RESEARCH REPORT
The tech-powered operating model
Accelerating performance by design
4-MINUTE READ
March 15, 2023
In brief
- Technology-driven operating models support transformations that are broader and faster than ever before and enable continuous, dynamic reinvention.
- A small group of companies are reaping the benefits of reinvention including improved productivity and increased profitability.
- To follow their lead and move ahead of the competition, our report explores five fundamentals to tap into the full power of data and technology.
Seizing the full power of technology goes beyond cutting costs and driving efficiency. It’s about using the combination of data and tech as strategic assets to develop the speed, agility and resilience required to drive growth amid continuous change.
Yet our research found too many companies are missing this opportunity. They're using new technology in the same old ways of working, with siloed, outmoded operating models that get in their way.
80%
of executives say their company isn’t fully leveraging data and technology in critical areas of the business.
69%
of executives believe their operating model is unable to continuously adapt.
Accelerating performance by design
Unlocking the full value of technology requires an operating model designed with data and technology at its core.
For those that get it right, the payoff is significant. Companies with tech-powered operating models are 1.6x more likely to achieve profitable growth compared to companies without. And those without these types of operating models are 2x more likely to lag on profitability and growth.
Beyond operating model tradeoffs: the art of the possible
A defining trait of these exceptional companies is their ability to reconsider the big operating model choices and tradeoffs they’ve had to make in the past. They’re no longer a given, thanks to radical progress in data and technology, as illustrated below.
Core and new
Grow the existing business while driving innovation.
Key to getting it right:
- Build discrete teams for core and new that share data and insights
- Tap into the ecosystem to rapidly infuse innovative technology talent
Scale and agility
Respond quickly to customer needs, while delivering efficiently at scale.
Key to getting it right:
- Provide freedom within a framework of common processes, data and technology.
- Organize customer facing product teams around growth and shared services teams for efficiency and scale
Global and local
Make big bets while empowering local decision-making.
Key to getting it right:
- Create complementary P&Ls with shared accountabilities and common data
- Introduce policies and decision making rights that empower teams to make decisions closer to the customer
Fixed and flexible
Maintain a strong core organization that can flex with market changes.
Key to getting it right:
- Develop mechanisms to quickly create, deploy and redeploy teams
- Cultivate a culture where requirements continuously evolve, and experimentation is encouraged
Inside and outside
Deliver integrated solutions, while leveraging best-in-class capabilities.
Key to getting it right:
- Strategically engage and map your partner and customer ecosystems
- Evolve relationships with third parties (from vendors to partners) and seek ways to share in risks and rewards
Five fundamentals to reaching a new level of performance
Companies have an opportunity to set a new performance frontier through Total Enterprise Reinvention and an operating model designed with data and technology at its core. As advances in technology upend traditional organizational design tradeoffs, they present new possibilities. Whether you are just embarking on your transformation journey or looking to accelerate, consider the art of the possible. The following five fundamentals are key to realizing the potential and extracting the full value of your data and technology.
1. Fuse strategy, operating model and technology
Design your operating model to use data and technology as both a driver and enabler, a strategic and competitive asset. Make it a CEO initiative, align funding and incentives to drive the change and establish a culture of continuous reskilling to support it.
2. Break down silos to capture hidden value
Take a hard look at the activities that cut across your organization and your ecosystem. Identify where they may be falling through the cracks between silos or organizations in your ecosystem. Smooth the seams with data and tech solutions that enable real-time transparency and faster data-driven decision making, enabling teams to respond quickly as conditions change.
3. Design for a digital offer and core value chain
Redesign teams to focus on innovation and problem solving, while automating the core value chain. Go beyond using artificial intelligence (AI) and robotics for the low-hanging-fruit of transactional activities and focus on driving top-line growth, targeting areas where advanced technologies can add the most value.
4. Establish modular teams and systems
Implement new ways of working in tandem with implementing new technology. Create customer-centric multidisciplinary teams to drive speed to market; and enterprise platform teams to enable scale. Power them with a modern digital core and supporting collaboration tools.
5. Continuously redefine work and skills
Continuously revisit which activities are done by human vs. machine as technologies become more sophisticated. Organize work around issues to solve and outcomes to achieve. Empower teams to define the “how.” Blur job descriptions across business and IT, focusing on skills rather than jobs to foster better collaboration and solutions.