This article explores the shift in how organizations view technology, moving beyond a tool for efficiency to a more integral role. It examines the impact of mobile internet and advancements like large language models, using case studies of two Chinese online-to-offline platform companies to illustrate this evolution.
Traditionally, leaders and managers often treat technology as a tool or capability that can help get work done more efficiently, but doesn’t drastically change the nature of that work. Email, for instance, allows for faster communication.
The supply chain management system reduces supply chain costs, shortens delivery cycles, and ensures that products are delivered to customers quickly and accurately. Increasingly, however, this view is out of date. In recent years, the role of technology in shaping organizations has undergone revolutionary changes. Our research reveals that since the rise of mobile internet in the 2010s—and particularly with the advancement of large language models in the past three years—technology has increasingly assumed a deeper, more social “role” within organizational transformation, profoundly influencing structures, collaboration, and operational mechanisms. In a recent study, we examined the “tool” vs. “role” approaches and how they shape what companies do with technology. Specifically, we looked at two Chinese online-to-offline platform companies—let’s call them T Company and R Company—during the rapid growth of mobile internet. In many ways, the two companies are very similar. They are of similar age , and both achieved billion-dollar valuations with employee counts peaking at 30,000 to 40,000. They share commonalities in policy and market environments, business scopes, development stages, and organizational structures. And both relied on technology platforms to disrupt traditional business models: T Company revolutionized the traditional fresh produce supply chain through IT technology, offering services to both merchants and end consumers. R Company transformed the automobile transaction process using IT technology, providing matchmaking services for new and used cars for merchants and end consumers. Where the companies differed significantly was in perceptions and positioning of technology by company leaders. In turn, that led to different organizational structures and business practices. T Company’s leaders viewed technology as a tool or capability with a supportive role. They merely moved existing business and management processes online. R Company’s leaders positioned technology as an independent social “role,” integrating it into operations and management, aiming at reshaping business models and standards. In these two companies, the way technology was introduced, understood, and applied shaped organizational structure, how and with whom employees collaborate, and the roles managers take on. How “Tool” vs. “Role” Changes Organizational Structure What do the distinction between viewing tech as a tool vs. a role really mean? And how does it change how companies operate? At T Company, the founding team believed that the company’s core value was in aggregating customer demand, taking over certain tasks from merchants, and integrating them into a large-scale supply chain to improve bargaining power with suppliers and deliver better services. As such, the company used technology only to automate the supply chain and to digitize and optimize existing processes. In other words, T Company directly translates existing business and processes into code, as tools making the work easier and shortening the time required for the processes, without radically changing the information and decision-making chain. They didn’t use it to drive business or organizational transformation. In contrast, R Company positions technology as an independent “role” within its operations. From the beginning, the leadership team envisioned technology as a transformative force capable of addressing industry pain points, eliminating information asymmetries, and increasing efficiency across the value chain. As such, they integrated IT technology into business and management processes where it could function in a human-like manner. Concretely, R Company has established an Operations and Algorithm Center at its headquarters, treating it as an extraordinarily intelligent “brain” that collects and aggregates all business data, industry data, and real-time user behavior. Through pre-designed and continuously refined algorithms, the “brain” analyzes real-time business situations, makes decisions, and generates reports to assist managers in decision-making. The company also treats the “brain” as a middle manager that breaks down specific decisions into step-by-step tasks, directly issuing and displaying them on frontline employees’ mobile devices. This guides employees on how to communicate with customers, confirm prices, and quickly sign contracts, while simultaneously enabling task coordination and acceptance across all company departments. By creating a “central brain” with technology, the company was able to standardize processes, improve transaction rates, and enable innovative service models. Put simply, they used it to change how work was done. Consider how each approach directly influenced the organizational hierarchies of the two companies. Because T Company was trying to use technology to improve existing processes, it relied on a traditional bureaucratic structure in which information and decisions passed through multiple layers and often become diluted, undermining consistency and execution—a phenomenon known as “information decay.” This structure struggles to keep pace with the dynamic market environment, as delays and inefficiencies hinder operational responsiveness. Conversely, R Company’s perception of technology as a “role” has allowed IT systems to eliminate layers and functions traditionally assumed by middle managers. The “central brain” functions as an “assistant” for information collection and transmission, a strategic analysis “expert,” and a “coordinator” responsible for decision breakdown and task assignment. Decision-making authority is thus centralized. By gradually minimizing the function of and finally eliminating its intermediary layer , R company has achieved a flat structure, with headquarters directly managing over 60 cities. How Employees Collaborate—and with Whom Because of the tool vs. role choice, the ways that employees collaborate and make decisions also differ significantly at the two companies. At T Company, business teams propose plans and pass them sequentially through departments, following a linear process that’s bound by hierarchy. Whenever a new business proposal is initiated, business staff must route the proposal sequentially through all related departments to seek approval. Each department follows the traditional functional approval process, where regulations and rules are used solely to verify compliance. Implementation can only begin after every department has signed off. If any single department raises an issue , the entire workflow may have to restart again. The result is repetitive procedures, high communication costs, and delays. Discrepancies between technical implementation and business workflows often necessitate iterative adjustments, further slowing progress. In contrast, at R Company, collaboration mechanisms are networked and virtual. Positioning technology as a