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McKinsey on How to profitably deliver services to customers

How to profitably deliver services to customers has become a defining challenge for businesses today.

There are a number of reasons for this. One is because customers don’t just expect more, the expectations themselves also change quickly, radically shifting profits. The other is that executives face an increasingly complex landscape of technologies, methodologies, and both regulatory and compliance pressures to ensure that new processes are standardized and traceable.

This sea change for both B2B and B2C businesses is fundamentally transforming what “services” means.

McKinsey research

McKinsey research suggests that as much as 45 percent of employee activities can be automated by adopting current technologies. That is calling into question how businesses work, build skills, and deliver customer experiences.

This reality is particularly important given the high-stakes nature of today’s digital environment.


McKinsey research has revealed a “power curve” where the top quintile of performers capture more than 90 percent of the economic profit (see report). The 24 companies that make up the top 1 percent of our sample earn—astonishingly—the same as the next 87 companies combined. Moving into the top quintile, or even improving within it, is not easy. Most companies have embarked on journeys to transform their operating models, of course, but performance has been uneven. The efficiency levels of many service industries, for example, have barely changed over the past decade.

Most important questions

McKinsey organized it in three sections designed to address the most important questions executives should ask:

1. The next-generation operating model: What is it and how do I build it?

• What is the operating model needed to simultaneously disrupt existing processes, drive value, and improve customer experience while reducing costs to serve?
• How do we actually build it and what does the sequencing look like? Why should we focus on end-to-end journeys, and which ones will deliver the most value?
• How can we use design thinking to reinvent user experience for our most important journeys?

READ  [Lara Penin's Book] An Introduction to Service Design

2. New approaches and capabilities to drive your next-generation operating model

• What is the right mix of capabilities and approaches we should develop to meet our primary
objectives based on our starting point and aspirations?
• How do we set up teams to be successful in a digital world?

3. Foundations to scale your next-generation operating model

• What is the IT architecture we need to support a next-generation operating model?
• Can we scale and sustain the operating model across the entire business?
• How can we build a new and healthy organization that supports an agile and customer-centric culture?
• What management systems should we put in place to embed the new skills, technologies, and processes in the organization?

Read all in the paper (downloadable)Introducing-the-next-gen-operating-model

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