Customers’ lives are digital—but is your customer care still analog?

Posted in Aktuellt, Customer care / Kundvård, Digitalisering / Internet, Strategy implementation / Strategiimplementering on June 20th, 2017 by admin

Digital customer care is still new territory for many companies. They can learn a lot from the natives.

Today’s customers expect digital service. More and more are getting it, too, across sectors from telecommunications to banking and from utilities to retail. For example, telco customers conduct roughly 70 percent of their purchases either partly or wholly online—and 90 percent of their service requests as well.

The rapid shift to digital customer care (or e-care) should be good for everyone. Automation and self-service cuts transaction costs for providers. When e-care is done well, customers prefer it, too. Our research among telecommunications customers shows that customers who use digital channels for service transactions are one-third more satisfied, on average, than those who rely on traditional channels. And since companies that excel in customer satisfaction also tend to create more value for their shareholders, there is even more incentive to get e-care right.

Despite e-care’s advantages, however, many companies struggle to give their customers a consistently good digital experience. The same research revealed that while more than two-fifths of service interactions with telecommunications companies begin on an e-care platform, only 15 percent are digital from start to finish. We’ve also found that use of digital service channels lags a long way behind awareness. In Europe, for example, 98 percent of mobile phone users in one survey knew their provider offered a service website, but only 37 percent made use of it. In the United States, meanwhile, only 18 percent of mobile users said they used their providers’ online service platforms.

And e-care is getting more complex to implement. Not only do customers now want access to a fully comprehensive range of online service offerings—they also want to access these offerings using a variety of platforms, including both conventional web browsers and a growing pool of mobile devices and dedicated apps. Customers expect their experience to be continuous and consistent as they migrate from one platform to another, but they also want service options that make sense in the context in which they are asking for help.

Finally, customers are getting harder to impress. The rapid rise of “digital native” companies, such as Spotify or Uber, exposes customers to simple, streamlined user experiences designed from the ground up for digital delivery. Established companies that build their e-care offerings and processes on top of, or alongside, more traditional channels often find it hard to meet the same standards.

That comparison is becoming increasingly important. When customers think about the e-care service they receive from their bank or phone company, they don’t compare it with its competitors in the same industry but with the other digital services they use every day. When the online experience doesn’t meet their expectations, customers go back to the phone. As a result, some telecoms companies have seen call-center volumes—and costs—rise as they attempt to move to a digital service model.

Making e-care work
Companies that have been able to move more customer-care services to online channels and articulate strong e-care offerings excel across seven dimensions:

Simplicity starts with a clean, clear, and intuitive design that requires few mouse clicks or screen touches to achieve the desired task. The main functionalities are easy to find and well explained. The language is concise, simple, and easy to understand. Apple offers a wide range of products aimed at very different customers, for example, but its product information and support websites use the same clean, pared-down design, with key information presented clearly and more detail available with a minimum of clicks. In financial services, companies such as PayPal have dramatically simplified online payments, in many cases requiring only the recipient’s email address or mobile-phone number as identification.

Convenience means customers are offered a wide variety of services and a choice of support channels. User interfaces are easy to navigate and critical information is not hidden within long pages or complex menu hierarchies. Even better are sites that use data intelligence to tailor page content dynamically based on who is accessing it. Similarly, biometric identification techniques using fingerprint or voiceprint technologies accelerate authentication steps and reduce the mental burden on users without comprising security. One telecom company has developed a dynamic FAQ system that suggests possible support articles as soon as a customer begins to type a query and that loads the most relevant content automatically without requiring a page refresh.

Interactivity reflects the fact that customers now expect their online experiences to be dynamic and interactive, with blogs, social-media feeds, user reviews, and customer forums all playing important roles in modern e-care. These are especially important for millennial consumers, who have grown up steeped in social media and online interactions. Accordingly, an active user community is central to UK-mobile-phone-network giffgaff’s strategy. Users receive account credit for helping others with their queries, and individual community members are regularly highlighted on giffgaff’s support website. One of the company’s core product offerings—a bundle of text messages, voice minutes, and data known as a “goodybag”—was introduced as a direct result of suggestions on user forums. Moreover, through interactive games and a cocreation system that lets users build new services for other community members, customers now help set giffgaff’s direction.

Consistency is essential: customers require that the appearance, functionality, and information available in e-care services be consistent regardless of which device or software they use. Amazon, for example, shows customers essentially the same menus, the same links, and the same tone and language across all of its mobile and website channels, giving customers the same experience as they move from one channel to the next. This commitment significantly reduces any need for relearning after each switch—and any attendant digital friction.

Value results only if e-care works for the customer. Services must be designed to reflect the user’s individual needs, rather than the company’s internal processes, and must evolve as those needs change. One insurance company, for example, uses real-time rendering technology to create a customized video presentation of the coverage included in the customer’s quotation. The video combines professionally scripted and presented content with customer-specific data drawn from multiple sources, and its content is adjusted based on the customer’s choices and responses during the presentation.

Desirability is a product not only of a consistently appealing visual design but also of the tone and presentation of the site’s content. Both usually require adaption to suit local tastes, which may require dramatically different choices depending on the specific context. For instance, Chinese websites are typically very crowded, with lots of information available, while sites in the United States and Western Europe tend toward a more streamlined aesthetic.

Brand is not just a label: it is how customers experience a company’s products and services. Given that e-care has become one of the primary ways customers interact with a business, brand reinforcement should be a primary e-care goal rather than an afterthought. The best companies therefore integrate their brand values deeply into the design of their e-care offerings.

To buttress its message of providing exactly the services its customers need, one mobile-phone company has tailored its service experience to support unique “moments of truth” in the customer journey. Once a customer logs in, the website’s navigation changes dynamically based not only on what the customer is doing but also on behavioral insights based on previous interactions with the company.

A customer who’s usually pressed for time may see just three simple plan alternatives, cutting through the clutter, while one who wants to be assured of getting the best deal will see more detail on plan options, so she can feel in control. The site then guides the customer through activation steps, offers clear instructions on how to get the most from the service, and anticipates the most common questions with detailed answers.

Measuring up
To understand how leading players measure up under this harsh scrutiny, we evaluated the e-care offerings of more than 20 major telecommunications companies across the world, covering both online services and dedicated apps. We tested half a dozen common service activities, including access to billing and consumption information, technical-support queries, and sales or upgrade queries.

Our approach looked at the way e-care platforms were designed and presented to the user, the functionalities on offer, and the information available within each of our target service activities. Under each of those three main concepts, we rated the offerings across the seven dimensions described above.

Are you ahead of the pack?
Overall, our analysis should be sobering reading in all sectors for incumbents that are digitizing their customer-service offerings. We found only one area—the presentation of information using simple, jargon-free language—where most of the companies surveyed are demonstrating best practices. Elsewhere, we did find examples of best practices, but they have not been adopted by every company, and they are not always consistently applied even when they have been adopted.

The best websites and apps in our survey sample, for example, offer a wide range of services using a clear, easily understandable architecture that requires few clicks to access relevant content. Several, but by no means all, companies provide a convenient search function to help customers access technical support. Only a few make “search” the core navigation method for technical-support information.

Indeed, not many of the surveyed companies are taking full advantage of digital platforms’ unique capabilities. Interactive features such as support wizards or explanatory videos were rare. Only the very best-performing companies managed to integrate their e-care offerings seamlessly with live channels (such as e-calling or traditional telephone support) to create a truly multichannel experience. And just a handful have deployed the most advanced e-care technologies, such as artificial intelligence or chatbots.

For many of the services we evaluated, customer experience was inconsistent between web and app platforms. Apps sometimes offered less functionality and frequently provided less information than their web counterparts, which companies tended to position as the full-service option. On further examination, differences in look and function between apps and web often arose because of the relatively recent introduction of app offerings, or the use of different design and development teams.

Best practice is not enough
As they move further into the digital world, many incumbents clearly have work to do to give their customers the best e-care experience. But that’s no reason to set their sights too low. Leading companies not only make their digital channels highly useful and consistent at every customer touchpoint—they also make them fun and emotionally appealing. They personalize the experience and keep it relevant across the entire customer life cycle. For these top digital players, e-care doesn’t just work, it builds a brand that engages and delights customers.

That’s the standard, and it’s lifting customer expectations for everyone else. To keep up, traditional companies must measure their own performance against the best of the best of best—and embrace a culture of rapid, continuous evolution and improvement. There’s no time to lose.

Source:McKinsey.com, June 2017
Authors: Jorge Amar and Hyo Yeon
About the authors: Jorge Amar is an associate partner in McKinsey’s Stamford office, and Hyo Yeon is a partner in the New York office.
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Fem trender: AI och maskininlärning

Posted in Aktuellt, Digitalisering / Internet on June 16th, 2017 by admin

AI och maskininlärning är på god väg att revolutionera samhället, det menar Fredrik Heintz som är forskare i artificiell intelligens vid Linköpings universitet. Han listar dagens starkaste trender.

1. Mer flexibel industriproduktion
Automatisering har varit avgörande för att industrier i högkostnadsländer ska kunna konkurrera på den globala marknaden. Lägre produktionskostnader genom högre produktivitet säkras nu långsiktigt med hjälp av flexibla robotar som ABB:s YuMi som med samarbets- och inlärningsförmåga ställer om produktionen efter företagets behov.

2. Digitala medarbetare
Sökmotorer och översättningstjänster är digitala stöd som blivit en del av vår vardag. Utvecklingen har nu gått så långt att det till och med går att anställa digitala medarbetare och styrelsemedlemmar. De moderna kognitiva medhjälparna för en dialog med användaren – till exempel kan programmet Watson ställa diagnos på patienter och programmet Amelia ansvara för företags kundtjänst.