key role—managers and employees interact directly with the central “brain”—fundamentally transforms the business model. This requires all departments within the company to function as proposal- or solution-oriented units rather than approval-oriented ones. Whenever a new business need arises, business and technology teams work simultaneously to design solutions, forming task forces that evaluate feasibility and optimize workflows collaboratively. In other words, the business staff and relevant departments collaborate from the very beginning to craft a solution—rather than having the business team draft a proposal in isolation and route it for sequential approvals, which ensures that potential issues/problems are anticipated and addressed while the plan is still in the conceptual stage. This integrated approach eliminates the need for repeated revisions, ensures alignment between technological implementation and business objectives, and enhances efficiency. The perception about how to view technology also changes who employees collaborate with. In traditional organizations, interactions occur primarily between managers and employees, employees and employees, and employees and customers, i.e., between humans. At T Company, these interactions remain predominantly human-to-human. Managers rely on IT systems for workflow facilitation and information sharing but still engage directly with employees for execution. Similarly, operational communication among employees often relies on face-to-face exchanges, with verbal explanations accompanying IT-issued work orders. Customer interactions are also handled directly by front-line employees, limiting automation and efficiency. This one-to-one interaction model constrains scalability and reduces overall organizational efficiency. In contrast, R Company integrates human-to-machine interactions into its operations. This model extends traditional one-to-one relationships to one-to-many or many-to-many connections, enabling demand-oriented interactions. The IT system actively participates in communication, accepting or rejecting requests based on programmed logic and self-learning capabilities. Consequently, interactions occur at all levels through the central brain—between employees, and between management and employees—driven by functional needs, where groups are spontaneously formed as needed. These groups further interconnect, weaving a complex network. Such multimodal interaction transforms the organization into a networked structure. Over time, this system continually optimizes interactions, enhancing efficiency and agility. The differences between T and R Companies’ approaches are particularly evident in their price adjustment processes. At T Company, price adjustments involve multi-layered approvals from team leaders to city managers, taking significant time and being influenced by human factors. For example, when a customer negotiates the price, the salesperson needs to submit a request to their direct superior, indirect superior, and functional line manager, following the traditional line of authority. This cumbersome process introduces uncertainty and inefficiency. R Company, on the other hand, uses an intelligent system to streamline price adjustments. Salespeople submit requests that are quickly approved by team leaders, with the system automatically executing changes. The IT system employs algorithms to calculate optimal prices based on factors like sales cycles and regional competition. Most adjustments are automated, drastically reducing manual interventions. This model enables thousands of daily price adjustments to be handled efficiently, avoiding delays caused by human-led approvals. Director vs. Empowerer The different approaches to technology also reshaped managerial roles. At T Company, managers act as directors, relying on top-down decisions and multi-layered meetings for resource allocation. While this works in small-scale operations, it falters in large-scale, high-complexity scenarios. Decision delays and communication bottlenecks impair the organization’s agility in addressing customer needs. At R Company, since operational tasks are delegated to employees and IT systems, senior managers have transitioned into empowerers, focusing on strategic decisions . The IT system assumes many traditional managerial functions, such as information collection, analysis, and decision-making, so middle managers now act as resource allocators and performance evaluators. This transformation enhances organizational agility and shifts decision-making power to individual employees, fostering a flatter and more networked structure. The emergence of the technology system as an active organizational role places new demands on managers. At R Company, managers are now required not only to possess traditional business expertise, but also to deeply understand the design and application of technology systems. This digital competency has become a critical element of leadership in the modern era. Lessons for Leaders The dramatic differences in organizational structure, collaboration mechanisms, and leadership roles that were caused by the perception and position of technology tell us that it is not whether your company is using new technology, but how your company lives with it. Such revolutionary change needs a transformation in leadership, mindset, and ways of organizing. Leadership: Leaders must possess technical savvy, constantly tracking technological trends and working hard to predict where they might go next. They need to understand system logic, participate in algorithm governance, and collaborate deeply with technical teams. Only by doing so can they stay ahead and gain a competitive edge. Mindset: Companies should shift from using technology to do things to empowering technology to take the lead in accomplishing tasks. As IT systems, AI, and future robotics continue to advance in their ability to perform a variety of tasks, managers must consistently ask themselves: “Can this task be handed over to technology?” Ways of organizing: When a task is effectively executed by technology, reexamine the distribution of information flow and the chain of decision-making. Adapt organizations to technology, instead of compromising technology for the sake of existing organization and power dynamics. R Company achieved agility and organizational flattening by allowing technology to adopt particular roles. This approach enables a shift from traditional hierarchies to networked or flexible organizational models. In networked organizations, technology aligns units with front-line needs, creating collaborative circles and efficient interconnectivity. Flexible organizations build on this by enhancing adaptability through modular designs, blurred boundaries, and rapid reconfiguration. Positioning technology as an active participant not only modernizes management practices but also drives greater efficiency and adaptability. In the AI era, managers must adopt forward-thinking approaches, understand technological logic, and integrate it seamlessly into business processes. Embracing technology as a role enables companies to achieve agility, innovate business models, and discover growth opportunities, paving the way for smarter, more efficient, and open organizations.
Technology Organizational Transformation Mobile Internet Large Language Models Business Models
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