Be selective, go fast: The new rules of business productivity

We need to boost productivity. Despite improvements in analytics and insights, “more of the same, but faster” won’t work anymore.

Business and operations leaders are facing challenges every day as companies look to improve performance. The questions they’re asking include “How can we leverage intelligent technology to capture more value faster, increase productivity, and outperform our competitors?,” How can we onboard technology as part of wider transformations?,” and “What is the route to future-proofing operations and business performance, and navigating ongoing volatility to outcompete competitors with technology?”

Companies that see real increases in productivity are not simply grafting technology onto existing operations. Instead, they recognize that technology has changed fundamental assumptions about what operations can (and should) achieve, in much the same way that lean management and agile operating models challenged how leaders thought about waste, variability, and flexibility. Even at the highest levels of corporate performance, businesses that have successfully brought intelligent tech into their operations exist in a state of continuous experimentation and iterative improvements, simply to keep pace.

New ways of working, across the board

The operations landscape has become increasingly challenging over the past decade, with spillover impacts from geopolitical conflicts, logistics issues, and sustainability imperatives. Organizations across industries also face mounting pressures to reduce costs, improve service levels, optimize working capital, and find solutions that deliver immediate impact.

Harnessing the power of new technologies and new ways of working has always been important. Selection and moving fast in business-critical areas is the new rule of business productivity.

Focus where it’s needed

Technology has long been a tempting productivity shortcut for companies trying to derive value from the latest innovations, but the idea of the “big bang” digital transformation is becoming less common. Such programs are high risk and almost never succeed.

McKinsey’s own survey data shows lackluster returns from technology transformation, with most organizations achieving less than one-third of the impact they expected. Even when technology efforts achieve good initial results, the success isn’t likely to last long. A 2022 survey on implementing transformations found that across all types of transformation, only 12 percent of programs sustained their performance gains for more than three years.

This story could be a lot better. Technology needs to be applied and systems integrated where and when it matters to get to the right answer for an organization. An agnostic approach to technology providers allows leaders to find the best solution, deliver results, and build the muscle for a transformation that sticks.

Improved capital productivity, better products delivered faster, more-efficient sourcing, and an elevated experience for employees and customers alike are some of the prizes on offer. None of these are small things, and all of them are complex and nuanced enough for top-down, big bang transformation efforts to blow them off course.

The engine room with the boardroom

The most valuable and sustainable operations transformations are likely to occur in disparate parts of an organization—the CPO overhauling supply chain IT, a COO seeking to eliminate wasted time and materials in manufacturing processes, or a construction company shifting to a digital platform that connects its people and projects far more closely. These things will happen in any case, but it’s far better if they happen within a framework of leader sponsorship, the right reward structures, and a larger plan for change.

With the advent of generative AI (gen AI), organizations need to consider these same principles. Creating value from gen AI requires tackling operational readiness challenges as much as grappling with new technologies. This is the familiar terrain of capability building and change management: developing new capabilities in IT and tech, managing risk and reputation, and monitoring regulatory matters. As is true for any successful change program, it is critical to have a strong relationship between operations leaders, tech leaders, and commercial leaders. Human factors, as always, can be decisive.

It’s right to be excited about what advances in technology can bring to a forward-looking business. Equally important is to remember that some of the challenges of transformation are not related to technology at all.

Learn more about how to integrate, accelerate, and scale technology in your operations here.

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