Innovation Archive

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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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BCG Report: Are You Making the Most of Your Relationship with AI?

Management Review suggests that in order to see significant financial returns, organizations need a multidimensional, complex relationship with AI—one that involves several methods of learning and different modes of interaction.

Businesses everywhere are recognizing the power of AI to improve processes, meet customer needs, enter new spaces, and, above all, to gain sustainable competitive advantage. With this recognition has come an increased adoption of—and investment in—AI technologies. A global survey of more than 3,000 executives revealed that more than half of respondents are deploying AI: six out of ten have an AI strategy in 2020, up from four out of ten in 2018. AI solutions are more prolific and easier to deploy than ever before, and companies around the globe are seizing on the opportunity to keep up with this exciting trend. Yet despite their efforts—to hire data scientists, develop algorithms, and optimize processes and decision making—most companies aren’t seeing a significant return on their investments.

So, what allows a small number of companies to stand out from the crowd?

For them, AI isn’t just a path to automation; it’s an integral, strategic component of their businesses. To achieve significant financial benefits, companies must look beyond the initial, albeit fundamental, steps of AI adoption—of having the right data, technology, and talent in place, and organizing these elements around a corporate strategy. Currently, companies have only a 21% chance of achieving significant benefits with these fundamentals alone, though incorporating the ability to iterate on AI solutions with business users nearly doubles the number, to 39%. But it’s the final stage of AI maturity, of successfully orchestrating the macro and micro interactions between humans and machines, that really unlocks value. The ability to learn as an organization—by bringing together human brains and the logic of machines—is what gives companies a 73% chance of reaping the financial benefits of AI implementation.

More: To embrace AI’s full potential, companies must recognize that humans play an equally important role in the equation—and reshape themselves accordingly. Download the Full Report

Authors: Sam Ransbotham, Associate Professor, Boston College/MIT Sloan Management Review; Shervin Khodabandeh, Managing Director & Senior Partner, Los Angeles; David Kiron, Executive Editor, MIT Sloan Management Review’s Big Ideas initiatives; François Candelon, Managing Director & Senior Partner, Global Director of the BCG Henderson Institute
Paris; Michael Chu, Partner and Associate Director, Data Science, Silicon Valley – Bay Area; Burt LaFountain, Managing Director & Partner, Boston

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AI, Robots, and Ethics in the Age of COVID-19

Before COVID-19, most people had some degree of apprehension about robots and artificial intelligence. Though their beliefs may have been initially shaped by dystopian depictions of the technology in science fiction, their discomfort was reinforced by legitimate concerns. Some of AI’s business applications were indeed leading to the loss of jobs, the reinforcement of biases, and infringements on data privacy.

Those worries appear to have been set aside since the onset of the pandemic as AI-infused technologies have been employed to mitigate the spread of the virus. We’ve seen an acceleration of the use of robotics to do the jobs of humans who have been ordered to stay at home or who have been redeployed within the workplace. Labor-replacing robots, for example, are taking over floor cleaning in grocery stores and sorting at recycling centers. AI is also fostering an increased reliance on chatbots for customer service at companies such as PayPal and on machine-driven content monitoring on platforms such as YouTube. Robotic telepresence platforms are providing students in Japan with an “in-person” college graduation experience. Robots are even serving as noisy fans in otherwise empty stadiums during baseball games in Taiwan. In terms of data, AI is already showing potential in early attempts to monitor infection rates and contact tracing.

No doubt, more of us are overlooking our former uneasiness about robots and AI when the technology’s perceived value outweighs its anticipated downsides. But there are dangers to this newfound embrace of AI and robots. With robots replacing more and more job functions in order to allow humans to coexist as we grasp for some semblance of normalcy, it’s important to consider what’s next. What will happen when humans want their former jobs back? And what will we do if tracking for safety’s sake becomes too invasive or seems too creepy yet is already an entrenched practice?