3. Självkörande fordon
Tesla och Googles självkörande bilar har inspirerat hela fordonsbranschen med sin samhällsnytta. I en förarlös framtid kan väginfrastrukturen utnyttjas bättre – bilarna kan köra närmare varandra och med högre hastigheter än människor behärskar bakom ratten. Utan trafikljus och avståndsregler skulle trafikflödet bli bättre och spara både energi och pengar. Men säkerheten är fortfarande en utmaning. Hur säkerställer man att bilen fattar rätt beslut och vem bär ansvaret vid olyckor?

4. Datalogiskt tänkande
Automatisering innebär en samhällsomställning och de arbeten som inte försvinner kommer att förändras. Utvecklingen vi sett i fabrikerna sprider sig nu till tjänstemannayrkena och människan behöver anpassa sig till datalogiskt tänkande. I samarbete med intelligenta maskiner blir vi mer produktiva och konkurrenskraftiga.

5. Sociala robotar
Robotarna blir alltmer avancerade och en tydlig trend är att de även används för initiativ med mjuka värden. Sociala robotar som förstår vad som händer, fattar beslut och interagerar med människor visar positiva effekter. Till exempel hjälper de autistiska barn att kommunicera och bidrar med socialt stöd i äldreomsorgen.

Läs också ”5 trender: Social selling – sälj med sociala medier”

Källa: Dustin.se, juni 2017
Text: Moa Thorsell
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The next-generation operating model for the digital world

Posted in Aktuellt, Digitalisering / Internet on April 6th, 2017 by admin

Companies need to increase revenues, lower costs, and delight customers. Doing that requires reinventing the operating model.

Companies know where they want to go. They want to be more agile, quicker to react, and more effective. They want to deliver great customer experiences, take advantage of new technologies to cut costs, improve quality and transparency, and build value.

digi 3The problem is that while most companies are trying to get better, the results tend to fall short: one-off initiatives in separate units that don’t have a big enterprise-wide impact; adoption of the improvement method of the day, which almost invariably yields disappointing results; and programs that provide temporary gains but aren’t sustainable.

We have found that for companies to build value and provide compelling customer experiences at lower cost, they need to commit to a next-generation operating model. This operating model is a new way of running the organization that combines digital technologies and operations capabilities in an integrated, well-sequenced way to achieve step-change improvements in revenue, customer experience, and cost.

A simple way to visualize this operating model is to think of it as having two parts, each requiring companies to adopt major changes in the way they work:
•The first part involves a shift from running uncoordinated efforts within siloes to launching an integrated operational-improvement program organized around customer journeys (the set of interactions a customer has with a company when making a purchase or receiving services) as well as the internal journeys (end-to-end processes inside the company). Examples of customer journeys include a homeowner filing an insurance claim, a cable-TV subscriber signing up for a premium channel, or a shopper looking to buy a gift online. Examples of internal-process journeys include Order-to-Cash or Record-to-Report.
•The second part is a shift from using individual technologies, operations capabilities, and approaches in a piecemeal manner inside siloes to applying them to journeys in combination and in the right sequence to achieve compound impact.

Let’s look at each element of the model and the necessary shifts in more detail:

Shift #1: From running uncoordinated efforts within siloes to launching an integrated operational-improvement program organized around journeys
Many organizations have multiple independent initiatives underway to improve performance, usually housed within separate organizational groups (e.g. front and back office). This can make it easier to deliver incremental gains within individual units, but the overall impact is most often underwhelming and hard to sustain. Tangible benefits to customers—in the form of faster turnaround or better service—can get lost due to hand-offs between units. These become black holes in the process, often involving multiple back-and-forth steps and long lag times. As a result, it’s common to see individual functions reporting that they’ve achieved notable operational improvements, but customer satisfaction and overall costs remain unchanged.

Instead of working on separate initiatives inside organizational units, companies have to think holistically about how their operations can contribute to delivering a distinctive customer experience. The best way to do this is to focus on customer journeys and the internal processes that support them. These naturally cut across organizational siloes—for example, you need marketing, operations, credit, and IT to support a customer opening a bank account. Journeys—both customer-facing and end-to-end internal processes—are therefore the preferred organizing principle.

Transitioning to the next-generation operating model starts with classifying and mapping key journeys. At a bank, for example, customer-facing journeys can typically be divided into seven categories: signing up for a new account; setting up the account and getting it running; adding a new product or account; using the account; receiving and managing statements; making changes to accounts; and resolving problems. Journeys can vary by product/service line and customer segment. In our experience, targeting about 15–20 top journeys can unlock the most value in the shortest possible time.

We often find that companies fall into the trap of simply trying to improve existing processes. Instead, they should focus on entirely reimagining the customer experience, which often reveals opportunities to simplify and streamline journeys and processes that unlock massive value. Concepts from behavioral economics can inform the redesign process in ingenious ways. Examples include astute use of default settings on forms, limiting choice to keep customers from feeling overwhelmed, and paying special attention to the final touchpoint in a series, since that’s the one that will be remembered the most.

In 2014, a major European bank announced a multiyear plan to revamp its operating model to improve customer satisfaction and reduce overall costs by up to 35 percent. The bank targeted the ten most important journeys, including the mortgage process, onboarding of new business and personal customers, and retirement planning. Eighteen months in, operating costs are lower, the number of online customers is up nearly 20 percent, and the number using its mobile app has risen more than 50 percent. (For more on reinventing customer journeys, see “Putting customer experience at the heart of next-generation operating models,” forthcoming on McKinsey.com.)

Shift #2: From applying individual approaches or capabilities in a piecemeal manner to adopting multiple levers in sequence to achieve compound impact
Organizations typically use five key capabilities or approaches (we’ll call them “levers” from now on) to improve operations that underlie journeys.

Digitization is the process of using tools and technology to improve journeys. Digital tools have the capacity to transform customer-facing journeys in powerful ways, often by creating the potential for self-service. Digital can also reshape time-consuming transactional and manual tasks that are part of internal journeys, especially when multiple systems are involved.1

•Advanced analytics is the autonomous processing of data using sophisticated tools to discover insights and make recommendations. It provides intelligence to improve decision making and can especially enhance journeys where nonlinear thinking is required. For example, insurers with the right data and capabilities in place are massively accelerating processes in areas such as smart claims triage, fraud management, and pricing.
•Intelligent process automation (IPA) is an emerging set of new technologies that combines fundamental process redesign with robotic process automation and machine learning. IPA can replace human effort in processes that involve aggregating data from multiple systems or taking a piece of information from a written document and entering it as a standardized data input. There are also automation approaches that can take on higher-level tasks. Examples include smart workflows (to track the status of the end-to-end process in real time, manage handoffs between different groups, and provide statistical data on bottlenecks), machine learning (to make predictions on their own based on inputs and provide insights on recognized patterns), and cognitive agents (technologies that combine machine learning and natural-language generation to build a virtual workforce capable of executing more sophisticated tasks). To learn more about this, see “Intelligent Process Automation: The engine at the core of the next generation operating model.”
•Business process outsourcing (BPO) uses resources outside of the main business to complete specific tasks or functions. It often uses labor arbitrage to improve cost efficiency. This approach typically works best for processes that are manual, are not primarily customer facing, and do not influence or reflect key strategic choices or value propositions. The most common example is back-office processing of documents and correspondence.
•Lean process redesign helps companies streamline processes, eliminate waste, and foster a culture of continuous improvement. This versatile methodology applies well to short-cycle as well as long-cycle processes, transactional as well as judgment-based processes, client-facing as well as internal processes.

Guidelines for implementing these levers
In considering which levers to use and how to apply them, it’s important to think in a holistic way, keeping the entire journey in mind. Three design guidelines are crucial:

1. Organizations need to ensure that each lever is used to maximum effect. Many companies believe they’re applying the capabilities to the fullest, but they’re actually not getting as much out of them as they could. Some companies, for example, apply a few predictive models anddigi 2 think they’re really pushing the envelope with analytics—but in fact, they’re only capturing a small fraction of the potential value. This often breeds a false complacency, insulating the organizations from the learnings that would otherwise drive them to higher performance because it is “already under way” or “has been tried”. Having something already under way is a truism: everyone has something under way in these kinds of domains, but it is the companies that press to the limit that reap the rewards. Executives need to be vigilant, challenge their people, and resist the easy answer.

In the case of analytics, for example, maxing out the potential requires using sophisticated modeling techniques and data sources in a concerted, cross-functional effort, while also ensuring that front-line employees then execute in a top-flight way on the insights generated by the models.

2. Implementing each lever in the right sequence. There is no universal recipe on sequencing these levers because so many variables are involved, such as an organization’s legacy state and the existing interconnections between customer-facing and internal processes. However, the best results come when the levers can build on each other. That means, in practice, figuring out which one depends on the successful implementation of another.

Systematic analysis is necessary to guide decision making. Some institutions have started by outlining an in-house versus outsource strategy rooted in a fundamental question: “What is core to our value proposition?” Key considerations include whether the activities involved are strategic or confer competitive advantage or whether sensitive data or regulatory constraints are present.

The next step is to use a structured set of questions to evaluate how much opportunity there is to apply each of the remaining levers and then to estimate the potential impact of each lever on costs and customer experience. This exercise results in each lever being assigned an overall score to help develop a preliminary point of view on which sequence to use in implementing the levers.

