The next-generation operating model for the digital world

The rise of digital has kept businesses on their toes to reinvent their operating models in order to increase revenues, lower costs and delight customers.
Businesses want to improve agility, take advantage of new technologies, so that they can react more quickly, cut costs, be more effective, improve quality of services and customer experience. However, silo efforts, limited experience and capability and lack of long term business digital strategy all contributed to an unsustainable gain on the enterprise level.
According to an article "The next-generation operating model for the digital world" published by McKinsey (Authored by Albert Bollard, Elixabete Larrea, Alex Singla, and Rohit Sood), businesses need to shift from the traditional operating model to a different one.

Shift 1: From running uncoordinated efforts within siloes to launching an integrated operational-improvement program organized around customer experience
Focusing on customer experience and the internal processes that support them will cut across organizational siloes because accomplishing a customer journey requires the effort from multiple departments such as sales & marketing, operations and technology.

Shift 2: From applying individual approaches or capabilities in a piecemeal manner to adopting multiple levers in sequence to achieve compound impact
Five capabilities are the key in this round of transformation – digitisation, intelligent process automation, advanced analytics, business process outsourcing and lean process redesign.

In other words, the start point is the customer experience from which, businesses need to work out how to operate efficiently and effectively in order to satisfy the needs and wants of their customers. This is where the business intelligence and analytics come into play as without understanding customers and their behaviours, it is like operating in the dark. Other capabilities mentioned such as lean process redesign, process automation, process outsourcing and digitisation are the ones driving cost reduction, quality improvement and time to market.

One important point missed in the article was the need of supporting and educating the staff of the businesses and taking them together in the journey. Companies tend to send their employees to training courses when there is a need identified although this may be constrained by the training budget which may vary from organisation to organisation. A model or a set of tools should be built in conjunction with the format of formal training courses to allow readily accessible of knowledge, training materials, digital & operation trends to continuously strengthen people’s knowledge of digitalisation, lean, agile and specialised professional techniques and skills. This will create a learning culture and a team of mind-set ready staff to support the digital transformation agenda of the operating model of a company.

You can read the McKinsey article here.

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