A New Normal Comes Racing In

After a vaccine for COVID-19 is developed (we hope) and the pandemic retreats, it’s hard to imagine life returning to how it was at the start of 2020. Our experiences in the coming months will make it quite easy to normalize automation as a part of our daily lives. Companies that have adopted robots during the crisis might think that a significant percentage of their human employees are not needed anymore. Consumers who will have spent more time than ever interacting with robots might become accustomed to that type of interaction. When you get used to having food delivered by a robot, you eventually might not even notice the disappearance of a job that was once held by a human. In fact, some people might want to maintain social distancing even when it is not strictly needed anymore.

We, as a society, have so far not questioned what types of functions these robots will replace — because during this pandemic, the technology is serving an important role. If these machines help preserve our health and well-being, then our trust in them will increase.

As the time we spend with people outside of our closest personal and work-related social networks diminishes, our bonds to our local communities might start to weaken. With that, our concerns about the consequences of robots and AI may decrease. In addition to losing sight of the scale of job loss empowered by the use of robots and AI, we may hastily overlook the forms of bias embedded within AI and the invasiveness of the technology that will be used to track the coronavirus’s spread.

More: https://sloanreview.mit.edu

About the Authors

Ayanna Howard (@robotsmarts) is the Linda J. and Mark C. Smith Professor and Chair of the School of Interactive Computing in the College of Computing at Georgia Tech. She also serves as director of the Human-Automation Systems (HumAnS) Lab in the School of Electrical and Computer Engineering. Jason Borenstein is the director of graduate research ethics programs and associate director of the Center for Ethics and Technology within the School of Public Policy and Office of Graduate Studies at Georgia Tech.

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A leader’s guide: Communicating with teams, stakeholders, and communities during COVID-19

COVID-19’s speed and scale breed uncertainty and emotional disruption. How organizations communicate about it can create clarity, build resilience, and catalyze positive change.

Crises come in different intensities. As a “landscape scale” event, 1 the coronavirus has created great uncertainty, elevated stress and anxiety, and prompted tunnel vision, in which people focus only on the present rather than toward the future. During such a crisis, when information is unavailable or inconsistent, and when people feel unsure about what they know (or anyone knows), behavioral science points to an increased human desire for transparency, guidance, and making sense out of what has happened.

At such times, a leader’s words and actions can help keep people safe, help them adjust and cope emotionally, and finally, help them put their experience into context—and draw meaning from it. But as this crisis leaps from life-and-death direction on public health and workplace safety to existential matters of business continuity, job loss, and radically different ways of working, an end point may not be apparent. While some may already be seeking meaning from the crisis and moving into the “next normal,” others, feeling rising uncertainty and worried about the future, may not yet be ready for hope.

COVID-19’s parallel unfolding crises present leaders with infinitely complicated challenges and no easy answers. Tough trade-offs abound, and with them, tough decisions about communicating complex issues to diverse audiences. Never have executives been put under such an intense spotlight by a skeptical public gauging the care, authenticity, and purpose that companies demonstrate. Leaders lack a clear playbook to quickly connect with rattled employees and communities about immediate matters of great importance, much less reassure them as they ponder the future.

Against this frenzied backdrop, it would be easy for leaders to reflexively plunge into the maelstrom of social-media misinformation, copy what others are doing, or seek big, one-off, bold gestures. It is also true that crises can produce great leaders and communicators, those whose words and actions comfort in the present, restore faith in the long term, and are remembered long after the crisis has been quelled.

So we counsel this: pause, take a breath. The good news is that the fundamental tools of effective communication still work. Define and point to long-term goals, listen to and understand your stakeholders, and create openings for dialogue. Be proactive. But don’t stop there. In this crisis leaders can draw on a wealth of research, precedent, and experience to build organizational resilience through an extended period of uncertainty, and even turn a crisis into a catalyst for positive change. Superior crisis communicators tend to do five things well:

  1. Give people what they need, when they need it. People’s information needs evolve in a crisis. So should a good communicator’s messaging. Different forms of information can help listeners to stay safe, cope mentally, and connect to a deeper sense of purpose and stability.
  2. Communicate clearly, simply, frequently. A crisis limits people’s capacity to absorb information in the early days. Focus on keeping listeners safe and healthy. Then repeat, repeat, repeat.
  3. Choose candor over charisma. Trust is never more important than in a crisis. Be honest about where things stand, don’t be afraid to show vulnerability, and maintain transparency to build loyalty and lead more effectively.
  4. Revitalize resilience. As the health crisis metastasizes into an economic crisis, accentuate the positive and strengthen communal bonds to restore confidence.
  5. Distill meaning from chaos. The crisis will end. Help people make sense of all that has happened. Establish a clear vision, or mantra, for how the organization and its people will emerge.

