McKinsey: The road to recovery is paved with data
A wave of innovation in digital technology has been unleashed by the global pandemic, reports McKinsey & Company.
While COVID-19 has launched the greatest behaviour change in a lifetime, business leaders are saying they have accomplished in 10 days what used to take them 10 months.
“That kind of speed is what’s unleashing a wave of innovation unlike anything we’ve ever seen,” said Kate Smaje, Senior Partner and Global Co-Leader, McKinsey Digital.
Although the pandemic is a full-stop on business as usual, it has become a launch pad for organisations to become virtual, digital-centric and agile according to the new report from consultants McKinsey & Company.
“This great digital migration has forced every company into a massive experiment in how to be more nimble, flexible and fast. For many organisations they have been pleasantly surprised by how quickly they have moved to digital, said Smaje.
The acceleration of digitisation: How six companies are leveraging technology and data to transform themselves, is an in-depth report from McKinsey & Company which highlights that the road to recovery is paved with data.
Five points stood out for companies who are winning the digital transformation:
- Digital speed. Leading companies just operate faster, from reviewing strategies to allocating resources.
- Ready to reinvent. Business-as-usual is a dangerous posture. Leading businesses are investing in upgrading the core of their business as they are in innovation, often by harnessing technology.
- All in. These companies are not just making decisions faster; the decisions themselves are bolder. From major acquisitions (leaders spend three times more than their peers) and capital bets (leaders spend two times what their peers do).
- Data-driven decisions. “The road to recovery is paved with data,” Smaje says. High-performers are three times more likely to say their data and analytics initiatives have contributed at least 20% to EBIT (from 2016–19).
- Customer followers. Being “customer centric” (in addition to operational and IT improvements) can generate economic gains ranging from 20% to 50% of the cost base.
But now business leaders are asking: How do we bottle the stuff that worked? Even before the crisis, 92% of leaders felt that their business model would not remain viable through the current rates of digitalisation.
“But now everything has just sped up. Banks like Goldman Sachs, with 150 years of legacy, are acting fast to define new personal digital ecosystems,” said Smaje.
Power of reinvention
Harit Talwar, Global Head of Marcus by Goldman Sachs said the pandemic strongly reaffirmed their business model of digital combined with a strong balance sheet. Marcus is Goldman Sachs consumer business, an online bank with “a mission to empower millions of consumers to take control over their financial lives”.
“The pandemic has helped us emerge competitively stronger by focusing on customers, employees and our communities, said Talwar.
“During the pandemic we launched our mobile app and we expanded our range of products and services with Apple and we launched a brand-new partnership with Amazon for seller financing. I think the most important thing for companies to strive for in the next normal which is all round acceleration of digitalisation is the mindset,” he said.
According to Smaje we are now living in a “winner takes all world” with one or two top companies in each sector that are winning. The big lesson coming through all of this is the metabolic rate of business has significantly increased.
“Leading companies do not just make bolder decisions they make them much faster,” commented Smaje. This includes three factors:
- Allocating talent
- Investing capital
- Unlocking new operations
Freeport-McMoRan used data and analytics in new and inventing ways – combining the power of Artificial Intelligence (AI) and institutional knowledge.
Harry “Red” Conger, chief operating officer of the Phoenix-based company, said: “Our engineers thought that it was blasphemy that data scientists were proposing that they knew how to run the plant better than they did. But the AI model was telling us how much faster the equipment could run at.”
Real-time data is allowing Freeport to lower operating costs, stand more resilient in tough economic climates (and when commodity prices are falling) and make faster decisions. “A learn-fast culture means we put things into action,” he says. “We don’t sit around thinking about it.”
Speed of digital
RXR Realty, a commercial and residential real estate developer in New York, began investing in digital capabilities even before the pandemic hit.
RXR’s new platform, RxWell, includes a new mobile app that provides information about air quality and occupancy levels of a building, cleaning status, food delivery options and shift times for worker arrivals.
Scott Rechler, CEO of RXR. “We felt that by leveraging our digital skills, we could create a unique and personalised experience for our customers similar to what they’re used to in other aspects of their lives.”
Follow the customer mindset
One of the biggest transformations that occurred throughout the pandemic is how customers shop. Store closings pushed millions of consumers online, many for the first time.
Majid Al Futtaim Retail, a Dubai-based conglomerate that operates the Carrefour chain in the Middle East, Africa and Asia saw online grocery orders explore to 400% higher than in 2019.
“The pandemic pushed us to accelerate our digital transformation. We are implementing in the coming 18 months things we originally said we wanted to achieve in five years,” said Hani Weiss, CEO of Majid Al Futtaim Retail.
When data showed that more capacity was needed, logistics managers quickly arranged to have a 54,000-square-foot online fulfilment centre tent put up and operational in five weeks. Complete with rooms for frozen and chilled food, the facility is now handling 3,000 online orders a day, making it the latest and largest of 75 fulfilment centres launched this year.
“The road to recovery is paved with data, those companies that can harness it best will set the pace,” concluded Smaje.
Intelliwave SiteSense boosts APTIM material tracking
“We’ve been engaged with the APTIM team since early 2019 providing SiteSense, our mobile construction SaaS solution, for their maintenance and construction projects, allowing them to track materials and equipment, and manage inventory.
We have been working with the APTIM team to standardize material tracking processes and procedures, ultimately with the goal of reducing the amount of time spent looking for materials. Industry studies show that better management of materials can lead to a 16% increase in craft labour productivity.
Everyone knows construction is one of the oldest industries but it’s one of the least tech driven comparatively. About 95% of Engineering and Construction data captured goes unused, 13% of working hours are spent looking for data and around 30% of companies have applications that don’t integrate.
With APTIM, we’re looking at early risk detection, through predictive analysis and forecasting of material constraints, integrating with the ecosystem of software platforms and reporting on real-time data with a ‘field-first’ focus – through initiatives like the Digital Foreman. The APTIM team has seen great wins in the field, utilising bar-code technology, to check in thousands of material items quickly compared to manual methods.
There are three key areas when it comes to successful Materials Management in the software sector – culture, technology, and vendor engagement.
Given the state of world affairs, access to data needs to be off site via the cloud to support remote working conditions, providing a ‘single source of truth’ accessed by many parties; the tech sector is always growing, so companies need faster and more reliable access to this cloud data; digital supply chain initiatives engage vendors a lot earlier in the process to drive collaboration and to engage with their clients, which gives more assurance as there is more emphasis on automating data capture.
It’s been a challenging period with the pandemic, particularly for the supply chain. Look what happened in the Suez Canal – things can suddenly impact material costs and availability, and you really have to be more efficient to survive and succeed. Virtual system access can solve some issues and you need to look at data access in a wider net.
Solving problems comes down to better visibility, and proactively solving issues with vendors and enabling construction teams to execute their work. The biggest cause of delays is not being able to provide teams with what they need.
On average 2% of materials are lost or re-ordered, which only factors in the material cost, what is not captured is the duplicated effort of procurement, vendor and shipping costs, all of which have an environmental impact.
As things start to stabilise, APTIM continues to utilize SiteSense to boost efficiencies and solve productivity issues proactively. Integrating with 3D/4D modelling is just the precipice of what we can do. Access to data can help you firm up bids to win work, to make better cost estimates, and AI and ML are the next phase, providing an eco-system of tools.
A key focus for Intelliwave and APTIM is to increase the availability of data, whether it’s creating a data warehouse for visualisations or increasing integrations to provide additional value. We want to move to a more of an enterprise usage phase – up to now it’s been project based – so more people can access data in real time.