Solutions are the technology tools we have developed to help our clients analyze, benchmark, and use data in new ways. Over the past ten years, we’ve developed a range of solutions across industries and business functions, and as we start 2019, we believe that three of them may be particularly relevant to clients this year.
From agile organizations to cybersecurity to retail channel planning, these solutions can provide insights that help our clients make more informed decisions. Two are used to diagnose organizations, evaluating structure and security, and the third helps retailers and other businesses maximize the economic value of their real estate.
OrgLab: capturing an amoeba
If an organization chart depicts the structure of a company, what does it look like when the organization is fluid, with three quarters of its employees rotating among teams?
“Like an amoeba,” laughs Carolyn Pierce, director of product management. “‘Agile organizations,’ with flexible teams, will be the dominant new way of operating—so it makes sense that OrgLab reflects this.”
OrgLab is our solution that helps organizations visualize their structure—and is often the first step when a company reorganizes, acquires a business, or undertakes a transformation.
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McKinsey_Website_Accessibility@mckinsey.comLeft to right: the evolution of OrgLab from 2014 to 2019.
When introduced in 2014, OrgLab depicted organizations as boxes and lines in a hierarchy of reporting relationships.
In 2019, OrgLab is being refined to depict organizations by the way the work gets done: through teams, by projects. It will help companies evaluate whether their teams are the right size; do they have effective structures and skill sets; and leaders who are performing well.
OrgLab also depicts processes: visualizing work flow and decision points. “If my most important activity is onboarding new customers, OrgLab can help me see where key decisions are being made,” explains Ashwin Acharya, senior solution leader. “Are they happening in sales? Finance? How many layers do they go up? How quickly do decisions happen?”
Having served more than 300 clients in the last 3 years, OrgLab often provides a first-time, bird’s-eye view of an organization to its senior leaders. In 70 percent of our projects, they are surprised by what they learn, says Ashwin.
For example, a large financial-services company discovered that it had more contractors than employees. A telecom found that 10 percent of its senior management reported to peers. A bank was overcounting its employee population by 20 percent.
The OrgLab team today, part of McKinsey’s larger Organization Practice, has 40-plus people: software developers and data scientists who create the product; org-design experts who scope, problem solve, and run client projects; and coaches and specialists who load and run data and train clients.
They estimate that 20 percent or more of their work this year will focus on helping companies convert to agile methods.
“Reorganizations take a long time. By the time you complete one, you need to start all over,” says Carolyn. “"If you do an agile transformation, it’s the last reorganization you'll have to do.”
Cybersecurity: first things first
Cyberattacks, once a threat to financial firms and governments, are now universal, affecting any business that’s digital and connected to the internet.
So it’s not surprising that cybersolutions are on our list for the second year in a row, this time, specifically, Digital Resilience Assessment.
“In 2018, we have seen attackers become increasingly sophisticated, regulators laser focused, and companies becoming more stringent with their suppliers,” observes James Kaplan, a partner. “Cybersecurity has gone beyond being a technical issue to become organizational in nature. Eighty percent of what you need to do is outside the CEO’s office and integrated into basic processes.”
This 360-degree benchmarking diagnostic scans a company, pinpointing vulnerabilities across seven areas. It answers questions such as:
- Does the business know where its most important data is?
- Are the data protected?
- Can the business enlist its users to help it understand the value of the information it touches?
- Is the business flexible, to respond across all departments instantly and cohesively?
Once the assessment is complete—it typically takes a week or so—we can help the company put a plan into place, from securing data to investing in the cybersecurity market.
The team has grown from zero to 50 in 2 years, and it brings together a mix of deep industry expertise and proven risk experience across a wide variety of scenarios. We expect growth to keep to the same pace in 2019.
“Every company today wants to become digital, to use data and analytics in strategic ways. As a first step, you need the confidence that comes from effective cybersecurity—built into a product’s specs,” says James. “No cybersecurity, no digital, no innovation.”
OMNI: retail therapy for an omnichannel world
The “retail apocalypse” rolled through 2018, with nearly 5,000 stores closing—many of them well-known names—and it will continue through 2019.
While retail networks may be shrinking, physical stores, in some form or other, are here to stay. Often they are evolving to new identities as product showrooms, “brand experiences,” service centers, or fulfillment locations. This evolution, paired with the fact that many digitally native brands, such as Amazon and Casper (mattresses), are building physical stores, means that traditional “four-wall metrics” of sales and profit will become increasingly irrelevant.
Our OMNI solution builds on more than a decade of geospatial-analytics work and helps businesses fundamentally change the ways they think about, and operate, their sales channels—including decisions about their physical footprint.
The solution incorporates large data sets in new ways to calculate interactions between channels, quantifying the “halo effects” that strongly influence the economic value of a store, adding or detracting up to 20 percent of its sales.
One example of OMNI data: a visualization of foot-traffic patterns across São Paulo during a typical day
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OMNI integrates traditional geospatial data—such as demographics, mobile-phone foot traffic, and competitor locations—with internal business data. It is all fed through customized machine-learning models to uncover the factors that are driving performance in each channel, quantify how channels are interacting at a hyperlocal level, and help create the optimal cross-channel footprint for each market.
“Retailers can make informed decisions about where to put stores, which formats to choose, how to use the stores to drive online sales, and even all the way down to fine-tuning store categories to meet the demand for that particular consumer base,” explains Nathan Uhlenbrock, a geospatial-analytics expert.
“It’s become increasingly important be able to quantify channel interactions (owned and third party) at the micromarket level. We have a number of powerful use cases, including optimizing a store network, recapturing volume from store closures, and improving personalization,” explains Kelly Ungerman, a McKinsey partner.
Looking ahead to 2019, she says, “We’re a global capability, and we completed dozens of projects in 2018, ranging from 1-week sprints to 6-month transformations. Every retailer faces these challenges, and few know how to tackle them—but those who do will win.”