There’s also a need to vet the envisioned sequences in the context of the overall enterprise. For example, even if the optimal sequence for a particular customer journey may be “IPA then lean then digital,” if the company’s strategic aspiration is to become “digital first,” it may make more sense to digitize processes first.

This systematic approach allows executives to consider various sequencing scenarios, evaluate the implications of each, and make decisions that benefit the entire business.

3. Finally, the levers should interact with each other to provide a multiplier effect. For example, one bank only saw significant impact from its lean and digitization efforts in the mortgage application journey after both efforts were working in tandem. A lean initiative for branch offices included a new scorecard that measured customer adoption of online banking, forums for associates to problem solve how to overcome roadblocks to adoption, and scripts they could use with customers to encourage them to begin mortgage applications online. This, in turn, drove up usage of online banking solutions. Software developers were then able to incorporate feedback from branch associates, which made future digital releases easier to use for customers. This in turn drove increased adoption of digital banking, thereby reducing the number of transactions done in branches.

Some companies have developed end-to-end journey “heat maps” that provide a company-wide perspective on the potential impact and scale of opportunity of each lever on each journey. These maps include estimates for each journey of how much costs can be reduced (measured in terms of both head count and financial metrics) and how much the customer experience can be improved.

Companies find heat maps a valuable way to engage the leadership team in strategic discussions about which approaches and capabilities to use and how to prioritize them.

Case example: The ‘first notice of loss’ journey in insurance
In insurance, a key journey is when a customer files a claim, known in the industry as first notice of loss (FNOL). FNOL is particularly challenging for insurers because they must balance multiple objectives at the same time: providing a user-friendly experience (for example, by offering web or mobile interfaces that enable self-service), managing expectations in real time through alerts or updates, and creating an emotional connection with customers who are going through a potentially traumatic situation—all while collecting the most accurate information possible and keeping costs in line.

Many companies have relied on Lean to improve FNOL call-center performance. One leading North American insurer, however, discovered it could unlock even more value by sequencing the buildout of three additional capabilities, based on the progress it had already made with Lean:

Digitization. This company improved response times by using digital technologies to access third-party data sources and connect with mobile devices. With these new tools, the insurer can now track claimant locations and automatically dispatch emergency services. Customers can also upload pictures of damages, and both file and track claims online. The insurer also allows some customers to complete the entire claims process without a single interaction with a company representative.

Advanced analytics. Digitization of the FNOL journey provided the insurer with more and better data faster, which in turn allowed its digi 1analytics initiative to be more effective. Now able to apply the latest modeling capabilities to better data, the company is using advanced analytics to improve decision making in the FNOL journey. For example, intelligent triage is used to close simple claims more quickly, and smart segmentation identifies claims likely to be total losses and those liable to require the special investigative unit (SIU) far earlier than before. Analytics are even being used to predict future staffing needs and inform scheduling and hiring, thereby allowing both complex and simple claims to be handled more efficiently.

Intelligent process automation (IPA). Once digital and analytics were in place, IPA was implemented. Automation tools were deployed to take over manual and time-consuming tasks formerly done by customer-service agents, such as looking up policy numbers or data from driving records. In addition to reducing costs, IPA sped up the process and reduced errors. IPA came last because the streamlining achieved by digitization and more effective use of analytics had eliminated some manual processes, so the IPA effort could focus only on those that remained.

By combining four levers—lean plus digital, analytics and IPA—this insurer drove a significant uplift in customer satisfaction while at the same time improving efficiency by 40 percent. (For more approaches to improving claims, see “Next-generation claims operating model: From evolution to revolution,” forthcoming on McKinsey.com.)2

Bringing it all together: Avoid creating new silos by thinking holistically
Senior leaders have a crucial role in making this all happen. They must first convince their peers that the next-generation operating model can break through organizational inertia and trigger step-change improvements. With broad buy-in, the CEO or senior executive should align the business on a few key journeys to tackle first. These can serve as beacons to demonstrate the model’s potential. After that comes evaluation of the company’s capabilities to determine which levers can be implemented using internal resources and which will require bringing in resources from outside. Finally, there is the work of actually implementing the model. (For more on the last topic, see “How to build out your next-generation operating model,” forthcoming on McKinsey.com.)

Transformation cannot be a siloed effort. The full impact of the next-generation operating model comes from combining operational-improvement efforts around customer-facing and internal journeys with the integrated use of approaches and capabilities.

Source: McKinsey.com, April 2017
Authors: Albert Bollard, Elixabete Larrea, Alex Singla and Rohit Sood
About the authors: Albert Bollard is an associate partner in McKinsey’s New York office, Elixabete Larrea is an associate partner in the Boston office, Alex Singla is a senior partner in the Chicago office, and Rohit Sood is a partner in the Toronto office.
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Transforming operations management for a digital world

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Strategy implementation / Strategiimplementering, Technology on October 13th, 2016 by admin

When combined, digital innovation and operations-management discipline boost organizations’ performance higher, faster, and to greater scale than has previously been possible.

In every industry, customers’ digital expectations are rising, both directly for digital products and services and indirectly for the speed, accuracy, productivity, and convenience that digital makes possible. But the promise of digital raises new questions for the role of operations management—questions that are particularly important given the significant time, resources, and leadership attention that organizations have already devoted to improving how they manage their operations.

At the extremes, it can sound as if digitization is such a break from prior experience that little of this history will help. Some executives have asked us point blank: “If so much of what we do today is going to be automated—if straight-through processing takes over our operations, for example—what will be left to manage?” The answer, we believe, is “quite a lot.”

More digital, more human
Digital capabilities are indeed quite new. But even as organizations balance lower investment in traditional operations against greater investment in digital, the need for operations management will hardly disappear. In fact, we believe the need will be more profound than ever, but for a type of operations management that offers not only stability—which 20th-century management culture provided in spades—but also the agility and responsiveness that digital demands.

The reasons we believe this are simple. First, at least for the next few years, to fully exploit digital capabilities most organizations will continue to depend on people. Early data suggestdw1 that human skills are actually becoming more critical in the digital world, not less. As tasks are automated, they tend to become commoditized; a “cutting edge” technology such as smartphone submission of insurance claims quickly becomes almost ubiquitous. In many contexts, therefore, competitive advantage is likely to depend even more on human capacity: on providing thoughtful advice to an investor saving for retirement or calm guidance to an insurance customer after an accident.

That leads us to our second reason for focusing on this type of operations management: building people’s capabilities. Once limited to repetitive tasks, machines are increasingly capable of complex activities, such as allocating work or even developing algorithms for mathematical modeling. As technologies such as machine learning provide ever more personalization, the role of the human will change, requiring new skills. A claims adjuster may start by using software to supplement her judgments, then help add new features to the software, and eventually may find ways to make that software more predictive and easier to use.

Acquiring new talents such as these is hard enough at the individual level. Multiplied across an organization it becomes exponentially more difficult, requiring constant cycles of experimentation, testing, and learning anew—a commitment that only the most resilient operations-management systems can support.

Seizing the digital moment
And if digital needs operations management, we believe it’s equally true that operations management needs digital. Digital advances are already making the management of operations more effective. Continually updated dashboards let leaders adjust people’s workloads instantly, while automated data analysis frees managers to spend more time with their teams.

The biggest breakthroughs, however, come from the biggest commitment: to embrace digital innovation and operations-management discipline at the same time. That’s how a few early leaders are becoming better performers faster than they ever thought possible. At a large North American property-and-casualty insurer, for example, a revamped digital channel has reduced call-center demand by 30 percent in less than a year, while improved management of the call-center teams has reduced workloads an additional 25 percent.

Achieving these outcomes requires organizations to tackle four major shifts.

Digital and analog, reinforcing each other
Digitization can be dangerous if it eliminates opportunities for productive human (or “analog”) intervention. The goal instead should be to find out where digital and analog can each contribute most.

That was the challenge for a B2B data-services provider, whose customized reports were an essential part of its white-glove business model. Rather than simply abandon digitization, however, the company enlisted both customers and frontline employees to determine which reports could be turned into automated products that customers could generate at will.

Working quickly via agile “sprints,” developers tested products with the front line, which was charged with teaching customers how to use the automated versions and gathering feedback on how they worked. The ongoing dialogue among customers, frontline employees, and the developer team now means the company can quickly develop and test almost any automated report, and successfully roll it out in record time.

Driving digital, enterprise-wide
Developing new digital products is only the beginning, as a global bank found when it launched an online portal. Most customers kept to their branch-banking habits—even for simple transactions and purchases that the portal could handle much more quickly and cheaply.

Building the portal wasn’t enough, nor was training branch associates to show customers how to use it. The whole bank needed to reorient its activities to showcase and sustain digital. That meant modifying roles for everyone from tellers to investment advisers, with new communications to anticipate people’s concerns during the transition and explain how customer service was evolving. New feedback mechanisms now ensure that developers hear when customers tell branch staff that the app doesn’t read their checks properly.

Within the first few months, use of the new portal increased 70 percent, while reductions in costly manual processing means bringing new customers on board is now 60 percent faster. And throughout the changes, employee engagement has actually improved.

Realigning from the customer back
The next shift redesigns internal roles so that they support the way customers work with the organization. That was the lesson a major European asset manager learned as it set out on a digital redesign of its complex, manual processes for accepting payments and for payouts on maturity. The entire organization consisted of small silos based on individual steps in each process, such as document review or payment processing—with no real correlation to what customers wanted to accomplish. The resulting mismatch wasted time and effort for customers, associates, and managers alike.