Give people what they need, when they need it

Every crisis has a life cycle, and emotional states and needs vary with the cycle’s stages. In a recent article, our colleagues framed the COVID-19 crisis in five stages: resolve, resilience, return, reimagination, and reform. These stages span the crisis of today to the next normal that will emerge after COVID-19 has been controlled. The duration of each stage may vary based on geographic and industry context, and organizations may find themselves operating in more than one stage simultaneously (exhibit).

MORE: https://www.mckinsey.com/Business%20Functions

About the authors: Ana Mendy is a partner in McKinsey’s Southern California office, Mary Lass Stewart is an expert in the Chicago office, and Kate VanAkin is an expert in the London office.

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3 things chief legal officers can do now to become more cyber-savvy

Action #1 Understand the cyber threat environment
The National Council of Information Sharing and Analysis Centers
(ISACs) helps organizations in various industries share information
that can protect their facilities, personnel, and customers from
cyber and physical security threats and other hazards. Members
have access to information and tools to help them mitigate risks
and enhance their cyber resilience.

Action #2 Look into the existing cybersecurity program

Most organizations today have some form of cybersecurity strategy.
While knowing the technical details may be of some value, it can be
more useful for legal executives to understand its scope and, at a high
level, how effectively it addresses cyber risks the organization faces.
In particular, you should be familiar with four areas of the cybersecurity
strategy and the program in which that strategy is executed.
Cyber risk profile
Understand the processes by which cyber risks have been identified
and prioritized for your organization. How often is the profile updated?
How does it account for a quickly evolving threat environment?

Program governance
Assess who across the enterprise is involved in cybersecurity program
oversight. Who sets policies and procedures? What internal controls
are there for compliance? What resources and programs are in place to
predict, detect, and respond to cyber incidents, and how much does
the organization spend on cybersecurity annually? Are the programs
insourced or outsourced? How are employees and business partners
educated and trained about cybersecurity, and how is the effectiveness
of that monitored over time?
Cybersecurity safeguards
Determine what resources, both human and digital, are in place to
defend the organization. How is the cyber perimeter defined? What
security measures protect each type of device and the networks to
which they have access?
Cyber incident response and remediation
Identify existing disaster recovery plans for responding to data
breaches and other cyber incidents and determine if they meet any
applicable industry standards and regulations. If a breach occurs, what
public disclosures and other actions are required? How quickly can the
organization react to shut it down? Do existing plans go far enough not
only in meeting requirements, but also to remediate the issue in such
a way to build additional resilience so it’s not likely to happen again?

Action #3 Apply a legal point of view

With a clearer view of the cyber threat environment and the organization’s program for addressing it, legal executives can look upstream to determine where legal should be involved, both strategically and in discrete activities.
Strategically
Bring a legal perspective to the cyber risk assessment, prioritization, and mitigation process. Have an active voice in how the organization views cyber risk and how key elements of a cybersecurity program address
those risks. As the organization expands its cyber footprint into new geographic areas, stay on top of legal and regulatory implications.
Tactically
As new business initiatives are undertaken (for example, new product development, digital expansion into new markets, thirdparty relationships, and many others), take a seat at the planning table to represent the legal point of view. For example, if an organization allows employees to use company-owned or their own mobile devices for business purposes, review the approach and help establish related parameters for access and usage.
Operationally
Insert legal into the process of monitoring cybersecurity programs. Make sure legal has adequate representation early on in the event of a cyber breach or other incident. Play a more active role in remediation
efforts to help mitigate risk to the organization and prevent similar future
events. To enable more effective strategic, tactical, and operational engagement, consider deeper training in cyber issues for your legal
department or a subset of the department.

MORE: Deloitte Report: Tech Bytes Part 3: Cyber Three things chief legal officers can do now to become more cyber-savvy