Want a
Successful Digital Transformation?
First, Look For
the Unicorns
Challenge your assumptions about how people and technology work together, in this third and final installment of this series co-created by Boston Consulting Group and Bloomberg Media Studios.
Bringing people and technology together is a giant leap toward successful digital transformation. But there’s one last piece of the puzzle: Where do you begin the process to get the best results?
To create significant value from transformation—in revenue growth, efficiency, resilience, and competitive advantage—you must choose wisely what to change first. Get middle managers on board and be ready for all the new internal and external opportunities.
What happens when you get digital transformation right?
Employees are more attuned to clients, meeting their demands more completely at a faster pace.
New business opportunities become clearer, both inside and outside of the organization.
Customer loyalty and engagement increase through targeted offers and services.
The bottom-line benefits
45% of companies that successfully transform have revenue growth of more than 10%.*
Digital leaders are 2x as likely as digital laggards to say they outpace the competition in cost efficiency, product quality, customer satisfaction, and time to market.*
Companies that successfully transform create 66% more value.*
Look for your billion-dollar use case
If you want to build transformations that scale, don’t start small—or large. Small experiments won’t move the needle enough, and whole-company transformations will stumble without strong consensus and dedication.
“The place to get started is what we call the ‘unicorn use case,’” says Rich Hutchinson, Managing Director & Senior Partner, BCG. “The reason it’s called ‘unicorn’ is that you’re trying to create a billion dollars of market value for a sizable company. What we normally recommend is to pick one outcome at the heart of the company and do it end to end across the business.”
To get that billion-dollar impact, a unicorn use case digitally transforms part of a company that is central to its operations. It could be supply chain systems for a manufacturer, or personalization for a cosmetics company.
Finding the unicorn in retail
One major fashion retailer’s unicorn use case is in demand forecasting, a process central to the company’s goals of controlling costs, satisfying customers, and being more sustainable. The company rolled out new algorithms, and trained workers on how to use their own insights in combination with the data to make better choices about which fashions would be in stores. The outcome of the change?
AI improved the retailer’s ability to accurately forecast demand, allowing them to manufacture the precise volume of garments needed for each store.
How a Global Brand Goes Local
Learn how Starbucks’ mobile-payment app became one of the most popular in the U.S.
Start the engine of change
Although organizations need strong vision, enthusiasm, and commitment at the top, middle managers will ultimately make or break digital transformation. Leaders must effectively communicate the vision to middle managers, the vital engines of change, especially when that change happens at the company’s core. Organizations that successfully hyperscale transformation are more than twice as likely to include middle managers in driving strategic initiatives.
If leaders can’t make a crystal-clear case to middle managers on how transformation will empower and benefit them, those managers who’ve seen new efforts come and fail over the years can often act like antibodies and stifle new initiatives.
“Without full context for the change, resistant groups can act like antibodies and kill these new ideas,” says Romain de Laubier, Northeast Asia Lead for BCG GAMMA. “I’ve seen this dozens of times, and it’s terrifyingly efficient.”
But when middle managers are invested and take control of the journey, they can deliver swift and efficient transformation at scale.
Companies that understand how to create fast digital changes are more than 2x as likely to have middle managers actively participate in developing strategies and business cases for transformation.†
You can make it clear to people that it’s only upside for them, and that you’ve got their back if there’s some sort of blip.
Dylan Bolden, Managing Director & Senior Partner, BCG
Incentives can play a key role in bringing middle managers and their teams on board. For instance, when one restaurant chain implemented an AI-enabled demand forecast and labor optimization product, leaders involved store-level general managers in the effort early, enlisting their support to test the solution in their restaurants and provide input on the necessary features. To secure the support of GMs, leaders guaranteed that they would be protected from any downside risk to EBITDA, which impacts GM bonuses.
“Smart incentive plans can really help the adoption,” says Dylan Bolden, Managing Director & Senior Partner, BCG, who has helped restaurant companies train managers to work with AI-enabled tools to enhance their capabilities – from personalized offers to granular predictions of demand. “You can make it clear to people that it’s only upside for them, and that you’ve got their back if there’s some sort of blip.”
A complete transformation
Ping An, a leading financial, technology, and health company in China, went all-in on digital transformation in 2013, essentially recreating its business with end-to-end AI capabilities to increase efficiency and fine-tune which products it offers customers.
Ping An’s Progress
From its 2013 transformation to the present**
Be ready for momentum,
and keep it going
Digital transformation is contagious. If your human-technology partnership is a success in one part of the company, other parts of the organization will take notice. You should not only expect transformation to spread and scale in your organization; you should plan for it. From the moment you find your unicorn case, you should be listing other possible cases and imagining what a full transformation would look like. It’s not just about replicating success; it’s about keeping your company on stable footing.
“You get to a point of tension afterwards between your traditional way of operating and your digital way of operating,” de Laubier says. “Everyone wants to be in the successful part and not in the old legacy part of the company.”
Today’s digital natives can become tomorrow’s dinosaurs if they are not constantly looking for ways to improve.
What momentum looks like: How ING became a digital banking leader
Seeing the growing impact of mobile on banking, the Netherlands-based company forges a strategy in 2014 to become a digital banking leader.
In 2015, ING introduces agile ways of working to marketing, product development and IT—the groups crucial to launching new products. In less than six months, the bank creates new roles and redefines jobs for 3,000 people.
ING’s call centers and sales force go agile in 2016, adding 7,000 more employees into the fold.
Agile ways of working are implemented globally by ING in 2018, with 1,200 squads in 13 countries.
The Outcome? Customer satisfaction and employee engagement up, and time to market down.