The company saw that to digitize successfully, it would have to rethink its structure so that customers could easily move through each phase of fulfilling a basic need: for instance, “I’ve retired and want my annuity to start paying out.” The critical change was to assign a single person to redesign each “customer journey,” with responsibility not only for overseeing its digital elements but also for working hand in glove with operations managers to ensure the entire journey worked seamlessly. The resulting reconfiguration of the organization and operations-management systems reduced handoffs by more than 90 percent and cycle times by more than half, effectively doubling total capacity.

Making better leaders through digital
The final shift is the furthest reaching: digital’s speed requires leaders and managers to develop much stronger day-to-day skills in working with their teams. Too often, even substantial dw2behavior changes don’t last. That’s when digital actually becomes part of the solution.

About two years after a top-to-bottom transformation, cracks began to show at a large North American property-and-casualty insurer. Competitors began to catch up as associate performance slipped. Managers and leaders reported high levels of stress and turnover.

A detailed assessment found that the new practices leaders had adopted—the cycle of daily huddles, problem-solving sessions, and check-ins to confirm processes were working—were losing their punch. Leaders were paying too little attention to the quality of these interactions, which were becoming ritualized. Their people responded by investing less as well.

Digital provided a way for leaders to recommit. An online portal now provides a central view of the leadership activities of managers at all levels. Master calendars let leaders prioritize their on-the-ground work with their teams over other interruptions. Redefined targets for each management tier are now measured on a daily basis. The resulting transparency has already increased engagement among managers, while raising retention rates for frontline associates.

Organizations investing in human and digital capabilities can start by asking themselves several critical questions:

Do we really understand how customers interact with us now, and how they want to in the future?

How can we give customers the experience they want, no matter which digital and human channels they use?

How can we speed our metabolism so we can uncover new opportunities for better performance?

Can our culture become flexible enough for us to collaborate effectively with our customers through constant change?

Capturing the digital opportunity will require even greater operations-management discipline. But digital also makes this discipline easier to sustain. Adding the two together creates a powerful combination.

Source: McKinsey.com, October 2016
By: Albert Bollard, Alex Singla, Rohit Sood, and Jasper van Ouwerkerk
About the authors: Albert Bollard is an associate partner in McKinsey’s New York office, Alex Singla is a senior partner in the Chicago office, Rohit Sood is a partner in the Toronto office, and Jasper van Ouwerkerk is a senior partner in the Amsterdam office.
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Ledarskap för digitalisering

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Technology on October 5th, 2016 by admin

Frågan den som vill stresstesta sin egen organisation bör besvara är om det i dagsläget finns ett ledarskap och en kultur som krävs för att möta den förändring digitaliseringen för med sig, t ex dra full nytta av digitaliseringens möjligheter. En av de viktigaste grundbultarna som lyfts fram i studier om digital transformation av verksamheter är att det är en fråga för VD:n och styrelsen och att de inte får lämpa över ett så viktigt arbete till IT-chefen.

Att ställa om en organisation till digitalt leder oundvikligen till en del smärtsamma omställningar för individer i organisationen. Det handlar om roller som får mindre att tycka till om, om chefer som får mindre makt, om resurser som styrs om och om större krav på snabbrörlighet i organisationen. Denna ledarskapsutmaning är i sig ett tecken på det som karaktäriserar den digitaldisrupdigitala omställningen – den bryter upp de silos där vi är trygga och tvingar oss alla ut på djupt vatten.

Nära hälften av alla chefer, oavsett om de har en IT-roll eller inte, har varit med och fattat strategiska beslut kring digitalisering. Det kommer inte som någon överraskning att över hälften av dessa chefer (chefer som varit delaktiga i IT-beslut men som inte formellt har en roll inom IT) säger att de inte känner sig ha tillräckligt med kompetens för att fatta sådana beslut . Oavsett om man känner sig redo eller inte kommer fler och fler chefer bli inblandade i beslut som rör digitalisering. Det blir därför en kärnfråga att utbilda alla beslutsfattare i de villkor och möjligheter som digitaliseringen för med sig. Men hur ska man då vara och agera för att vara en bra digital ledare?

Fyra nycklar för digitala ledare
Idealt är det VD som tar täten i omställningen mot att bli en sant digital organisation. Att driva en sådan omvälvande förändring kräver ett starkt och uthålligt ledarskap som vågar ta obekväma beslut och driva igenom nödvändiga organisationsförändringar, maktförskjutningar och kulturskiften . Men samtidigt som VD behövs för att digitaliseringen ska lyckas sätter transformationen också press på alla ledare i verksamheten att ställa om till ett digitalt och innovativt mindset.
Fyra nyckelfaktorer kan ringas in när det gäller ledarskap för digital transformation.

1. Helhetsperspektiv
Skaffa er en samlad helhetsbild över vart utvecklingen är på väg. Bryt silos, lös upp revir och anställ generalister som förstår helhet och affär för att leda förändringen mot digitalt.

2. Säg hej då till det gamla
Var snabb när det gäller att förstå vilka kompetenser och avdelningar som blir obsoleta i det nya paradigmet och satsa på att skola om dem. Det blir för dyrt och trögt att hålla fast vid det gamla.

3. Snabbhet och innovation
Se till att dina gamla processer inte sinkar den digitala utvecklingen. Digital innovation kan gå snabbare än innovation i hårdvara och förväntas därför göra det. Eftersom digitaliseringen kommer genomsyra hela verksamheten kommer också innovation förväntas av alla.

4. Vision och strategi framför kontroll
Visioner, strategier och ramverk främjar innovation – kontroll dämpar. Sätt upp ambitiösa mål som inspirerar till helt nya sätt att jobba. Gör alla ledare till innovationsledare.

Källa: Kairosfuture.som, 5 oktober 2016
Del av artikel. Läs h e l a artikeln här.
Läs mer om Kairos Future här

Generation Z – hur kommunicerar vi med generationen som föddes med mobilen i handen?

Posted in Aktuellt, Allmänt, Board work / Styrelsearbete, Customer care / Kundvård, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Försäljning / Sales on October 3rd, 2016 by admin

Snapchat, Youtube, Musical.ly. Jo, det är viktigt att vara där målgruppen är! Hur många gånger har du inte hört det och hur många gånger har du inte känt dig stressad över alla nya appar och tjänster du behöver lära dig?
Strunta i det! Det var budskapet idag på ett frukostseminarium som Cision ordnade med antropologen Katarina Graffman och två representanter från generation Z, 11-åringarna Tilda och Linnéa. De tillhör en mycket integritetskänslig grupp som snarare flyr än följer dig tillbaka när du stalkar dem i sociala medier. De föddes bokstavligen med ipaden i hand. För dem har mobiltelefoner och ipads alltid funnits och de brukar allt det vi vuxna lite slarvigt buntar ihop sociala medier på helt andra sätt än vi gör.

Flyttar sig från medium till medium
Generation Z hänger mest på Youtube, Instagram och just nu på karaoke-appen Musical.ly. Instagram används inte främst för att posta bilder utan för att kommunicera med sina kompisar och chatta. Facebook och e-post använder de överhuvudtaget inte, eller väldigt sällan. Ibland har skolan eller idrottslaget en facebook-grupp som lärarna eller ledarna postar information så då måste de gå in där och läsa. I övrigt är Facebook ett medium för vuxna, där föräldrarna hänger och precis som vi inte ville hänga där våra föräldrar hängde, förflyttar sig generation Z från medium till medium när de vuxna hänger efter. Snapchat håller redan på att ebba ut nu när allt fler äldre hittar dit.
z
Alltid underhållen
Utmärkande för generation Z är att de alltid är vana att bli underhållna. De präglas av det Katarina Graffman kallar paus-beteende. De är vana att kunna sätta saker på paus för att ta upp tråden senare. Det gör att det ibland kan vara svårt att hänga med i en hel skollektion på 40-50 minuter. Det är inte helt ovanligt att barnen pausar för att en timma senare vilja lösa färdigt det där mattetalet men då är lektionen slut sen länge. Det här beteendet visar sig också då de ber sina föräldrar eller kompisar att pausa något för att kunna återuppta senare vilket kan skapa problem i relationer till andra människor.

Ombytta definitioner av utryck
Katarina Graffman har frågat barn och ungdomar i olika samhällsklasser och i olika länder vad medier och sociala medier är och samtliga svarar att media handlar om att ha kontakt med sina vänner och omvärlden. Att koppla appar och tjänster som sociala medier är inga uttryck de använder. I stället är ”sociala medier” när de sitter tillsammans och kollar på TV-teven, eftersom då är man social tillsammans.

Youtube före TV-teve

Att Youtube är den största sökmotorn hos generation Z är länge känt. Gruppen youtubar hellre än googlar. De följer personer som Beyoncé, Messi, Clara Henry, Hampus Hedström och Keyyo och har hög medvetenhet om sponsring och kan skilja på sponsrat material och icke-sponsrat och rör sig obehindrat mellan de båda.
40% av målgruppen definierar sig som gamers och kollar gärna när andra spelar Counterstrike eller Minecraft på samma sätt som vuxna kollar på fotboll eller längdskidor på TV-teven. Att Youtube är det första stället man söker på påverkar såklart också hur man upplever ord och text. Många ser till exempel gärna filmen först (om det finns en sån) för att få större förståelse när de läser en bok.

