Behind the scenes of top digital makeovers

A team bringing agile ways of working to build a company’s new digital unit from scratch

We use the phrase “digital reinvention” in many ways, but what does it really mean? It can be anything from adding a new digital channel or product line to an existing enterprise to creating a completely new standalone business, and sometimes it is kick-started by acquiring a digital business. “It can be a bit like building a rocket ship while you’re flying it,” laughs Markus Berger-de León, a partner in Berlin who joined McKinsey in 2015 after helming several successful start-ups in Europe.

“One of the things I am asked most frequently by clients is about the ‘secret sauce’—what does it take to get a digital transformation right?” says Markus. “When you boil it down, there are really three things that if you get right, you’ve just multiplied your chance of success.”

So, what are those three things? “One way to look at it is from the angle of ‘what can go most wrong,’” continues Markus. “And what we find is that if you haven’t built the right operating model or developed the right culture and set of skills for the long -term, it will eventually fail.”

Behind the scenes of top digital makeovers
A team storyboarding in a co-working space in London
Behind the scenes of top digital makeovers

Here are some tips from our experts on the ground for a successful digital reinvention.

1. Build a next-generation operating model

“There is no one-size-fits-all operating model for every organization,” says Francisco Gatto, a digital expert associate partner in McKinsey’s São Paulo office. Depending on clients’ needs, we will either create a new digital center of excellence in -house or build a digital unit on the side. “The factor that determines which approach we take is how committed the original organization is to a big transformation,” explains Francisco. “If senior executives are not fully supportive, we build something separate, an entirely new business.”

One example is a global industrial-manufacturing company that built a digital unit on the side to run a new predictive analytics tool for how they perform maintenance. Prior to that creation, the company had insisted on perfecting solutions before taking them to market, but the cost of delaying was too high in this case.

Even when we build a speed boat on the side, we’re always thinking about how to link it back to the ‘mothership.’

“What they needed was a team that could work like a start-up—empowered to take chances and make mistakes,” says Markus. To get there, we worked together to build that type of team with Digital McKinsey colleagues, all from start-up backgrounds in technology. For every McKinsey person brought in, there was a counterpart from the client, working side-by-side with them to learn and exemplify the new way of working. The result? Within a couple of months, the client team was fully independent, equipped to manage the new system.

When it comes to introducing a new operating model, “staying close to the parent company,” as Markus puts it, is a point of differentiation for how McKinsey works. “Even when we build a speed boat on the side, we’re always thinking about how to link it back to the ‘mothership,’” he adds. It is not about creating silos, but rather reinventing the core of a company by making sure the new unit is aligned with the larger corporate strategy and executives’ priorities.

2. Upend the culture

“Culture is the most complicated, and often hardest, aspect to change within an organization,” says Francisco. “The ability to experiment with culture without compromising business as usual for the parent company is critical.”

This was the case with a Latin American insurance company looking to create an all-digital brand. Within 12 months, a team of agile coaches, designers, and developers from Digital McKinsey—all from start-up backgrounds—built a platform using off-the-shelf components rather than the costly, time-consuming commercial software typically used by insurance companies. “The platform of this new digital brand is a global one that can be used across all branches,” explains Francisco. The implication of this? “Being able to scale this new culture and way of working across the entire bank.”

We then helped to recruit, hire, and train 60 full-time, digital-native employees into that insurance company to sustain and continue to build its culture of continuous innovation after the McKinsey team left and the company would be on its own. “If we leave and there’s no team that can continue this way of working, we’ve failed,” says Francisco. During the final weeks with the McKinsey team, our colleagues spent time running operations and contingency plans with the new hires on a practice basis so they would be prepared for all different scenarios.

If we leave and there’s no team that can continue this way of working, we’ve failed.

“The focus is always on the new unit—and culture— becoming a role model for the rest of the larger organization,” shares Markus. “This means being customer-centric and agile, working in sprints, and focusing on fast learning through experimentation.”

3. Recruit digital-savvy talent

A new culture goes hand in hand with luring the right people to an organization. Many large corporations, however, find it difficult to attract digital talent when competing with start-ups and large technology companies. One client shared, “The biggest challenge [in our digital transformation] for us was getting those skills in house—the deep customer and technical know-how.”

Often, a separate physical space is used to house the new digital unit, which “can be ideal when there’s a need to hire a lot of new talent while wanting to keep their space and culture distinct from the legacy organization,” explains Francisco.

That is exactly what a 150-year-old travel company did when it realized that doing sales via telephone and mailing printed brochures were becoming increasingly outdated, cumbersome, and ineffective. The company had no digital talent of its own, and we helped it set up shop for a new team, initially entirely staffed by McKinsey colleagues, in an abandoned warehouse. In nine months, we brought in a team of 40 people, including designers, engineers, architects, agile coaches, and more, who were able to build and release new digital products, like a redesigned global website for consumers and user-friendly tools for sales to travel agents. In less than one year, the travel company was ready to take control of this new digital unit as well as acclimate its new talent into the organization and implement the broader cultural change.

These three elements are critical aspects of every digital transformation we work on. “It’s easy for a large company to start a new business unit or to spin up a new venture,” says Francisco. “What’s hard is scaling that business—winning over customers while also integrating it into the core business strategy. That’s where the operating model, culture, and new people come in.”

To learn more about these principles, visit our page on digital business building.

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