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How to become ‘tech forward’

A technology-transformation approach that works

Whether it’s been the shift to online working, the spike in online demand, or the increase in cyber assaults, technology has emerged as a critical business capability. That reality has injected a renewed importance and new urgency into modernizing the technology function. Companies can no longer afford the long timelines and often-disappointing business returns that have hampered many of the large tech-transformation projects of the past.

Instead, some technology leaders have pursued a new approach that is comprehensive enough to account for the myriad interlinkages of modern technology joined at the hip with the business so that change delivers value, and self-funded so that the scope of the change can continue to expand. We think of this comprehensive approach as “tech forward.”

Counteracting the most devastating tech-transformation failure modes

Some companies are starting to see real impact from their tech transformations. In a recent McKinsey study, some 50 percent of surveyed companies reported moderate to significant impact on realizing new revenue streams, almost 70 percent reported impact on increasing existing revenue streams, and 76 percent reported impact on reducing costs. 1

Tech transformations, nonetheless, remain notoriously difficult and complex. Though many companies are transforming their tech organizations, about 50 percent of them report that they’re still in the pilot phase (small tech teams working with advanced technologies but isolated from the rest of the technology function). 2

To understand better what successful tech transformations look like—as well as what the most important pitfalls are—we spoke with nearly 700 CIOs at some of the largest companies across the world. These conversations illuminated a number of consistent factors that most consistently kill off even the most promising tech transformations and revealed antidotes to address them. Following are three of the most common failure modes.

Piecemeal activity and limited scope

There is no shortage of technology-transformation initiatives, all of them with good intentions and promising payoffs. In fact, our latest analysis shows that companies are expanding the range of tech-related transformations (Exhibit 1).

What a ‘tech forward’ transformation looks like

Detailed conversations with CIOs as well as our own experience helping businesses execute complex technology transformations yielded a broad array of insights, best practices, and guidelines. We’ve synthesized them into a “tech forward” model that highlights three interconnected vectors, within which are ten specific “plays,” or domains of activity (Exhibit 2).

Vector #1: A reimagined role for technology that’s focused on the business

Vector #2: A technology delivery model built for flexibility and speed

Vector #3: A future-proof foundation of core tech systems that support innovation, collaboration, and security

To plot a company’s tech-transformation road map, we find the following questions particularly helpful:

  • What is your expectation from technology?
  • Which strategic outcomes are most critical (for example, speed and quality of delivery)?
  • Which are the most urgent pain points and what causes them?

The following questions help executives understand the current state of the technology function and its experience with transformation programs:

  • Which, if any, of the ten plays from the tech-forward approach are in place, and what is their maturity?
  • Is transforming your company’s tech one of the top two priorities in your C-suite? If not, why not?
  • How well does the technology function support your company’s strategic objectives or digital ambitions?
  • What tech-transformation efforts has your company launched to date? What effect have they had? What went well, and what didn’t?
  • What factors might restrict the pace of your tech-transformation efforts? In particular, how much capital and other resources can the company devote to tech transformation?

The current COVID-19 crisis, of course, is having a significant impact on how CIOs and businesses manage tech transformations. Despite the pressures it has added to costs, however, the urgency to get moving and transform has never been higher, according to many CIOs. But while the demands placed on the technology function have grown, so too have the opportunities. Experience suggests that the most effective transformations are not only comprehensive, covering the function’s role, delivery model, and core systems, but also sequenced to ensure that changes that reinforce each other are carried out together. With up-front planning focused on business value and careful delivery, a company can bring its technology function forward and gain the capabilities to thrive in challenging digital markets.

About the author(s)

Anusha Dhasarathy is a partner in McKinsey’s Chicago office, where Isha Gill is an associate partner and Naufal Khan is a senior partner; Sriram Sekar is a senior expert in the New Jersey office, where Steve Van Kuiken is a senior partner.

More: https://www.mckinsey.com/business-functions/mckinsey-digital/our-insights/how-to-become-tech-forward-a-technology-transformation-approach-that-works

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Building a customer-centric B2B organization

Customer experience (CX) is an increasingly important strategic topic in the boardrooms of B2B companies in China and throughout the world. Despite the rapid development of the previous decades, the “growth first” principle of Chinese enterprises sometimes implies customer experience can be sacrificed. But CX leaders, globally and within China, drive higher growth, lower cost, and superior customer satisfaction. In times of crisis, they achieve three-times-higher shareholder returns 1 than laggards.