Stark integritet
Den här generationen har en stark digital integritet. Gruppen är väldigt medveten om hur de framställer sig själva på nätet och föredrar att skicka bilder och texter privat i privata chattar eller i tjänster som Snapchat där bilderna försvinner efter en tid. Den här generationen lägger inte ut särskilt mycket selfies. De hittar nya uttryck för att kommunicera. Ett exempel är smileyn som för den här gruppen är ett urvattnat sätt att kommunicera. Man skickar hellre en bild på sig själv med ett känslouttryck istället för att kommunicera via emojjis och de väljer aktivt tjänster där de får vara i fred och är inte lojala utan byter tjänster ofta. Att då ständigt följa efter dem gör att deras integritet kränks och då förlorar du målgruppen. De har större delen av sin identitet i den digitala verkligheten och istället för att springa efter bör organisationer och företag idag fokusera på hur de blir tillräckligt relevanta för att få dem att komma till dig.

Varumärket är viktigt
När Leksands knäckebröd ville marknadsföra sin knäckepizza och tog de hjälp gaminggruppen Ninjas In Pyjamas för att marknadsföra sin produkt som en nyttigare variant av snabbmat. Det var ett sätt att få målgruppen att identifiera sig med varumärket på ett nytt sätt istället för traditionell reklam. Ett annat exempel är Redbull som istället för att marknadsföra sin dryck, lyfter extremidrottare och extremsport som livsstil och lockar mängder av fans till sin sida. Var lyhörd för hur målgruppen använder just ditt varumärke och var öppen för hur de omtolkar det och gör det till sitt.

Slutligen, ha en inte en digitala strategi för samtliga plattformar. Varje plats eller app fyller olika funktioner och relationer för målgruppen. Våga välja bort kanaler och glöm inte att telefonen är deras viktigaste verktyg och den har de alltid med sig som en förlängd del av kroppen och hjärnan!

Källa:Linkedin.com, 2016
Av: Petra Jankov
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A truly omnichannel customer experience

Posted in Aktuellt, Board work / Styrelsearbete, Customer care / Kundvård, Digitalisering / Internet on October 3rd, 2016 by admin

Adding digital channels requires major efforts, yet payoffs can disappoint. Integrating digital and traditional channels into a truly omnichannel offering is even harder—but multiplies the rewards.

In sector after sector, companies are asking how they can adapt to the digital world—how they can build more digital capabilities, create more digital offerings, and even become “digital first” organizations.

But for institutions that have served customers for decades in person and over the phone, digital too often falls short. After the debut of a new app, for example, a jump in sales may not be as big as expected, while hoped-for operational efficiencies—such as a reduction in expensive call-center and in-store customer-support requests—hardly materialize.

Executives naturally wonder why: aren’t customers demanding digital? Without question, they are. But not to the exclusion of other channels, which remain critically important.

For example, as much attention (and fear) as Amazon may generate among traditional retailers, as of early 2016 about 92 percent of retail sales in the United States—the company’s home and largest market—were still taking place in person. Furthermore, our analysis of market research confirms that many customers (including large majorities in some markets and industries) want to move freely from channel to channel in an omnichannel experience. Accordingly, the digital end-to-end offerings and internal capabilities that companies are building are important not only in themselves but also in the way they support the other channels (see Driek Desmet, Ewan Duncan, Jay Scanlan, and Marc Singer, “Six building blocks for creating a high-performing digital enterprise,” September 2015).

omni-1Retailers have increasingly recognized this reality, with some folding one-time web-only subsidiaries back into their larger businesses. But in other consumer-facing industries, such as financial services or telecommunications, digital efforts often end up becoming just another channel—in effect, a whole set of subchannels including mobile, social, and chat. Given that channel conflicts have bedeviled large companies for decades, with competition among channels sometimes more intense than with the outside world, adding even more to the list is not ideal. The result? More complexity (and cost) for the company and a less-than-optimal experience for customers.

By contrast, integrating digital into an omnichannel experience breaks down barriers for customers—and for performance, allowing companies to hone their digital skills in a way that takes advantage of their strength in traditional channels. But first, companies must break down their own internal barriers, initially by developing a more sophisticated understanding of how their customers think about all of the channel options. Mapping out the journeys customers follow among the channels reveals the most important opportunities for channels to cooperate, forming a list of changes for the company to roll out. Finally, to ensure the changes last, each major journey will need its own leader and cross-unit team—supported by revamped incentive structures to facilitate cooperation, new performance dashboards, a road map for transformation, and clear communications and governance from top executives.

Getting these steps right provides new opportunities to make customers happy—for instance, by letting them start a loan application on their phone before bed and finish it at a branch the next day after asking a few questions via the call center. Capturing moments such as these turns omnichannel into a major growth platform.

After it tightened the links between its digital and traditional channels, a large regional bank increased sales of current-account and personal-loan products by more than 25 percent across all channels (Exhibit 1). And a European telecommunications company saw a 40 percent increase in usage of its online service channel, reducing its costs by more than 20 percent while increasing customer satisfaction by more than five percentage points.

The obstacles to omnichannel
Companies are starting to understand the omnichannel imperative. But getting there is proving unexpectedly difficult.

A bias toward bigness. Part of the reason is a misplaced belief that omnichannel’s massive implications require equally massive actions, such as an entirely new IT platform or organization structure to bring all channels together. Too often that “silver bullet” mentality leads only to a massive misallocation of resources. Instead, the companies that are most successful in making the digital and omnichannel transition concentrate on a long, prioritized list of pragmatic initiatives that, as they are implemented, unleash the value trapped in the intersections among poorly coordinated channels. Collectively these initiatives counter two larger problems:

Disregarding diversity. In our experience, most companies tend to build their digital and omnichannel experience believing that most customers have basically the same needs and follow basically the same journeys. In reality, customers are far more diverse, not only in their needs but also in how they want to meet those needs. For example, a recent survey of North American mobile customers showed that while approximately 35 percent would turn to digital channels first in dealing with an administrative issue, such as a change of billing information, only 24 percent would use digital channels for solving a technical problem. And, of course, even with administrative issues, more than half of customers preferred either in-person or phone resolution, illustrating how many different pathways are possible within the same basic journey. Accommodating these different behaviors will require organizations to understand their customers better while becoming more flexible in allowing for more options to reach the same end point.

Curbing cooperation. But the need for greater flexibility usually bumps into a hardened reality. Despite decades of discussion about conflicting channels, many companies still operate each channel as a separate organization, expecting it to optimize its own performance and service model while showing its own results. Incentives ostensibly designed to encourage performance unintentionally reinforce the channels’ isolation—such as revenue-generation targets that push each channel to increase its own sales volume regardless of any impact on sister channels. Competition becomes even more brutal internally than with the outside world.

The better breakthrough: Start small, from the customer

A better outcome is possible, but only by taking a more disciplined approach to understand how different customers think and behave at each step of their individual journeys. By revealing customers’ most important pain points, the resulting analysis helps the organization see which changes to make first, gradually making an entire process simpler and more effective for customers from beginning to end.

1. Discovering ‘personas’
The first step, describing how customers act, sounds daunting. But it’s actually less so because customers’ behavior usually coalesces around a few major variables. These become the basis for creating “personas” describing major segments of the customer population in a richer way than traditional demographic-based segmentation allows.

For example, in wireless services, the major variables could include customers’ comfort levels with mobile technology, the role mobile technology plays in their lives, their financialomni-2 sophistication, their occupation, and the way they shop—how much comparison shopping they do and what information sources they use. A “work and play” persona would be a professional who relies heavily on her mobile phone both for her job—communicating with clients, managing her calendar, and making travel arrangements—and for personal activities, such as paying bills, shopping for groceries, and making investments. Her busy schedule leaves little time for shopping, so for major purchases she relies on quick Internet searches to understand features and prices. Her ideal is to buy online and then pick items up in the store on her lunch break, rather than wait for delivery.

By contrast, a “social enthusiast” is a bit younger, less likely to have a job requiring a mobile device, and instead uses his phone mainly to keep up with friends and play multiplayer games. He may be more likely to be on a tight budget, so he researches purchases extensively, looks to social networks for a consensus on the best option, tests it out in person, and sends victorious tweets when he “scores a great deal.”

The same basic patterns repeat across industries—in small-business banking, for example, technology and financial sophistication both matter, as does a business’s size and its financial goals. Describing four to six major personas is usually enough to cover about 80 percent of the customer base.

2. Charting a journey’s map
The next step is to understand the personas’ different needs and follow the steps, both offline and online, that the each persona takes along a given journey. The crucial requirement is to identify the important (and often hidden) pain points that the persona encounters and the resulting areas of opportunity for redesign.

Some of the opportunities may be visible just by mapping all of the current journeys customers can follow across all channels and displaying them together (Exhibit 2). For the regional bank, two points showed particular problems. In the online channel, about 80 percent of customers dropped out rather than fill in a registration form. And in call centers, more than 98 percent of customers did not ask for an offer. A similar map for the European telco found that regardless of which channel customers started in, if they ended up on the online shop, they abandoned their purchases fully 99 percent of the time. Furthermore, across all channels, 30 percent of orders were never activated.

The reasons for these outcomes tend to differ by persona. The work-and-play user’s main challenges center on time: there’s not enough of it. She may grow impatient at sorting through too many options and give up when a form asks for information that she knows the company already has (“They know where I live—my statement arrives every month like clockwork. This is wasting my time.”) Meanwhile, the social-enthusiast user wants to get the best service and product he can get for the lowest price, without committing to a long contract in case a better option comes along later. He may keep getting timed out of his purchase while looking at his social feeds to figure out if the option he’s considering is really the right one.

