Digital transformation is a journey, as the business gurus like to say, not a quick trip.
Christopher Paquette, a partner at McKinsey & Company and an expert on enterprise digitization, gives the metaphor one more twist. At the recent MITSloan CIO Symposium in Cambridge, Mass., he likened enterprise digitization to an ocean journey requiring two types of watercraft and crews: a hardy band of risk takers on a nimble sailboat to launch the digital effort, and a process-savvy crew and large ship to reach the destination. Both crews need to know how to sail, but they possess different skill sets.
Also in this SearchCIO video, he talks about the digital metrics -- operational and output metrics -- that businesses should use to gauge their progress in the digital transformation journey.
Does getting started in enterprise digitization require a different skill set than scaling out those efforts?
Christopher Paquette: It depends on what do you mean by skill set. For functional skills, I think the answer is no. You need design thinkers, you need people who understand how technology can enable business value at the end of the day. Depending on what you're trying to achieve in the organization, you need people who understand what the customer wants, you need people who understand how the internal operations work. So that's required for both getting started as well as scaling, if that's what you mean by skill set.
If what you mean by skill set is what is the mettle of the organization and what is the fabric of the people actually doing this, then I think, yes, it is different. For the startup phase, you need people who are aggressive, who are willing to make mistakes, fail very quickly, are happy to have a thousand things fail.
Christopher PaquettePartner, McKinsey & Company
As you move into the scale-up phase, I think that those elements of innovation are still important, but you also have to have someone who can balance that with, 'Okay, we're now doing this in 60%, 70%, 90%, 100% of the organization.' If you're failing everywhere all the time, not in a managed way, it can actually be quite disruptive in the organization. What I'm not saying is, don't try this stuff as you're scaling up. It's like knowing how to sail a cruise ship versus knowing how to sail a small sailboat, right? You still need to know how to sail, but the way in which you're doing it, I think, is fundamentally different.
Operational and output digital metrics
What about digital metrics? Are you noticing any common measures that allow businesses to gauge the success of going digital?
Paquette: Absolutely. I think maybe there are two different categories. The first is the foundational: Is this working internally? Are we achieving our internal goals? Kind of the operating metrics. And there are different types of those operating metrics. You'd have a percent of processes digitized, the number of physical touch points for a particular document. So I do a lot of financial services work: if you're doing a mortgage, you'd ask how many different times do you need to go back to the customer to collect documents that you didn't get the first time, right? And [understand that] those are things that should be digitized and automated. That's one level of these operational metrics.
There's a second, which is the output or the impact metrics. So are you achieving your end goal? And these are really more closely connected to the value drivers, the organization. So these are things like what percent of revenue is coming through digital channels directly? Or what percent of revenue is enabled through a digital channel? Especially in financial services, it's not about digital channels for sales, it's about omnichannels: Start your research online, complete it in a different channel. So there's the more customer growth-focused metrics like that.
Of course, you have customer satisfaction and experience metrics. You have the cost and control for capital in financial services [digital] metrics. So two different levels and both of them have a variety of operational financial customer metrics that I see executives looking at.
Go to part one of our SearchCIO video with Christopher Paquette to hear his advice on where to start and how to scale an enterprise digitization effort.