How Enterprises Can Step Up Their 'Digital' Efforts

by CXOtoday News Desk    Jun 03, 2014

digital leader

More and more organizations are realizing that that they need to step up their digitization efforts to keep up with the rising customer expectations. Going ‘digital’ is not just about automating processes, but requires a compete realignment of your existing people skills, processes and business models, say McKinsey experts Shahar Markovitch and Paul Willmott in a recent article.

“Companies must reinvent the entire business process… Operating models, skills, organizational structures, and roles need to be redesigned to match the reinvented processes. Data models should be adjusted and rebuilt to enable better decision making, performance tracking, and customer insights,” say the experts.

Digitization would also require building new skills and adding to capabilities of existing people. New roles, such as data scientist and user-experience designer, may be needed.

While most companies agree with the need to go digital, not many are equipped to handle the complete transformation effort that it usually requires. Markovitch and Willmott suggest some best practices that successful firms have deployed:

Start at the end state and work back: Digitization often enables a process to be fundamentally reconfigured. Companies need to start their digitization efforts by designing the future state for each process without regard for current constraints. Once a compelling future state has been described, constraints (for instance, legally required checks) can be reintroduced.

Tackle the end-to-end customer experience: Digitizing select stages of the customer experience may increase efficiency in specific areas of the process and address some burning customer issues, but it will never deliver a truly seamless experience. To tackle an end-to-end process such as customer onboarding, process-digitization teams need support from every function involved in the customer experience.

Build new capabilities: Digitization skills are in short supply, so successful programs emphasize building in-house capabilities. The goal is to create a center of excellence with skilled staff that can be called upon to digitize processes quickly. It is also important that the team has the skills needed to build the required technology components in a modular way so that they can be reused across processes.

Need to move quickly: Traditional IT-intensive programs deliver a return only at the end of the project, but digital programs usually deliver improved performance in just three to five months. Complex IT challenges such as legacy-systems integration can be harder to move along quickly, but there are ways to mitigate the risks of delay. Many times slow decision making also proves to be a bottleneck. That’s why digitization programs need strong board-level support to align all the stakeholders.

Roll in, not out: In traditional deployment, a new solution is rolled out progressively across sites to existing user teams. However, a different approach may be with digitization. For example, traditional salespeople may still prefer customers to use the existing systems. In these cases, it might be easier to roll in a new organizational unit to handle the new digital process, and then bring employees into this unit while increasing the volumes handled by it in parallel. This ensures a much easier transition to the digital process by not expending extensive energy on changing old habits and behaviors. By the time all process volume has migrated to the new digital process, the new organizational unit will have “swallowed” all the required employees from the legacy units, suggest McKinsey experts.