3. Designing a portfolio of omnichannel initiatives for each improvement area
These findings lead directly to a multipronged improvement strategy comprising several dozen initiatives, ranging from better data links to prepopulate online order forms to revamped offers and new performance-measurement practices. The goal is for each of the initiatives to be pragmatic and achievable, while together they deliver profound and lasting change.

o-ni-3The most urgent changes typically concern the digital channel, where customers often face a vast range of choices with complex pricing provisions and business rules that make it almost impossible to find the right combination (see sidebar, “Becoming more agile—in IT and in processes”). Instead, a new structure would change the experience from the moment a user arrives on the page. Rather than show the same page for everyone, the new page would vary depending on the user’s persona, which typically could be assigned based on a combination of existing customer data and the user’s prior browsing behavior on the site.

The customer therefore has a much more customized experience. A work-and-play user would be taken directly to two or three simple product options based on phone features and service limits. After choosing one of the options, the user would see a second page of add-ons, such as purchase-protection plans and international coverage. Social enthusiasts, by contrast, would get a more detailed interface that allows them to make separate decisions for the phone and for the service levels, so that they can understand the trade-offs and feel like they’re getting the best bang for their buck. The page they see also would provide user-generated product reviews from other clients, social-network links, a chat feature staffed by sales representatives, and a tool to set up in-store appointments.

4. Enabling continuous refinement and improvement
The effort these changes require is too great for an organization to watch the returns fade away and then repeat the exercise a year or two later. Revisiting its internal governance, performance, and capabilities becomes critical to support essential cultural changes and ensure that the organization’s performance continues to improve as the market evolves.

Although difficult, restructuring the traditional governance approach—in which channels operated almost as separate businesses—is the best defense against the most immediate threat to the omnichannel model’s long-term health: the reemergence of silos. During the transformation process, the organization forms cross-unit teams with representation from each channel and from supporting functions such as IT, marketing, and compliance. Each team operates as a work cell, with accountability for the design and implementation of a set of initiatives. As the changes take hold, the cells become the basis for a new organization structure that continually reassesses how the omnichannel model is functioning, identifying improvement opportunities and translating them into new rounds of initiatives for implementation.

Accountability will also depend in part on new performance targets that encourage collaboration instead of competition among channels. That means, for example, deciding how to allocate credit for shared sales that start in one channel and end in another, and agreeing on performance indicators that provide concrete evidence the collaboration is occurring. Shared key performance indicators for digital, sales, and IT, such as the speed of change implementation or the level of digital adoption, help show whether the different functions are actually working together or whether they are finding reasons to block new initiatives.

Throughout the organization, people will need new capabilities at every level. Frontline sales and service personnel, for example, will need new and deeper skills in recognizing customer needs, understanding where the customers are in their journeys, and finding the most effective ways to help them depending on which persona they best match and which channels would best serve them. The greater complexity of frontline positions will require more coaching and support from managers, who will need their schedules freed up so that they can spend more time with their teams. And senior executives will need to play a more prominent part in role modeling behavior changes, such as in encouraging problem solving by people closer to the customer rather than imposing solutions from above.

What would it mean for your organization if you could promise your customers that they’ll get the service they need, however they need it? How much more effective would your people be if they didn’t have to worry about losing a customer to another channel? Becoming truly omnichannel is demanding for an organization. But the answers it provides to questions such as these make it worth the investment for organizations willing to make the commitment.

Source: McKinsey.com, September 2016
By: Raffaella Bianchi, Michal Cermak and Ondrej Dusek
About the authors: Raffaella Bianchi is a senior expert in McKinsey’s Milan office; Michal Cermak and Ondrej Dusek are partners in the Prague office.
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Digital in industry: From buzzword to value creation

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet, Executive Team / Ledningsgruppsarbete, Försäljning / Sales, Strategy implementation / Strategiimplementering on August 28th, 2016 by admin

From supply chains to production to customer experience, digitization is transforming the way industry functions—and unleashing global opportunities for value creation.

In the past few years, we have seen digitization bring its first benefits to the industrial sector, particularly in processing and manufacturing, yet enormous untapped potential remains. Digital capabilities such as e-commerce platforms can significantly improve traditional customer-supplier experiences. Additional advances in automation, big data and analytics, and the Internet of Things create additional opportunities for substantial gains along the entire industry value chain.

Another industrial revolution

Early signs of the digital revolution are already here. Amazon Business, a B2B e-commerce platform launched in April 2015, turned over $1 billion in sales in its first year, growing at an going D 1impressive 20 percent per month. B2B buyers increasingly prefer digital, with 94 percent conducting some form of online research before purchase.

Further changing the rules of the game are the decreasing costs of new processing technologies such as additive manufacturing and advanced robotics. For example, 3-D printing costs came down by 60 percent between 1990 and 2014, and industrial robot costs decreased 5 percent annually between 2000 and 2012.

Put concretely, what does digital bring in terms of performance jump across functions? Let’s start by looking at operations, where our experts have recently shown that the impact potential is significant across all functions.

And this is not science fiction! Pockets of excellence exist across industrial sectors that have proven it can be done.
•In the oil and gas industry, predictive maintenance is eradicating unplanned downtime and costly repairs. Connected plants use remote sensors to forecast and report on the condition and performance of machinery. Early signs of problems are detected and corrected, maintenance resources are directed at the areas of greatest need, and machinery availability is maximized.
•The pulp and paper industry has seen significant increases in productivity through the use of remote temperature monitoring. Kiln sensors monitor lime mud temperature, a leading indicator of calcination. Sophisticated tools aggregate and analyze the temperature readings and automatically optimize the shape and intensity of the flame driving heat through the kiln. The process has resulted in fuel savings as high as 6 percent and a lime throughput increase of 16 percent.
•In manufacturing, repetitive, strenuous, and complex tasks are performed by robots working alongside operators on the shop floor. The operators themselves spend less time waiting for goods or processes or filling in routine documentation, because information systems optimize materials flows and track key performance indicators. Real-time analytics and advanced process control enable errors and quality lapses to be picked up immediately, minimizing rework and scrap, and automated inventory systems—such as wireless-connected boxes with cameras that automatically reorder when their fill level drops below a certain limit—ensure that inventories are accurate, goods can be easily located, and safety stocks are adequate but not excessive.

Advanced modeling techniques for optimizing complex manufacturing sites and supply chains

Working with a basic-chemicals manufacturer with complex operations, we designed an end-to-end advanced model that generates a holistic optimization of the entire supply chain from procurement to commercial. By incorporating detailed price and cost curves into this model and leveraging the latest advanced optimization engines, we developed a systematic optimization tool that was embedded into the company business process.

The company saw a recurring EBITDA margin increase of roughly 5 percent, equal to approximately 6 percent of overall manufacturing, logistic, and raw-material costs. Application of these techniques on more than ten other cases in the process industry suggests a recurring EBITDA margin increase in the range of two to five percentage points, with value creation being proportional to supply-chain complexity.

Let’s not forget the customer: digital has the potential to profoundly reshape the way industrial companies interact with and serve their customers. Let’s have a closer look:
•Where customer access was once constrained by minimum order sizes and the cost to serve in a particular market, e-commerce and web shops allow companies to reach customers they could nevergoing D 2 have reached before; hence cost to serve can be cut by 50 to 70 percent. Online marketplaces such as Amazon Business and Alibaba virtually connect unlimited buyers and sellers, and established players like Grainger are leading the way with their own platforms, capitalizing on 2015’s estimated $1 trillion in B2B digital commerce sales in the United States.
•Suppliers who once relied on subjective analysis and historical knowledge to determine prices can now use faster, data-driven tools to optimize pricing. For example, a leading technical gases company with a large and highly fragmented product portfolio used advanced data analytics and modeling to design a more strategic and logical approach to pricing. The newly developed value-based pricing led to an increased return on sales of 5 percentage points (see sidebar “Pricing”). Emerging markets can tap the potential of digital in the food chain through innovations such as precision agriculture, supply-chain efficiencies, and agriculture-focused payment systems.
•Sales directors can make smarter resource-allocation decisions based on timely inputs from sales reps, individual performance data, and automated recommendations from tools. Reps making sales recommendations no longer have to rely on hunches about what their customers want, but instead make use of targeted insights about products to sell, customers’ success stories, and simulations run with the customer during the sales visit. The ability to attract new customers, improve cross-selling, and reduce leakage can increase revenues by 5 to 15 percent, while customer satisfaction can be increased by 20 to 30 percent.

Digital’s disruptive power

But digital is not only a means to optimize a company’s existing operations. It also gives both attackers and incumbents the power to disrupt value chains, enter new sectors, and create innovative business models. Established companies face threats from new competitors like Amazon Business, which offers millions of products, from automotive components, industrial lifts, and ramps to lab products, protective gear, and electrical equipment.

Impact of value-based pricing

Working with a basic-chemicals manufacturer with complex operations, we designed an end-to-end advanced model that generates a holistic optimization of the entire supply chain from procurement to commercial. By incorporating detailed price and cost curves into this model and leveraging the latest advanced optimization engines, we developed a systematic optimization tool that was embedded into the company business process.

The company saw a recurring EBITDA margin increase of roughly 5 percent, equal to approximately 6 percent of overall manufacturing, logistic, and raw-material costs. Application of these techniques on more than ten other cases in the process industry suggests a recurring EBITDA margin increase in the range of two to five percentage points, with value creation being proportional to supply-chain complexity.

To get ahead of threats like this, industrial companies can use digital to transform and extend their own business models before change is imposed on them by attackers reshaping their industry. Some incumbents are joining digital platforms and B2B marketplaces to aggregate demand and sell direct to end users. BASF, for example, was the first chemicals company to sell products online through Alibaba. Other businesses, such as the 3-D printing start-up Sculpteo, are selling services rather than products. Still others are offering their manufacturing capacity as a service to third parties.