Start with a vision

A successful transformation starts from the top. Cases within and outside China confirm that the CEO must be in charge to continuously push and unify the organization.

The Chinese steel industry has taken an upturn amid the country’s overcapacity-reduction program, and companies have been enjoying robust price and volume increases. In this article, we consider one Chinese steel manufacturer whose CEO set a clear vision to build a customer-centric organization in order to gain a competitive edge and to keep the organization healthy through future downturns. The company took a series of steps to systematically and holistically shift the entire organization toward customer-centricity.

More: https://www.mckinsey.com/business-functions/

By Hai Ye and Will Enger, Open interactive popup; Case study: Building a customer-centric B2B organization; Open interactive popup, A Chinese steel manufacturer systematically transformed its operations to be customer-centric—and in the process, improved its bottom line.

About the authors: Hai Ye and Will Enger are partners in McKinsey’s Hong Kong office.

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Five questions to answer before you finalize your media plan

The COVID-19 crisis had a quick impact on advertisers’ media budgets. Those in sectors such as travel and cinema, where consumer spending plummeted, slashed budgets. Those in other sectors, such as consumer packaged goods (CPG), digital retail, and healthcare, rushed to increase and redirect their budgets, hoping to gain market share as consumers flocked online—though some then pulled back, unable to keep up with consumer demand.

The early assumption was that life would return to normal and media teams could revert to their typical budgeting and planning processes. But there are clear indications that consumer behavior has changed for good, with the pandemic accelerating a trend toward online channels that was already in progress. In the space of five months, consumer online buying in the United States grew from around 15 percent to 45 percent for most categories. 1

Much remains uncertain. It is against this backdrop that advertisers are trying to plan for 2021, figuring out how much to budget, how to use that money as efficiently as possible, and how best to position themselves to adjust to whatever the future might hold. If a silver lining exists, it’s that the shift toward digital channels should be making it easier to track media-spend performance with much greater precision. This budget precision is particularly useful when it comes to budget negotiations between marketing and finance, which tend to be protracted given how hard it is to ascertain the budget’s impact on growth. In times of uncertainty, those negotiations are likely to be harder still, with stakeholders pulling in different directions.

While advertisers have made adjustments to their media spend, media planning often still does not reflect the scale of the change in the market or the precision now possible through analytics. Taking old plans and adding or subtracting a percentage, as has often been done, won’t do. In this light, we suggest that marketing leaders focus on answering the following five questions before locking in their media plans for 2021.

  1. Are you spending the right amount for your business ambitions?
  2. Do you have the analytics available to fine-tune your spend?
  3. Are you spending enough on addressable channels?
  4. Do you have the right mix of agencies to move fast?
  5. Are you experimenting enough with strategic publishers?

More: https://www.mckinsey.com/business-functions/marketing-and-sales/

About the authors: Cody Butt is a partner in McKinsey’s Denver office, Jeff Jacobs is a partner in the Chicago office, Craig Macdonald is a partner in the Southern California office, and Priya Rammohan is an associate partner in the Brussels office.

 

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Athens Journal of Business & Economics

We are glad to announce that the January issue (Volume 7, Issue 1, January 2021) of the Athens Journal of Business & Economics (AJBE) has been uploaded: https://www.athensjournals.gr/ajbe/v7i1. Below you can find the table of contents. The AJBE sponsors the following academic events:

  • 14th Annual International Conference on Global Studies, 18-21 December 2020, Athens, Greece (https://www.atiner.gr/cbc)
  • 8th Annual International Conference on Business, Law & Economics, 3-6 May 2021, Athens, Greece (https://www.atiner.gr/ble)
  • 16th Annual International Symposium on Economic Theory, Policy and Application, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/economics)
  • 19th Annual International Conference on Management, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/management)
  • 19th Annual International Conference on Marketing, 28-30 June & 1 July 2021, Athens, Greece (https://www.atiner.gr/marketing)
  • 19th Annual International Conference on Accounting, 5-8 July 2021, Athens, Greece (https://www.atiner.gr/accounting)
  • 19th Annual International Conference on Finance, 5-8 July 2021, Athens, Greece (https://www.atiner.gr/finance)
  • 8th Annual International Conference on SΜΕs, Entrepreneurship and Innovation: Management – Marketing – Economic – Social Aspects 26-29 July 2021, Athens, Greece (https://www.atiner.gr/sme)

