Great strategies and promising experiments often stumble due to lack of clarity on implementation, or thoughtful planning, say the McKinsey Partner authors of Fast Times
Strategies for building a digital business that learns, adapts and captures big gains may look great on the drawing board. But translating those strategies into actual value is another thing altogether. This article highlights two of the most consistent issues that stymie transformations.
Understand ‘last-mile’ complexity
Modern businesses are complex and deeply interconnected organisations. While a new digital initiative might promise huge value, you won’t see much of it if you don’t take into account all the people and systems that have to make it happen. This is the well-known but often poorly understood ‘last-mile challenge’, that is, the often-complex interdependencies at the edge of the organisation that can lead to ineffective decision-making and slow down change.
A single product designed to improve customer experience in buying a new banking service, for example, might require training people in R&D, procurement, operations, marketing, sales, customer service, and other areas to work in different ways to support the new product. Incumbents routinely underestimate the effort required, leading to squandered value and low adoption rates of technologies that otherwise could have a large impact on the business. Only 6% of frontline workers embed AI into formal decision-making and execution processes, for example, while only 16% of employees trust AI-generated insights, according to a McKinsey survey on AI adoption.
Here’s what the last-mile challenge looks like in practice for a global mining company that was trying to improve productivity. One strand of that effort was to use analytics and move to predictive maintenance to reduce costs and decrease downtime. To make sure it captured the value of shifting to a maintenance schedule based on need rather than set intervals, the company also had to shift the work routines of its maintenance-related experts. The reliability experts learned to triage predicted maintenance events, the planning team created a new scheduling procedure to avoid excess downtime, and the inventory management team found new ways to restock to ensure the right parts were on hand when equipment was brought in.
When it comes to analytics, winning companies spend a disproportionate amount of their energies and resources trying to break through the last-mile challenge. Nearly 90% of the best performers devote more than half of their analytics budgets to this effort, versus only 23% of all other organisations. In practice, this means making analytics user-friendly and tailored to a given person or team of people so they can make better decisions. And it requires embedding analytics into existing processes and tools, which are familiar to the end user. A major retailer saw a significant increase in sales by delivering demographic data on customers to store managers on a daily basis and empowering them to act on the insights. To help overcome last-mile problems, the best companies build training and adoption explicitly into their rollouts.
Galvanise action and make it concrete
At the end of the film, The Candidate, a politician (played by Robert Redford) who has just won the race for the US Senate turns to his campaign manager amid the celebrations and asks: ‘What do we do now?’ That’s a familiar question for people faced with translating lofty digital plans and aspirations into action. McKinsey analysis has found that one of the most important moves in turning a strategy into a reality is galvanising action to take the first step. Leaders need to identify the actions necessary to get started. This can be, for example, tackling staffing to put the best people on a few key initiatives. Or providing teams with clear, proximate goals of what can be achieved and verified over the first three to six months. It’s important to
bear in mind that at this stage, tracking actions taken is more meaningful than tracking results delivered. Focusing too much on the latter will strangle progress.
Take AI and analytics programmes. Best practice is to identify three to five concrete use cases that are feasible and generate value. With each successful use case completed, the company builds confidence and skills to make further progress. That lesson is clear when getting value from the Internet of Things (IoT) as well. The greatest bottom-line value from IoT comes from trying multiple use cases, each grounded on a clear business case tied to the strategy, and executing them with discipline. In fact, we’ve found that implementing more use cases correlates with better financial impact.
Creating a roadmap to help show the way forward has an important role to play as well in translating strategy into action. While this might seem like a vestige of the old days, the very complexity of a transformation—along with the need to be flexible enough to adapt as you learn—makes a roadmap crucial. This is not a waterfall planning activity. But it’s an important discipline for looking ahead and spotting dependencies, constraints, and issues as well as thinking through which initiatives to focus on. In this way, developing roadmaps helps companies overcome pilot paralysis by making an overwhelming and chaotic challenge manageable and affordable.
One electronics company, for example, that was transforming its manufacturing operations took the time to define more than 100 applications it wanted. Based on the maturity of the underlying technologies each would need and each initiative’s potential ROI, the company narrowed the list to 30 and further refined it to three waves of 10 each that it would roll out over two years. This made it easier to assign people and resources, and then manage them.
Listening to voices across the organisation
Alain Bejjani, the CEO of conglomerate Majid Al Futtaim, has built flexibility and accountability into making sure his vision for the company translates the organisation’s strategy into action. Each month, he meets with his business unit (BU) leaders to track performance and develop strategies, but also to understand what concrete initiatives they’re delivering to implement the company’s vision. The BU leaders take that same approach with their own senior managers, who in turn both challenge and strategise with their respective managers around how they are driving towards the company’s vision. This cascading approach gives teams the flexibility to implement programmes they think will be most effective in delivering on the vision while also building accountability into the process.
To understand how well the vision is being implemented at the edge of the organisation, Bejjani also hosts ‘Top Talent’ lunches twice a month with employees across the businesses at all levels of seniority. These lunches (#TalentLunchSeries) allow him to get a better sense of how well people understand the company’s vision and to generate ideas to improve the organisation’s customer-first transformation. As Bejjani posted on his Instagram feed: ‘Ensuring we create time to listen to voices from across our organisation is critical to effective leadership.’
Creating a roadmap is a programme-level activity, tied to your vision and your long-term goals for the transformation. For this reason, the programme-level roadmap is fairly stable, though by no means is it set in stone.
Adapted with permission from Amazon Publishing from Fast Times: How Digital Winners Set Direction, Learn, and Adapt by Arun Arora, Klemens Hjartar, Peter Dahlstrom, and Florian Wunderlich; four Partners at McKinsey & Company.
