insurance Co., collaboration and sharing tools powered by digital capabilities—roughly 80% of its operations currently run in the cloud—are bringing business, sales and IT units together like never before, says CIO James McGlennon.

That’s shifting the role of managers who oversee those units away from “dictating how things should be done,” to acting more like coaches who guide collaborative, multifunctional teams to “get the work done” on their own, Mr. McGlennon says.

By cutting out layers of approvals and paperwork, employee teams have the space to work faster, deploy new capabilities more frequently, change course in midstream based on quick user feedback or simply “fail fast” and start anew: “It’s a complete change in how we think about building products and software, and about the roles and responsibilities of every employee,” he says.

“Once digital reaches a certain percentage of your business, you have to reorganize,” says Ted Schadler, a vice president and principal analyst at Forrester Research Inc.

Paul Willmott, a McKinsey & Co. director who leads its business technology practice, says the common goal of these new models is to move faster, “and taking out several layers of middle management, coupled with digital applications, allows you to do that.”

Spending on digital technology by U.S. businesses alone is expected to reach nearly $732 billion in 2019, growing at a compound annual rate of more than 16%, according to research firm International Data Corp. World-wide spending is forecast to hit $2.1 trillion, IDC says.

Gartner Inc. Vice President Mark Raskino says newly digital ventures that rely more heavily on web-delivered data in decision-making tend to use technology to automate tasks wherever possible.

Just as consumer internet giants such as Facebook Inc. and Google parent Alphabet Inc. are characterized by their massive scale, non-tech companies are placing a greater emphasis on expanding the scale of their digital platforms, Boston University Professor Marshall Van Alstyne and others argued earlier this year in the Harvard Business Review.

A few years into her stint running P&G’s operations in Asia, Deb Henretta riled her leadership team by insisting that a young, tech-savvy data analyst attend monthly strategy meetings.

“He created algorithms that helped us look at early trends that were starting to indicate a business problem,” she says, citing reports that synthesized sell-through, customer information, market share and other data flowing into the company through recently deployed digital tools.

Even so, her team wasn’t happy with the way she had upended the company’s hierarchy by inviting a lower-level manager into a gathering reserved for top executives, says Ms. Henretta, who took over P&G’s U.S.-based e-business division in 2012. She left P&G in mid-2015 and is now a senior adviser for management consulting firm SSA & Co.

Andrew Wilson, chief information officer at Accenture PLC, says that when he was a young person starting in business, the idea of “pinging a C-suite member with an instant message” was absurd. He says new collaboration tools such as Microsoft Teams, Slack or Workplace by Facebook, place a new set of obligations on managers “to be connected and stay in contact.”

Write to Angus Loten nd John Simons