But are companies ready?
Compelling though the opportunities are, our analysis indicates that industrial sectors in general are lagging behind other sectors in terms of digitization: the MGI Industry Digitization shows that while advanced manufacturing and the oil and gas sectors have already gone some way in their digitization journeys, basic goods manufacturing and chemicals and pharmaceuticals are still in the early stages.

Moreover, the McKinsey Industry 4.0 survey of more than 300 manufacturing experts in Germany, Japan, and the United States from January 2016 shows that only 16 percent of manufacturers have an overall Industry 4.0 strategy in place, and just 24 percent have assigned clear responsibilities to implement it.

Five priorities for competing in an era of digital globalization

Five ways to win
Companies that want to get ahead of the digital pack would be wise to take five key steps:
1. Prioritize and scale up. Use structural assessments to determine the customer appetite versus willingness to pay by using mockups to conduct interviews with potential customers and external experts. In addition, weigh the potential impact against the ease of implementation by assessing the degree of innovation or disruption (Is it a substitute? an extension? a breakthrough?), defining the scalability, studying the feasibility of the pilot and full solution, and ascertaining the fit with existing assets and capabilities.

2. Adopt a test-and-learn approach. As technology-driven change accelerates, forecasting and planning are becoming less relevant and reliable. Agility—remaining open to learning and experimentation—is key. And it is crucial when investing in digital solutions to adopt the mind-set of a venture capitalist. This includes trying out ideas quickly with target customers as going D 3soon as they exist to check market interest and price points. It also means being ruthless: if the idea isn’t worth it, kill it immediately. In addition, successful ventures think about monetization potential as soon as interactions with potential customers start, and they proudly copy from other sectors. A focus on scale is also essential, with the ambition being a tenfold increase.

3. Put foundations in place. To maintain the efficiency and stability of existing operations while providing the processing capacity and speed required by new data-driven activities, smart companies move to a two-speed IT infrastructure—overlaying a fast, next- generation cloud-based IT system on their secure, robust, resilient legacy systems. New talent is another priority, especially data and process experts who can connect up various functions, systems, and levels of management; draw insights from all the information generated across the enterprise; and use their knowledge of the whole production chain to help design new products. Meanwhile, job profiles must be rethought to meet new needs, such as maintenance staff who oversee predictive maintenance rather than acting as troubleshooters, and quality specialists who intercept quality issues online rather than detecting faulty parts after production.

4.Treat data as a competitive advantage. Data fuels the algorithms that provide insights into markets, customers, and business processes, so ensure that data management has a clear structure and governance. And considering that even tech giants such as Google have been vulnerable to malicious attacks, be sure to put cybersecurity high on your management agenda. Physical targets such as connected machinery and systems installed for remote access could also be highly susceptible to sabotage by hackers and other attacks.

5. Work across functions, and manage change in the organization. Digitization requires that all departments work together to capture joint benefits for the whole business. Moreover, because these innovations have a major impact on how people work, it is essential to anticipate concerns and build a persuasive case for the employees.
When thinking about digital priorities, identify the technologies and applications that would have the greatest potential impact. But also make sure not to ignore possible barriers to adoption: devise a plan for helping employees use the new technologies and the related new methodologies most effectively. Remember that no organization achieves a successful digital transformation without taking a thoughtful approach to change management, and that it’s the people applying the technology in their daily jobs who will create the additional value.

Digital’s potential in industry is massive, not only in operations, but across all functions of the sector, and the levers that make the most difference to a company’s bottom line vary—from e-commerce to automation to advanced analytics. But industrial companies must begin taking advantage of digital opportunities in order to avoid losing the value to others. A commitment to digitization from top management is critical to succeeding, as is a systematic method of defining priorities and the ability to leverage early success to drive change.

Source: McKinsey.com, August 2016
Authors: Paul-Louise Caylar, Kedar Naik and Oliver Noterdaeme
About the authors: Paul-Louis Caylar is a partner in the Paris office and a coleader of Digital McKinsey in France. Kedar Naik is an associate partner in the Brussels office, where Olivier Noterdaeme is a partner.
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More than digital plus traditional: A truly omnichannel customer experience

Posted in Aktuellt, Customer care / Kundvård, Digitalisering / Internet, Försäljning / Sales, Strategy implementation / Strategiimplementering on August 25th, 2016 by admin

Adding digital channels requires major efforts, yet payoffs can disappoint. Integrating digital and traditional channels into a truly omnichannel offering is even harder—but multiplies the rewards.

In sector after sector, companies are asking how they can adapt to the digital world—how they can build more digital capabilities, create more digital offerings, and even become “digital first” organizations.

But for institutions that have served customers for decades in person and over the phone, digital too often falls short. After the debut of a new app, for example, a jump in sales may not be as big as expected, while hoped-for operational efficiencies—such as a reduction in expensive call-center and in-store customer-support requests—hardly materialize.

Executives naturally wonder why: aren’t customers demanding digital? Without question, they are. But not to the exclusion of other channels, which remain critically important.

omni 3For example, as much attention (and fear) as Amazon may generate among traditional retailers, as of early 2016 about 92 percent of retail sales in the United States—the company’s home and largest market—were still taking place in person. Furthermore, our analysis of market research confirms that many customers (including large majorities in some markets and industries) want to move freely from channel to channel in an omnichannel experience. Accordingly, the digital end-to-end offerings and internal capabilities that companies are building are important not only in themselves but also in the way they support the other channels (see Driek Desmet, Ewan Duncan, Jay Scanlan, and Marc Singer, “Six building blocks for creating a high-performing digital enterprise,” September 2015).

Retailers have increasingly recognized this reality, with some folding one-time web-only subsidiaries back into their larger businesses. But in other consumer-facing industries, such as financial services or telecommunications, digital efforts often end up becoming just another channel—in effect, a whole set of subchannels including mobile, social, and chat. Given that channel conflicts have bedeviled large companies for decades, with competition among channels sometimes more intense than with the outside world, adding even more to the list is not ideal. The result? More complexity (and cost) for the company and a less-than-optimal experience for customers.

By contrast, integrating digital into an omnichannel experience breaks down barriers for customers—and for performance, allowing companies to hone their digital skills in a way that takes advantage of their strength in traditional channels. But first, companies must break down their own internal barriers, initially by developing a more sophisticated understanding of how their customers think about all of the channel options. Mapping out the journeys customers follow among the channels reveals the most important opportunities for channels to cooperate, forming a list of changes for the company to roll out. Finally, to ensure the changes last, each major journey will need its own leader and cross-unit team—supported by revamped incentive structures to facilitate cooperation, new performance dashboards, a road map for transformation, and clear communications and governance from top executives.

Getting these steps right provides new opportunities to make customers happy—for instance, by letting them start a loan application on their phone before bed and finish it at a branch the next day after asking a few questions via the call center. Capturing moments such as these turns omnichannel into a major growth platform.

After it tightened the links between its digital and traditional channels, a large regional bank increased sales of current-account and personal-loan products by more than 25 percent across all channels. And a European telecommunications company saw a 40 percent increase in usage of its online service channel, reducing its costs by more than 20 percent while increasing customer satisfaction by more than five percentage points.

The obstacles to omnichannel

Companies are starting to understand the omnichannel imperative. But getting there is proving unexpectedly difficult.

A bias toward bigness. Part of the reason is a misplaced belief that omnichannel’s massive implications require equally massive actions, such as an entirely new IT platform or organization structure to bring all channels together. Too often that “silver bullet” mentality leads only to a massive misallocation of resources. Instead, the companies that are most successful in making the digital and omnichannel transition concentrate on a long, prioritized list of pragmatic initiatives that, as they are implemented, unleash the value trapped in the intersections among poorly coordinated channels. Collectively these initiatives counter two larger problems:

Disregarding diversity. In our experience, most companies tend to build their digital and omnichannel experience believing that most customers have basically the same needs and follow basically the same journeys. In reality, customers are far more diverse, not only in their needs but also in how they want to meet those needs. For example, a recent survey of North American mobile customers showed that while approximately 35 percent would turn to digital channels first in dealing with an administrative issue, such as a change of billing information, only 24 percent would use digital channels for solving a technical problem. And, of course, even with administrative issues, more than half of customers preferred either in-person or phone resolution, illustrating how many different pathways are possible within the same basic journey. Accommodating these different behaviors will require organizations to understand their customers better while becoming more flexible in allowing for more options to reach the same end point.

Curbing cooperation. But the need for greater flexibility usually bumps into a hardened reality. Despite decades of discussion aboutoni 2 conflicting channels, many companies still operate each channel as a separate organization, expecting it to optimize its own performance and service model while showing its own results. Incentives ostensibly designed to encourage performance unintentionally reinforce the channels’ isolation—such as revenue-generation targets that push each channel to increase its own sales volume regardless of any impact on sister channels. Competition becomes even more brutal internally than with the outside world.

The better breakthrough: Start small, from the customer

A better outcome is possible, but only by taking a more disciplined approach to understand how different customers think and behave at each step of their individual journeys. By revealing customers’ most important pain points, the resulting analysis helps the organization see which changes to make first, gradually making an entire process simpler and more effective for customers from beginning to end.

1. Discovering ‘personas’

The first step, describing how customers act, sounds daunting. But it’s actually less so because customers’ behavior usually coalesces around a few major variables. These become the basis for creating “personas” describing major segments of the customer population in a richer way than traditional demographic-based segmentation allows.

