ESCP Europe

A blueprint for reinventing the core of your business Value in the next phase of the digital era will go to those companies that don't just try digital but also scale it. Digital@Scale examines what it takes for companies to break through the gravitational pull of their legacy organizations and capture the full value of digital. Digging into more than fifty detailed case studies and years of McKinsey experience and data, the authors, along with a group of expert contributors, show how companies can move beyond incremental change to transform the business where the greatest value is generatedat its core. The authors provide practical insights into the three pillars of digital transformations that successfully scale: reinventing the business model, building out a business architecture from the customer back into the organization, and establishing an 'amoeba' IT and organizational foundation that learns and evolves. This is the ideal guide for all leaders who recognize the power and promise of a digital transformation.

TABLE OF CONTENTS Preamble: Thinking Digital ix 1 Digital Is Changing Our World, Quickly and Irreversibly 1 1.1 What Is a Digital Transformation? 1 1.2 Established Market Definitions Dont Apply Anymore 7 1.3 The Pace of Change Is Increasing Exponentially 11 1.4 Those Who Turn a Blind Eye to Digital Risk Failure and Extinction 13 2 Digitization Requires Fundamental Renewal: Digital@Scale 15 2.1 Why? Things Are Going Well, So Why Do We Need to Change? 16 2.2 What? What Does Digitization Mean for My Company, and What Priorities Are Derived? 20 2.3 How? How Do I Manage the Tasks Resulting from a Digital Transformation? 22 2.4 Cargo Cults Dont Work 23 3 Why? The Clock Is Ticking 26 3.1 Creating a Sense of Urgency: How Urgent Is Digitization? 27 3.2 Determining the Kind of Change Required 33 3.3 Identifying Relevant Assets 37 3.4 Determining the Aspiration Level for the Transformation 40 Conclusion: Bring on the New Ecosystems 41 4 What? Doing the Right Things Intelligently 42 4.1 Always Online, Gladly Electric, Often on Autopilot: Mobility in the Digital Age 45 Aamer Baig and Gianluca Camplone on the future of motoring. 4.2 Digital Commerce: One Channel Is No Longer EnoughTodays Mobile Customer Blithely Switches between the Real and Virtual Worlds 53 Kelly Ungerman on the future of retail. 4.3 Who Still Needs Banks? Fintechs Threaten the Established Business Model 60 Somesh Khanna, Vik Sohoni, and Michael Bender on the digital future of the finance industry. 4.4 Digital Health: The First Innovation in Health Care That Can Reduce Costs in the Long Term 66 Sri Velamoor and Basel Kayyali on the rocky road to the digitization of health care. 4.5 Connected Buildings 72 Hugo Sarrazin, Kabir Ahuja, and Mark Patel on the buildings and smart homes of tomorrow. 4.6 The Digital Revolution Has Reached Electricity Utilities 82 Adrian Booth, Mark Patel, and Naveen Sastry on the strategy of utilities in response to the digital intruders in their core markets. 4.7 Telecom Giants under Pressure: Who Will Be at the Heart of the Emerging Communications Ecosystems? 87 Brendan Gaffey on the distribution battle between hardware manufacturers, content providers, and telecom companies. 4.8 Digital Logistics: The Drone Always Rings Twice 93 David Frank on driverless trucks, fully connected containers, and small drones that deliver packages to our homes. 4.9 E-Government: Public Administration Goes Online 99 Martin Lundqvist on the digitization of public administration, and what citizens can expect. Conclusion: Opportunities in the Emerging Ecosystems 104 5 What? Developing Business Architecture 105 5.1 Omnichannel: A Presence across All Channels 106 Lareina Yee and Martin Harrysson describe how companies leverage all sales and communication channels to the maximum. 5.2 Dynamic Pricing: Up-to-the-Minute Prices 112 Ramji Sundararajan on dynamic pricing, and why two people can pay vastly differing sums for the same product, from the same provider. 5.3 Digital Marketing: Tailored Messages across All Channels 117 Brian Gregg on why content is king in digital marketing, and how companies can master the discipline. 5.4 Digital Product Development and Open Innovation: Rethinking Product Development 122 Michael Uhl and Belkis Vasquez-McCall on how digitization is changing development processes in all industries. 5.5 Product Design: Learning from Software Development 127 Florian Weig on how the philosophy of software development is infecting every industry, and what engineers can learn from big data. 5.6 Faster, More Flexible, More Efficient: Supply Chain 4.0 133 Enno de Boer and Sumit Dutta on how digitization is changing every point in the supply chain. 5.7 Digital Lean: The Digitization of Production 140 Varun Marya and Gianluca Camplone on the five fundamentals of digital production. 5.8 Digitization in the Office: Bots Take the Reins 146 Alexander Edlich on the automation of administration. Conclusion: Digitization Is Changing Every Function in the Company 151 6 What? Strengthening the Foundation 152 6.1 Two-Speed IT: Accelerating the Pace for the Digital Age 153 Naufal Khan on the new challenges for IT, and how companies from the analog age can meet them. 6.2 Big Data and Advanced Analytics 157 Holger Hürtgen on the path to better, data-driven decisions. 6.3 Cyber Security: The Art of the Secure Digital Economy 163 James Kaplan on the seven steps toward effective safeguards against hacking. 6.4 Embedded Software: Machines and Equipment Go Digital 168 Mark Patel on the five guiding principles that can help traditional hardware manufacturers develop a software strategy. 6.5 The Chief Digital Officer: A Steve Jobs for Every Company 172 Steve Van Kuiken discusses the art of the digital transformation with CDOs. 6.6 The Digital Organization: All Power to the Multifunctional Teams 176 Julie Goran on autonomous teams, agile sprints, and product owners. 6.7 Talent Management: Everyone Wants Digital Natives 181 Hugo Sarrazin and Satty Bhens on the upheavals in the labor market and the strategies deployed in the battle for scarce talent. 6.8 Partner Management: Stronger Together 185 Anand Swaminathan on the art of managing a collaborative network. 7 How? Decisive, Holistic, and Rapid Implementation 190 7.1 Creating a Plan 194 7.2 Think Big: Digitizing the Entire Enterprise 195 7.3 Surprise! Its about the Customer 199 7.4 Breaking Up Functional Silos 203 8 How? Ramping Up the Digital Company 210 8.1 Switching to the Digital Operating System 211 8.2 Anchoring the Culture Change 216 8.3 Steering Change 219 8.4 Encouraging Leadership at All Levels 222 9 How? Scaling Forcefully 226 9.1 Its about the Whole 227 9.2 How to Turn IT into a Weapon 228 9.3 Collaborating Closely with Start-Ups 231 9.4 Speed as a Guiding Principle 233 9.5 Rapid Scaling: Digitizing the Entire Enterprise 234 Conclusion: The Digital World Demands a New Way of Thinking 240 10 Are We in Good Shape for the Transformation? 242 About the Authors 251 Special Thanks 261 Index 262.