The Fourth Industrial Revolution is no longer hype; it has fully arrived and is now enabling real gains in productivity, sustainability, agility, and speed to market. However, many companies are still struggling to build on early pockets of success in a way that delivers meaningful improvements at scale and across the enterprise. There are signs that next-generation operating models are emerging within traditional organizations, but the pace of change still significantly lag behind the broader adoption of digital capabilities happening around the world.
As the urgency to shift to digital operations is growing, customers are already self-migrating to digital channels, whether to reduce in-person contact or out of convenience. Employees are working remotely, straining paper-based and handoff-heavy manual processes to the limit. These shifts are only gaining steam. Those who do not embrace Industry 4.0 risk falling behind in an increasingly competitive landscape. Companies that already started their digital transformation have been able to restart quickly in bigger and bolder ways, while others continue to struggle to deliver services and experiences effectively in the “new normal.”
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Many companies, particularly incumbents feeling the pain of disruption, are taking bigger steps to rethink how digital, automation, and analytics technologies are woven into the fabric of enterprise operations. These efforts are typically grounded in three important objectives:
- Raising the aspiration. While a “thousand flowers blooming” approach can deliver one-off, narrower opportunities and incubate nascent capabilities, building true digital operations requires a more strategic and holistic approach to allocating investments and resources. Leading companies are focusing on the handful of major customer journeys and enterprise processes that matter and are fundamentally re-engineering workflows and the ways of working. Meaningful change does not come from 2 to 3 percent gains scattered across the organization. It comes from 50 percent-plus step-change improvements in efficiency, quality, speed, and experience in the areas that matter the most.
- Expanding the toolkit. Teams reimagining journeys and processes need access to a full suite of capabilities and technologies. Experiences need to be engineered in a way that reflects the unstated needs of customers and employees. Workflows need to be orchestrated in a way that cleanly segments manual work from automated tasks. Organization structures should reflect the new economies of scale and skills that come along with working in a more digital environment. Companies are bringing together capabilities from multiple groups (e.g., automation, analytics, continuous improvement) to dramatically expand the available toolkit.
- Delivering the impact. Building digital operations is not a goal, it’s an enabler of productivity, experience, resilience—primary performance objectives that can be measured for impact. Leading organizations set targets that inspire creativity, look beyond pure cost savings, and ensure every ounce of capacity created is thoughtfully reinvested or monetized systematically. They make small investments upfront to create a foundation and then double down on the most successful efforts.
Digital service excellence: Scaling the next-generation operating model
In the 2021 McKinsey Digital Service Operations compendium, we explore each of these themes through specific examples and perspectives from our experts drawing on our global experience helping companies build next generation operating models.
