Late last year, we began leading a McKinsey research effort aimed at understanding the impact of digitization, advanced analytics, and artificial intelligence on the future shape of global industries. This issue’s cover story, “Competing in a world of sectors without borders,” distills our early thinking:
- The boundaries between economic sectors are blurring. And don’t just take our word for it: when we interviewed 300 global CEOs, across 37 industries, cross-sector dynamics were top of mind for fully one-third.
- Digital ecosystems are emerging. While it’s far too early to know their exact number or shape, one scenario suggests the emergence of a dozen variants on traditional industries where customers could enjoy an end-to-end experience for a wide range of products and services through a single digital access gateway.
- We ain’t seen nothing yet. It’s easy to fixate on the well-known players that are breaking boundaries and building ecosystems—Amazon getting into everything from groceries to movie making, for example. But our work suggests the value at stake—which reaches into the trillions—transcends these digital natives and could soon be shifting in areas as diverse as education, transportation, business services, and healthcare.
The path ahead is uncertain, and it’s possible that customers rather than companies will capture much of the value in play. Still, the nature and magnitude of likely change suggest some no-regrets moves for everyone:
Adopt an ecosystem mind-set as you look past your traditional competitors and industry borders. Follow the data and algorithms, which are critical competitive assets in this new world. Build emotional ties to your customers, whose loyalty will be crucial to ecosystem success. And open your mind to wide-ranging partnership possibilities.
When you start reflecting on the concept of sectors without borders, it influences your take on a variety of management issues—including many in this issue of the Quarterly. “Culture for a digital age,” for example, isn’t just about digital effectiveness, but about enabling your organization to stretch the boundaries of your business by overcoming risk aversion, busting silos, and becoming more customer centric. “A CEO action plan for workplace automation” describes applications of artificial intelligence (AI)—such as using automated facial analysis to strengthen emotional ties with customers and creating “virtual” scale through algorithm-enabled maintenance routines—that can fuel breakout competitive moves. AI also figures in a transformation that venture capitalist Veronica Wu describes taking place in her industry. And data, combined with customer-oriented design, could help ridesharing overcome growth barriers and accelerate the shift from an “automotive industry” to a “mobility ecosystem.”
Leaders grappling with these issues are doing so in the context of today’s organizations, many of which, our colleagues Aaron De Smet, Gerald Lackey, and Leigh M. Weiss argue, are experiencing decision-making dysfunction because digitization has changed our day-to-day operating norms, and our structures and processes haven’t kept up. They suggest ways to do better. Similarly, Scott Keller and Mary Meaney describe how top teams—whose cohesion is critical in fashioning forward-looking responses to our changing world—can work better together. We all need to if we’re to help our organizations navigate the new, borderless order taking shape.
Download the full issue of McKinsey Quarterly 2017 Number 3 (PDF–3.25MB).
