Important Habits of Highly Effective Digital Enterprises

Important Habits of Highly Effective Digital Enterprises

According a recent article On McKinsey & Company website by ‘Tunde Olanrewaju, Kate Smaje and Paul Willmott, the management philosophy of highly successful digital enterprises is quite different from that of less successful modern enterprises. The authors say the reason for this is that “digital transformation is uniquely challenging, touching every function and business unit while also demanding the rapid development of new skills and investments that are very different from business as usual.” They argue that in order to succeed, management teams need to move past airy company missions and work on “hard wiring digital into their organization’s structures, processes, systems, and incentives.”

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1. Digital enterprises: Shoot for the moon

Management at digital enterprises must be prepared to think out of the box about how a digital business operates. Executives need to consciously decide to set goals that might seem unreasonable to outsiders. Olanrewaju and colleagues argue that “Being “unreasonable” is a way to jar an organization into seeing digital as a business that creates value, not as a channel that drives activities.”

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They point out that some companies set goals such as growth or market share of digital channels. Some companies also set targets for cost decreases based on the cost structures of new digital competitors. The authors suggest that if you aren’t making your mid-level execs and line employees at least a little nervous, “you probably aren’t aiming high enough”.

2. Acquire capabilities

Many of the top dog digital enterprises got there by making, smart strategic acquisitions. The authors point out that you’re probably not going to have all the skills required for digital transformation in house. Digital companies today often look to other industries to attract digital talent, because emphasizing skills over experience when hiring new talent is vital to success in the early stages of these enterprises. Olanrewaju et al also say always hire the top talent you can find, even if these stars in digital product management or user-experience design don’t work in your industry.

3. Cultivate talent

You’ve not only got to acquire talent, you’ve got to keep then happy to keep them. The authors of the article suggest that “ring fencing” digital talent is the only way to make sure you keep your invaluable human capital. This means not just paying the top dollar and offering as many bennies as possible, but setting up digital talent in their own uniquely-structured work environment fenced in from external influences.

4. Digital enterprises: Rapid, data-driven decision-making

Making the right decision and quickly is essential in a dynamic digital environment. Twelve- or 18 month product-release cycles are history. Successful digital enterprises must operate in a continuous delivery and improvement mode, adopting agile development and “live beta,” and using big data analytics to inform decision-making. The authors also emphasize that continuous improvement requires continuous experimentation, and a nimble process for responding to critical information.

Integrating multiple data sources into a single system accessible to nearly everyone in the organization is de rigeur today for larger enterproses. The Procter & Gamble Company (NYSE:PG) recently built an analytics portal called the Decision Cockpit that provides up-to-date sales data across brands, products, and regions to more than global 50,000 employees. The Decision Cockpit is designed so that highly distributed management can quickly identify issues and address the problems.

5. Be obsessed with your customers

The McKinsey &Company article also emphasizes that customer expectations continue to increase, which “drives businesses to improve the customer experience across all channels.” They point out that excellence in one channel is no longer good enough; customers expect the same well-oiled experience in a retail store as they do when shopping online. They also point out that “a healthy obsession with improving the customer experience is the foundation of any digital transformation.”

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