For example, in wireless services, the major variables could include customers’ comfort levels with mobile technology, the role mobile technology plays in their lives, their financial sophistication, their occupation, and the way they shop—how much comparison shopping they do and what information sources they use. A “work and play” persona would be a professional who relies heavily on her mobile phone both for her job—communicating with clients, managing her calendar, and making travel arrangements—and for personal activities, such as paying bills, shopping for groceries, and making investments. Her busy schedule leaves little time for shopping, so for major purchases she relies on quick Internet searches to understand features and prices. Her ideal is to buy online and then pick items up in the store on her lunch break, rather than wait for delivery.

By contrast, a “social enthusiast” is a bit younger, less likely to have a job requiring a mobile device, and instead uses his phone mainly to keep up with friends and play multiplayer games. He may be more likely to be on a tight budget, so he researches purchases extensively, looks to social networks for a consensus on the best option, tests it out in person, and sends victorious tweets when he “scores a great deal.”

The same basic patterns repeat across industries—in small-business banking, for example, technology and financial sophistication both matter, as does a business’s size and its financial goals. Describing four to six major personas is usually enough to cover about 80 percent of the customer base.

2. Charting a journey’s map

The next step is to understand the personas’ different needs and follow the steps, both offline and online, that the each persona takes along a given journey. The crucial requirement is to identify the important (and often hidden) pain points that the persona encounters and the resulting areas of opportunity for redesign.

Some of the opportunities may be visible just by mapping all of the current journeys customers can follow across all channels and displaying them together. For the regional bank, two points showed particular problems. In the online channel, about 80 percent of customers dropped out rather than fill in a registration form. And in call centers, more than 98 percent of customers did not ask for an offer. A similar map for the European telco found that regardless of which channel customers started in, if they ended up on the online shop, they abandoned their purchases fully 99 percent of the time. Furthermore, across all channels, 30 percent of orders were never activated.

The reasons for these outcomes tend to differ by persona. The work-and-play user’s main challenges center on time: there’s not enough of it. She may grow impatient at sorting through too many options and give up when a form asks for information that she knows the company already has (“They know where I live—my statement arrives every month like clockwork. This is wasting my time.”) Meanwhile, the social-enthusiast user wants to get the best service and product he can get for the lowest price, without committing to a long contract in case a better option comes along later. He may keep getting timed out of his purchase while looking at his social feeds to figure out if the option he’s considering is really the right one.

3. Designing a portfolio of omnichannel initiatives for each improvement area

These findings lead directly to a multipronged improvement strategy comprising several dozen initiatives, ranging from better data links to prepopulate online order forms to revamped offers and new performance-measurement practices. The goal is for each of the initiatives to be pragmatic and achievable, while together they deliver profound and lasting change.

The most urgent changes typically concern the digital channel, where customers often face a vast range of choices with complex pricing provisions and business rules that make it almost impossible to find the right combination (see sidebar, “Becoming more agile—in IT and in processes”). Instead, a new structure would change the experience from the moment a user arrives on the page. Rather than show the same page for everyone, the new page would vary depending on the user’s persona, which typically could be assigned based on a combination of existing customer data and the user’s prior browsing behavior on the site.

The customer therefore has a much more customized experience. A work-and-play user would be taken directly to two or three simple product options based on phone features and service limits. After choosing one of the options, the user would see a second page of add-ons, such as purchase-protection plans and international coverage. Social enthusiasts, by contrast, would get a more detailed interface that allows them to make separate decisions for the phone and for the service levels, so that they can understand the trade-offs and feel like they’re getting the best bang for their buck. The page they see also would provide user-generated product reviews from other clients, social-network links, a chat feature staffed by sales representatives, and a tool to set up in-store appointments.

4. Enabling continuous refinement and improvement

The effort these changes require is too great for an organization to watch the returns fade away and then repeat the exercise a year or two later. Revisiting its internal governance, performance, and capabilities becomes critical to support essential cultural changes and ensure that the organization’s performance continues to improve as the market evolves.

Although difficult, restructuring the traditional governance approach—in which channels operated almost as separate businesses—is the best defense against the most immediate threat to the omnichannel model’s long-term health: the reemergence of silos. During the transformation process, the organization forms cross-unit teams with representation from each channel and from supporting functions such as IT, marketing, and compliance. Each team operates as a work cell, with accountability for the design and implementation of a set of initiatives. As the changes take hold, the cells become the basis for a new organization structure that continually reassesses how the omnichannel model is functioning, identifying improvement opportunities and translating them into new rounds of initiatives for implementation.

Accountability will also depend in part on new performance targets that encourage collaboration instead of competition among channels. Thatomni 1 means, for example, deciding how to allocate credit for shared sales that start in one channel and end in another, and agreeing on performance indicators that provide concrete evidence the collaboration is occurring. Shared key performance indicators for digital, sales, and IT, such as the speed of change implementation or the level of digital adoption, help show whether the different functions are actually working together or whether they are finding reasons to block new initiatives.

Throughout the organization, people will need new capabilities at every level. Frontline sales and service personnel, for example, will need new and deeper skills in recognizing customer needs, understanding where the customers are in their journeys, and finding the most effective ways to help them depending on which persona they best match and which channels would best serve them. The greater complexity of frontline positions will require more coaching and support from managers, who will need their schedules freed up so that they can spend more time with their teams. And senior executives will need to play a more prominent part in role modeling behavior changes, such as in encouraging problem solving by people closer to the customer rather than imposing solutions from above.

What would it mean for your organization if you could promise your customers that they’ll get the service they need, however they need it? How much more effective would your people be if they didn’t have to worry about losing a customer to another channel? Becoming truly omnichannel is demanding for an organization. But the answers it provides to questions such as these make it worth the investment for organizations willing to make the commitment.

Source: McKinsey.com, August 2016
Authors: Raffaella Bianchi, Michal Cermak and Ondrej Dusak
About the author: Raffaella Bianchi is a senior expert in McKinsey’s Milan office; Michal Cermak and Ondrej Dusek are partners in the Prague office.
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Fintechs can help incumbents, not just disrupt them

Posted in Aktuellt, Board work / Styrelsearbete, Digitalisering / Internet on July 26th, 2016 by admin

While true for other financial services, it’s most striking in corporate and investment banking.

Fintechs, the name given to start-ups and more-established companies using technology to make financial services more effective and efficient, have lit up the global banking landscape over the past three to four years. But whereas much market and media commentary has emphasized the threat to established banking models, the opportunities for incumbent organizations to develop new partnerships aimed at better cost control, capital allocation, and customer acquisition are growing.

We estimate that a substantial majority—almost three-fourths—of fintechs focus on retail banking, lending, wealth management, and payment systems for small and medium-size enterprises (SMEs). In many of these areas, start-ups have sought to target the end customer directly, bypassing traditional banks and deepening an impression that they are disrupting a sector ripe for innovation.

However, our most recent analysis suggests that the structure of the fintech industry is changing and that a new spirit of cooperation between fintechs and incumbents is developing. We examined more than 3,000 companies in the McKinsey Panorama FinTech database and found that the share of fintechs with B2B DD 2offerings has increased, from 34 percent of those launched in 2011 to 47 percent of last year’s start-ups. (These companies may maintain B2C products as well.) B2B fintechs partner with, and provide services to, established banks that continue to own the relationship with the end customer.

Corporate and investment banking is different. The trend toward B2B is most pronounced in corporate and investment banking (CIB), which accounts for 15 percent of all fintech activity across markets. According to our data, as many as two-thirds of CIB fintechs are providing B2B products and services. Only 21 percent are seeking to disintermediate the client relationship, for example, by offering treasury services to corporate-banking clients. And less than 12 percent are truly trying to disrupt existing business models, with sophisticated systems based on blockchain (encrypted) transactions technology, for instance.

Assets and relationships matter. It’s not surprising that in CIB the nature of the interactions between banks and fintechs should be more cooperative than competitive. This segment of the banking industry, after all, is heavily regulated.1 Clients typically are sophisticated and demanding, while the businesses are either relationship and trust based (as is the case in M&A, debt, or equity investment banking), capital intensive (for example, in fixed-income trading),DD 1 or require highly specialized knowledge (demanded in areas such as structured finance or complex derivatives). Lacking these high-level skills and assets, it’s little wonder that most fintechs focus on the retail and SME segments, while those that choose corporate and investment banking enter into partnerships that provide specific solutions with long-standing giants in the sector that own the technology infrastructure and client relationships.

These CIB enablers, as we call them, dedicated to improving one or more elements of the banking value chain, have also been capturing most of the funding. In fact, they accounted for 69 percent of all capital raised by CIB-focused fintechs over the past decade.

Staying ahead. None of this means that CIB players can let their guard down. New areas of fintech innovation are emerging, such as multidealer platforms that target sell-side businesses with lower fees. Fintechs also are making incursions into custody and settlement services and transaction banking. Acting as aggregators, these types of start-ups focus on providing simplicity and transparency to end customers, similar to the way price-comparison sites work in online retail. Incumbent banks could partner with these players, but the nature of the offerings of such start-ups would likely lead to lower margins and revenues.

In general, wholesale banks that are willing to adapt can capture a range of new benefits. Fintech innovations can help them in many aspects of their operations, from improved costs and better capital allocation to greater revenue generation. And while the threat to their business models remains real, the core strategic challenge is to choose the right fintech partners. There is a bewildering number of players, and cooperating can be complex (and costly) as CIB players test new concepts and match their in-house technical capabilities with the solutions offered by external providers. Successful incumbents will need to consider many options, including acquisitions, simple partnerships, and more-formal joint ventures.

Source: McKinsey.com
By Miklos Dietz, Jared Moon, and Miklos Radnai
About the authors: Miklos Dietz is a senior partner in McKinsey’s Vancouver office; Jared Moon is a partner in the London office, where Miklos Radnai is a consultant.
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