Many businesses fail, and many more probably just break even. The businesses that grow and become entrenched are the ones that find time-tested best practices and processes that have worked for them. Unfortunately, the larger a business becomes, the harder it becomes to refine or replace aging processes. In essence, the “gravity” of an organization’s legacy holds digital innovation back. In an article for McKinsey & Company, Jürgen Meffert and Anand Swaminathan describe how to push past it:
- Think big.
- Build an operating system for speed and reaction time.
- Create momentum through forceful scale.
Incidentally, each of the three steps above has three recommended sub-steps of its own. For thinking big, the authors further say to (1) have a bold plan, (2) put the customer first, and (3) break down functional silos. These are tips you have heard before, but that only serves to reemphasize their significance. Everything should revolve around customers, and silos inhibit change and growth. These are straightforward considerations.
About building an operating system, the authors say to (1) recruit a team, (2) be “fast, not perfect,” and (3) build to adjust. The significance of recruiting new people to work with a CIO or CDO is that, if you only work with existing employees, you are more likely to land on the same old solutions. New talent—particularly with skills in agile, design, and/or data science—will bring fresh ideas to the table that push innovation at a faster rate. And speaking of agile, “be fast, not perfect” is essentially the authors’ way of encouraging you to target minimum viable products (MVPs). You can dynamically adjust how you develop the product as you learn the ways that customers prefer to interact with it. However, the authors note that such dynamic development will require a great CFO who is fluid with budgets.
Lastly, creating momentum through forceful scale entails that you (1) spread the change, (2) turn IT into a weapon, and (3) find partners and build networks. Spreading the change may warrant a “shock team” of specialists and consultants who design a first set of digital processes and plunge it like a spear into the organization. This team can both educate others on digital skills (for eventual handover) and also take care of the first round of digitally-inclined hiring.
By comparison, turning IT into a “weapon” is made to sound more dramatic than it really is; the authors are really just saying you should look for ways to make IT faster in order to meet digital demand. And they continue to say this about finding partners and building networks:
Many established companies prefer to bring all critical functions in-house, but that can take a lot of time and require significant resources. We’ve found that the most successful companies build networks of best-in-class outside specialists—even competitors—who already have the required skills. A consortium of German automakers, for example, formed a venture to buy Nokia’s digital mapping business, giving the whole group the technology critical to self-driving cars that none of them could have developed or acquired alone. With a clear goal, the company delivered. In 2016, digital media represented 67 percent of the company’s revenues and 72 percent of EBITDA.
For further elaboration on these points, you can view the original article here: https://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/how-to-break-through-the-gravitational-pull-of-your-legacy-organization