You are more than welcome to submit a proposal for presentation. Please note that the program of the December conference on Global Studies is available at: https://www.atiner.gr/2020cbc-pro. Late submissions for this event will be accepted by the end of November. ATINER has decided to offer the option of remote (online or pre-recorded) presentation for those who cannot travel for objective or subjective reasons. If you need more information, please let me know, and our administration will send it to you including the abstract submission form. Finally, you are welcome to contribute to the AJBE with an original research paper.

TABLE OF CONTENTS
Download the entire issue (PDF)
Front Pages i-viii
Labor Productivity in France: Is the Slowdown of its Growth Inevitable or are there Levers to fight it?
Catherine Bruneau & Pierre-Luis Girard
9
The Never-Ending Quest for the European Fiscal Policy’s Objectives: Stability vs. Convergence or Stability and Convergence?
Carlo Klein
41
Sustainable Governance and Knowledge-based Economy – Prerequisites for Sustainable Development of the Developing and Transitional Economies
Kristina Jovanova
67
Outcomes from Building Transparency in Governance in a Smart City Project in India: A Case Study of Panaji, Goa
Mridula Goel & Sheetal Thomas
85
The Sustainable Development Goals and Leading European Retailers
Peter Jones & Daphne Comfort
105

Dr Zoe Boutsioli
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Dr Zoe Boutsioli  Vice President of Publications ATINER (A World Association of Academics and Researchers).
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McKinsey Survey: Consumer sentiment on sustainability in fashion

While the fashion industry is reorganizing for the next normal after the COVID-19 crisis, European consumers have become even more engaged in sustainability topics. That presents an opportunity for the fashion industry to reiterate its commitment to sustainability. Moreover, now could be the moment to drive less seasonality in the fashion system.

Our survey was conducted in April 2020 across more than 2,000 UK and German consumers. 1 It is part of a firmwide effort to capture consumer sentiment during the COVID-19 crisis.

Sentiment toward sustainability. Amid the shock and uncertainty that the fashion sector is facing during the COVID-19 crisis, there is a silver lining for the environment: two-thirds of surveyed consumers state that it has become even more important to limit impacts on climate change. Additionally, 88 percent of respondents believe that more attention should be paid to reducing pollution. In practice, consumers have already begun changing their behaviors accordingly. Of consumers surveyed, 57 percent have made significant changes to their lifestyles to lessen their environmental impact, and more than 60 percent report going out of their way to recycle and purchase products in environmentally friendly packaging (Exhibit 1).

We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Emphasis on social and environmental commitments

While the industry is reorganizing for the next normal, it should consider that consumers want fashion players to uphold their social and environmental responsibilities amid the crisis. Of surveyed consumers, 67 percent consider the use of sustainable materials to be an important purchasing factor, and 63 percent consider a brand’s promotion of sustainability in the same way. Additionally, surveyed consumers expect brands to take care of their employees, as well as workers in Asia, during the COVID-19 crisis. That highlights the need for brands to maintain ethical commitments, despite the crisis. We strive to provide individuals with disabilities equal access to our website. If you would like information about this content we will be happy to work with you. Please email us at: McKinsey_Website_Accessibility@mckinsey.com

Overall, it is imperative to build trust and transparency with consumers, as 70 percent are sticking with brands they know and trust during the crisis. Of surveyed consumers, 75 percent consider a trusted brand to be an important purchasing factor. However, younger consumers, particularly Gen Zers and millennials, are more likely to experiment with smaller or lesser-known brands during the crisis.

By Anna Granskog, Libbi Lee, Karl-Hendrik Magnus, and Corinne Sawers

More: McKinsey; About the authors: Anna Granskog is a partner in McKinsey’s Helsinki office, Libbi Lee and Corinne Sawers are associate partners in the London office, and Karl-Hendrik Magnus is a senior partner in the Frankfurt office.