Technology-driven operating models support transformations that are broader and faster than ever before and enable continuous, dynamic reinvention, writes Luis Rodriguez, Managing Director for Strategy and Consulting for Accenture in Africa. At Accenture, we identified a small group of companies (the top 15%) that have effectively infused data and technology into their operating model design.
Our financial performance analysis over the last three years found that these companies delivered more robust performance than those that don’t infuse data and technology into their operating model design. Compared to their peers, the 15% are more likely to report achieving their performance targets across critical business dimensions. The statistics below speak to these findings:
- 3.3x agility to respond to and anticipate changes
- 2.5x scale to do more with less
- 2.4x speed to market, launch and execute fast
- 2.8x customer intimacy to focus on needs
- 2.4x innovation to increase differentiation
- 3.1x sustainability for a greater environmental focus
Beyond trade-offs – the art of the possible
Exceptional companies can move beyond traditional organisational trade-offs, such as choosing between scale and agility. It has given them a competitive advantage, as they can reconsider the big operating model choices and trade-offs, they’ve had to make due to radical progress in data and technology.
- Grow the existing business while driving innovation
Companies often set up innovation engines and spin-offs with separate P&Ls, structures and cultures to avoid a political tug-of-war for leadership, support, funding and talent. However, managing many standalone P&Ls is resource-intensive, and there is a risk of divergence and duplicative costs. Weaving data and technology through the operating model design combined with a unified, measurable strategy across the business and IT makes it easier to break down silos and integrate these units around shared data and technology platforms.
Only 28% of executives believe they effectively use the potential of data and technology to help continuously transform their existing business while scaling the new. To make it work, companies must build discrete teams for core and new that share data and insights while upskilling internal talent and tapping into partnerships and vendors to infuse innovative technology talent into the core business rapidly.
- Respond quickly to customer needs while delivering efficiently and at scale
Start-ups can move quickly to seize market opportunities because they are more flexible and data-driven. Large companies may have the advantages of scale, but the complexity that comes with it can slow them down. Loosening this trade-off with a data- and technology-powered operating model is possible. By digitising the core value chain, companies can achieve scalability while providing the agility to move fast.
78% of executives want to better address trade-offs between scale and agility by realising the full potential of data and technology. The key to making it work is to provide freedom within a framework of standard processes, data and technology, establish one set of clear standards for the company, and organise teams and technologies into two areas: “shared service” teams and tech-focused on cost efficiency, fast data extraction and scale; and “product” teams and tech-focused on customer experience and revenue growth.
- Make big bets while empowering local decision-making
Companies often struggle with the power dynamics between corporate headquarters and local leadership, as local units have insights into customers, regulatory requirements and markets. Still, corporate leadership may fear losing control if decision-making is democratised. To reduce tensions, companies should define clear, unique accountabilities across global and local, with shared ownership for results, and ground their operating model design in data and technology.
Local market leaders and frontline staff are empowered to make decisions, and companies can develop relevant and profitable products and services by focusing on customer needs, not organisational hierarchies. To make it work, companies should create complementary P&Ls with shared accountabilities and common data and introduce governance and policies that empower teams to make decisions locally without going to headquarters for “permission” if they stay within global guidelines.
- Maintain a robust digital core that can flex with market changes
Data- and technology-powered operating models can unlock business flexibility and maintain efficiency in execution. They allow companies to quickly form and deploy teams, track their success and attribute financial impact back to appropriate parts of the organisation. Enterprise resource planning (ERP) must be stable with solid processes and governance and configured to respond to change easily.
Collaboration technology and shared data threaded through how work gets done can unlock more cross-functional and product-centric ways of working. Only 24% of executives say that their company’s data and technology fully enable the organisation to become agile. To make it work, companies must develop mechanisms to quickly create, deploy, and redeploy teams and cultivate a culture of discovery across the organisation where requirements continuously evolve and experimentation is accepted and encouraged.
- Deliver integrated solutions while leveraging leading capabilities
Companies rely on ecosystem relationships for ready-made capabilities, skills and expertise to improve their responsiveness and competitiveness. With an operating model designed with data and technology built in from the outset, companies can decrease the barriers to entering strategic ecosystem relationships. It is due to a technology foundation that supports collaboration and interoperability.
Companies can integrate and share data and talent with partners more efficiently, faster, and cheaper. 52% of executives say that their company still must overcome the barrier of having too few open innovation partners. Companies must strategically engage and map partner and customer ecosystems to make it work, decide the proper role, and evolve relationships with third parties.