Digital @ Scale: The Playbook You Need to Transform Your Company

290 Pages·2017·2.46 MB·English

by  Anand Swaminathan

Digital @ Scale

Digital @
Scale
How you can lead your business
to the future with Digital@Scale
ananD Swaminathan
Jürgen meffert
Cover Design: Lisa Campabadal and Paolo Donato
Copyright © 2017 by McKinsey & Company, Inc. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
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10 9 8 7 6 5 4 3 2 1
Contents
Preamble: Thinking Digital ix
1 Digital Is Changing Our World, Quickly and Irreversibly 1
1.1 What Is a Digital Transformation? 1
1.2 Established Market Definitions Don’t Apply Anymore 7
1.3 The Pace of Change Is Increasing Exponentially 11
1.4 Those Who Turn a Blind Eye to Digital Risk Failure and
Extinction 13
2 Digitization Requires Fundamental Renewal: Digital@Scale 15
2.1 Why? Things Are Going Well, So Why Do We Need to
Change? 16
2.2 What? What Does Digitization Mean for My Company, and What
Priorities Are Derived? 20
2.3 How? How Do I Manage the Tasks Resulting from a Digital
Transformation? 22
2.4 Cargo Cults Don’t Work 23
3 Why? The Clock Is Ticking 26
3.1 Creating a Sense of Urgency: How Urgent Is Digitization? 27
3.2 Determining the Kind of Change Required 33
3.3 Identifying Relevant Assets 37
3.4 Determining the Aspiration Level for the Transformation 40
Conclusion: Bring on the New Ecosystems 41
4 What? Doing the Right Things Intelligently 42
4.1 Always Online, Gladly Electric, Often on Autopilot: Mobility in
the Digital Age 45
Aamer Baig and Gianluca Camplone on the future of motoring.
[ v ]
4.2 Digital Commerce: One Channel Is No Longer Enough—Today’s
Mobile Customer Blithely Switches between the Real and Virtual
Worlds 53
Kelly Ungerman on the future of retail.
4.3 Who Still Needs Banks? Fintechs Threaten the Established
Business Model 60
Somesh Khanna, Vik Sohoni, and Michael Bender on the digital
future of the finance industry.
4.4 Digital Health: The First Innovation in Health Care That Can
Reduce Costs in the Long Term 66
Sri Velamoor and Basel Kayyali on the rocky road to the digitization
of health care.
4.5 Connected Buildings 72
Hugo Sarrazin, Kabir Ahuja, and Mark Patel on the buildings and
smart homes of tomorrow.
4.6 The Digital Revolution Has Reached Electricity Utilities 82
Adrian Booth, Mark Patel, and Naveen Sastry on the strategy of
utilities in response to the digital intruders in their core markets.
4.7 Telecom Giants under Pressure: Who Will Be at the Heart of the
Emerging Communications Ecosystems? 87
Brendan Gaffey on the distribution battle between hardware
manufacturers, content providers, and telecom companies.
4.8 Digital Logistics: The Drone Always Rings Twice 93
David Frank on driverless trucks, fully connected containers, and
small drones that deliver packages to our homes.
4.9 E-Government: Public Administration Goes Online 99
Martin Lundqvist on the digitization of public administration, and
what citizens can expect.
Conclusion: Opportunities in the Emerging Ecosystems 104
5 What? Developing Business Architecture 105
5.1 Omnichannel: A Presence across All Channels 106
Lareina Yee and Martin Harrysson describe how companies leverage
all sales and communication channels to the maximum.
5.2 Dynamic Pricing: Up-to-the-Minute Prices 112
Ramji Sundararajan on dynamic pricing, and why two people
can pay vastly differing sums for the same product, from the same
provider.
[ vi ] Contents
5.3 Digital Marketing: Tailored Messages across All Channels 117
Brian Gregg on why content is king in digital marketing, and how
companies can master the discipline.
5.4 Digital Product Development and Open Innovation: Rethinking
Product Development 122
Michael Uhl and Belkis Vasquez-McCall on how digitization is
changing development processes in all industries.
5.5 Product Design: Learning from Software Development 127
Florian Weig on how the philosophy of software development is
infecting every industry, and what engineers can learn from big data.
5.6 Faster, More Flexible, More Efficient: Supply Chain 4.0 133
Enno de Boer and Sumit Dutta on how digitization is changing
every point in the supply chain.
5.7 Digital Lean: The Digitization of Production 140
Varun Marya and Gianluca Camplone on the five fundamentals of
digital production.
5.8 Digitization in the Office: Bots Take the Reins 146
Alexander Edlich on the automation of administration.
Conclusion: Digitization Is Changing Every Function in
the Company 151
6 What? Strengthening the Foundation 152
6.1 Two-Speed IT: Accelerating the Pace for the Digital Age 153
Naufal Khan on the new challenges for IT, and how companies from
the analog age can meet them.
6.2 Big Data and Advanced Analytics 157
Holger Hürtgen on the path to better, data-driven decisions.
6.3 Cyber Security: The Art of the Secure Digital Economy 163
James Kaplan on the seven steps toward effective safeguards against
hacking.
6.4 Embedded Software: Machines and Equipment
Go Digital 168
Mark Patel on the five guiding principles that can help traditional
hardware manufacturers develop a software strategy.
6.5 The Chief Digital Officer: A Steve Jobs for Every Company 172
Steve Van Kuiken discusses the art of the digital transformation
with CDOs.
Contents [ vii ]
6.6 The Digital Organization: All Power to the Multifunctional
Teams 176
Julie Goran on autonomous teams, agile sprints, and product
owners.
6.7 Talent Management: Everyone Wants Digital Natives 181
Hugo Sarrazin and Satty Bhens on the upheavals in the labor
market and the strategies deployed in the battle for scarce talent.
6.8 Partner Management: Stronger Together 185
Anand Swaminathan on the art of managing a collaborative
network.
7 How? Decisive, Holistic, and Rapid Implementation 190
7.1 Creating a Plan 194
7.2 Think Big: Digitizing the Entire Enterprise 195
7.3 Surprise! It’s about the Customer 199
7.4 Breaking Up Functional Silos 203
8 How? Ramping Up the Digital Company 210
8.1 Switching to the Digital Operating System 211
8.2 Anchoring the Culture Change 216
8.3 Steering Change 219
8.4 Encouraging Leadership at All Levels 222
9 How? Scaling Forcefully 226
9.1 It’s about the Whole 227
9.2 How to Turn IT into a Weapon 228
9.3 Collaborating Closely with Start-Ups 231
9.4 Speed as a Guiding Principle 233
9.5 Rapid Scaling: Digitizing the Entire Enterprise 234
Conclusion: The Digital World Demands a New Way of
Thinking 240
10 Are We in Good Shape for the Transformation? 242
About the Authors 251
Special Thanks 261
Index 262
[ viii ] Contents