Six capabilities to sustain digital transformations

Digital

November 9, 2020Digital transformations are enabled by technology—and are happening faster than ever because of the pandemic. Recent data show that we have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks. But to sustain change, organizations will need to have the right digital capabilities. Here are six that are top of mind for our McKinsey Digital experts.

1. Diverse tech talent

If leaders want to deliver on their digital aspirations, they’ll need a deep bench of diverse expertise and skill sets, says partner Belkis Vasquez-McCall, including data science, data engineering, product, and design talent. “Organizations need to get the people model right because that’s what enables a culture of iteration and innovation across the organization,” she says. That includes deciding which gaps in talent should be addressed through hiring or outsourcing, such data science, when organizations don’t have the right capabilities in-house—and which roles can be filled by retraining and reskilling existing employees. “You can’t turn a product manager into a data scientist or engineer, but it’s possible to retrain for roles like product owner or agile coach,” Vasquez-McCall says.

2. Customer-centric design thinking

The pandemic’s toll on people’s emotional well-being and health has underscored the need for companies to think about serving customers with a much broader set of motivations and behaviors, explains Hyo Yeon, a McKinsey Design partner. “Design thinking is a critical part of the solution because it is rooted in the human experience,” Hyo says. She points to the various products—take grocery-delivery apps, for example—that have shifted during the crisis to service experiences because of rolling lockdowns and sheltering in place. “For customers, a banking app isn’t just about making a transaction anymore, but a way of managing financial wellness during this transitional time.” As the COVID-19 crisis continues to have an impact on our daily lives, customer-centric design thinking presents an opportunity for organizations to improve the way they serve consumers.

3. Agile ways of working

Compared to traditional ways of working—in which an end goal will determine a project’s resources, cost, and timeline—agile ways of working present a fixed timeline, cost, and resources, while teams are encouraged to explore what scope of impact they can achieve within that framework. “An agile approach is a mindset shift for leaders—it’s all about what minimal viable product you can achieve within specific constraints,” explains partner Brian McCarthy. “This allows organizations to learn, iterate, and improve quickly before that MVP is then industrialized.”

4. Data literacy

The ability to understand, analyze, and leverage data in decision-making is critical as organizations have access to more and more data from digital interactions with their customers, says Ines Marusic, an associate at QuantumBlack, McKinsey’s advanced analytics firm. Beyond the ability to use mathematical modeling, AI, machine learning, and other data-powered tools to substantiate decisions, organizations of the future will need to ensure their algorithmic models are fair and validated in production. “It is important for leaders to ensure they’re solving the right problems with data—not all problems are currently amenable to be solved using AI and machine learning in a way that ensures unbiased decision making,” she says. “Once you decide which problems, the ability to validate your solution as new data comes in is equally important.”

5. Next-gen technology

Engagement with cloud-based products and services increased significantly as the COVID-19 outbreak forced people around the world to shelter in place and work remote. And it’s a trend MGI partner Michael Chui says will continue given that many organizations won’t fully return to the workplace in the near term. “The move to cloud and other technologies is beyond just an adaptation to COVID-19,” he says. “For instance, many companies have found IoT to be helpful during the crisis for applications such as worker safety—e.g., determining if social distancing is being observed—but they will continue to use it for connecting with their customers, improving efficiency of their supply chains, and remote operations.”

6. Analytical reasoning

Digitization may have been accelerated this year by the pandemic, but digital expert Maria Ocampo says it’s a continuous process for organizations that will require leaders and their teams to apply analytical reasoning in an ongoing way. “Our challenges are only going to be increasingly complex to solve—and because we can’t predict what they’ll look like exactly, it’s vital for leaders and their teams to be able to break down problems, analyze patterns in data, leverage new kinds of data, and continuously find different solutions,” she says.