Amazon is ruining things for many businesses – teaching customers that they can expect to get products and services quickly, have a great user experience, no errors, 24-7 availability and personalised interfaces – and save money and time.
What about everyone else? How should they think about transforming their organisations to stay competitive?
Tunde Olanrewaju and Kate Smaje from McKinsey set out seven traits in this article that they have discovered effective digital enterprises share – and that we can use as a blueprint for our own programmes.
Going digital is less evolution and more reinvention.
We need to set unreasonable goals, make choices about targets and strategies that make people around us nervous about the scope and extent to which things will change.
Someone, somewhere is working on an idea that will make our existing business obsolete, our products expensive or redundant and that will satisfy our customers more.
We need to work on destroying and rebuilding our business before they do.
And the skills we have in the organisation now are not the ones that will take us there.
We need to recruit for skills, not experience.
The capability that built our organisation is unlikely to be the same capability needed to build a new digitized one.
The kinds of people needed – developers, user experience designers, system architects – are likely to be in other fields and need to be recruited.
Most organisations will be better off in the long term with in-house capability because a digital transformation is a core strategic initiative.
Then, talent needs to be protected, perhaps in a Skunk Works.
Lockheed Martin’s Advanced Development Programs are referred to as the Skunk Works, a group given a high degree of autonomy and freed from bureaucracy, and told to get on with new projects.
It’s very hard to stick talent in the middle of an existing organisational structure and expect them to innovate.
The resistance from people used to business as usual is too much, and can slow everything down.
Nothing is sacred – challenge everything
When going through a transformation, every aspect of the business and how it works needs to be questioned.
Do certain processes have to be carried out? Are there things we can stop doing?
A formal way to this is a method called Final Cause Analysis (FCA).
We ask what is this for? over and over again – and focus on the essential elements we discover as a result.
We haven’t got a year – we need to move fast.
These days no one has 12-24 months to put a new system in place.
We’re talking weeks and months to getting working systems that we can test and refine based on customer feedback.
Lean and agile ways of working are taken for granted now.
There are more projects than we can do, so we need to prioritise based on value – follow the money
Our projects will help us increase revenue.
At the same time, and as importantly, they can help us cut costs.
We need to rank our projects based on contribution to the bottom line and then commit to a programme – putting money, resources and management in to get things done.
All of this effort and reinvention is focused on one thing – the customer.
Customers leave because they are unhappy – so successful digital organisations are obsessed with the customer and their experience (in a healthy way).
Digitization is not a choice – it’s just what we now have to do to stay in business.