Digital @ Scale

Dr. Jürgen Meffert is a Senior Partner in the McKinsey Düsseldorf office. He is both the Director of Digital McKinsey in the area of B2B, and founder of McKinsey's initiative for SME growth companies. He advises several leading global firms in the telecommunications, high-tech, and media industries, and has overseen extensive transformation programs in various fields, from growth and innovation strategies, marketing, and sales through to processes and organization.Anand Swaminathan is a Senior Partner in the McKinsey San Francisco office. He is a leader at the intersection of Digital McKinsey and McKinsey New Ventures and focuses on helping organizations across industries leverage technology and digital capabilities to evolve their operating models, transform their businesses to effectively serve their customers, and scale operations efficiently. For over 20 years he has focused on serving clients in the financial services, technology, retail, and industrial sectors. In 2015 Anand was named to Fortune magazine's 40 under 40 most influential young people in business.

• Preamble: Thinking Digital ix1 Digital Is Changing Our World, Quickly and Irreversibly 11.1 What Is a Digital Transformation? 11.2 Established Market Definitions Don’t Apply Anymore 71.3 The Pace of Change Is Increasing Exponentially 111.4 Those Who Turn a Blind Eye to Digital Risk Failure and Extinction 132 Digitization Requires Fundamental Renewal: Digital@Scale 152.1 Why? Things Are Going Well, So Why Do We Need to Change? 162.2 What? What Does Digitization Mean for My Company, and What Priorities Are Derived? 202.3 How? How Do I Manage the Tasks Resulting from a Digital Transformation? 222.4 Cargo Cults Don’t Work 233 Why? The Clock Is Ticking 263.1 Creating a Sense of Urgency: How Urgent Is Digitization? 273.2 Determining the Kind of Change Required 333.3 Identifying Relevant Assets 373.4 Determining the Aspiration Level for the Transformation 40Conclusion: Bring on the New Ecosystems 414 What? Doing the Right Things Intelligently 424.1 Always Online, Gladly Electric, Often on Autopilot: Mobility in the Digital Age 45Aamer Baig and Gianluca Camplone on the future of motoring.4.2 Digital Commerce: One Channel Is No Longer Enough—Today’s Mobile Customer Blithely Switches between the Real and Virtual Worlds 53Kelly Ungerman on the future of retail.4.3 Who Still Needs Banks? Fintechs Threaten the Established Business Model 60Somesh Khanna, Vik Sohoni, and Michael Bender on the digital future of the finance industry.4.4 Digital Health: The First Innovation in Health Care That Can Reduce Costs in the Long Term 66Sri Velamoor and Basel Kayyali on the rocky road to the digitization of health care.4.5 Connected Buildings 72Hugo Sarrazin, Kabir Ahuja, and Mark Patel on the buildings and smart homes of tomorrow.4.6 The Digital Revolution Has Reached Electricity Utilities 82Adrian Booth, Mark Patel, and Naveen Sastry on the strategy of utilities in response to the digital intruders in their core markets.4.7 Telecom Giants under Pressure: Who Will Be at the Heart of the Emerging Communications Ecosystems? 87Brendan Gaffey on the distribution battle between hardware manufacturers, content providers, and telecom companies.4.8 Digital Logistics: The Drone Always Rings Twice 93David Frank on driverless trucks, fully connected containers, and small drones that deliver packages to our homes.4.9 E-Government: Public Administration Goes Online 99Martin Lundqvist on the digitization of public administration, and what citizens can expect.Conclusion: Opportunities in the Emerging Ecosystems 1045 What? Developing Business Architecture 1055.1 Omnichannel: A Presence across All Channels 106Lareina Yee and Martin Harrysson describe how companies leverage all sales and communication channels to the maximum.5.2 Dynamic Pricing: Up-to-the-Minute Prices 112Ramji Sundararajan on dynamic pricing, and why two people can pay vastly differing sums for the same product, from the same provider.5.3 Digital Marketing: Tailored Messages across All Channels 117Brian Gregg on why content is king in digital marketing, and how companies can master the discipline.5.4 Digital Product Development and Open Innovation: Rethinking Product Development 122Michael Uhl and Belkis Vasquez-McCall on how digitization is changing development processes in all industries.5.5 Product Design: Learning from Software Development 127Florian Weig on how the philosophy of software development is infecting every industry, and what engineers can learn from big data.5.6 Faster, More Flexible, More Efficient: Supply Chain 4.0 133Enno de Boer and Sumit Dutta on how digitization is changing every point in the supply chain.5.7 Digital Lean: The Digitization of Production 140Varun Marya and Gianluca Camplone on the five fundamentals of digital production.5.8 Digitization in the Office: Bots Take the Reins 146Alexander Edlich on the automation of administration.Conclusion: Digitization Is Changing Every Function in the Company 1516 What? Strengthening the Foundation 1526.1 Two-Speed IT: Accelerating the Pace for the Digital Age 153Naufal Khan on the new challenges for IT, and how companies from the analog age can meet them.6.2 Big Data and Advanced Analytics 157Holger Hürtgen on the path to better, data-driven decisions.6.3 Cyber Security: The Art of the Secure Digital Economy 163James Kaplan on the seven steps toward effective safeguards against hacking.6.4 Embedded Software: Machines and Equipment Go Digital 168Mark Patel on the five guiding principles that can help traditional hardware manufacturers develop a software strategy.6.5 The Chief Digital Officer: A Steve Jobs for Every Company 172Steve Van Kuiken discusses the art of the digital transformation with CDOs.6.6 The Digital Organization: All Power to the Multifunctional Teams 176Julie Goran on autonomous teams, agile sprints, and product owners.6.7 Talent Management: Everyone Wants Digital Natives 181Hugo Sarrazin and Satty Bhens on the upheavals in the labor market and the strategies deployed in the battle for scarce talent.6.8 Partner Management: Stronger Together 185Anand Swaminathan on the art of managing a collaborative network.7 How? Decisive, Holistic, and Rapid Implementation 1907.1 Creating a Plan 1947.2 Think Big: Digitizing the Entire Enterprise 1957.3 Surprise! It’s about the Customer 1997.4 Breaking Up Functional Silos 2038 How? Ramping Up the Digital Company 2108.1 Switching to the Digital Operating System 2118.2 Anchoring the Culture Change 2168.3 Steering Change 2198.4 Encouraging Leadership at All Levels 2229 How? Scaling Forcefully 2269.1 It’s about the Whole 2279.2 How to Turn IT into a Weapon 2289.3 Collaborating Closely with Start-Ups 2319.4 Speed as a Guiding Principle 2339.5 Rapid Scaling: Digitizing the Entire Enterprise 234Conclusion: The Digital World Demands a New Way of Thinking 24010 Are We in Good Shape for the Transformation? 242About the Authors 251Special Thanks 261Index 262