Why a next-generation operating model delights customers and drives growth

Siloed thinking leads to digital failure

A significant proportion of Australian small and medium-sized (SME) organisations are prioritising growth and expansion above all else. Delivering great customer experiences and driving business efficiencies will go a long way towards attaining this goal. However, being integrated, agile and quick to react is essential – a digital strategy is central to this. A Deloitte study has shown that digitally advanced SMEs are 50 percent more likely to be growing revenue.

Yet, despite the best of intentions, most digital initiatives often remain siloed. And, where customer experience is concerned, digital tends to be viewed through the lens of marketing and sales initiatives that dominate business thinking. Too often, pockets of innovation occur as new point solutions in separate business units. This makes trying to evaluate the effectiveness of technology extremely hard. Although research[1] tells us they will more than likely fail. In addition to this, there’s also a lack of skill sets in mid-sized organisations to know if the right path is being taken. This is where partnering with a Iike-minded digital service provider is crucial to driving a successful digital transformation.

To provide compelling customer experiences at a lower cost that ultimately drives growth, organisations need to delight from the core and across function. That is, not just bringing together existing business units under one strategy, but developing integrated, new digital capabilities in core systems – a next-generation operating model.

What is a next-generation operating model?

Coined by several leading professional consultancies, McKinsey describes it as, ‘A new way of running the organisation that combines digital technologies and operations capabilities in an integrated, well-sequenced way to achieve step-change improvements in revenue, customer experience, and cost.”

The next-generation operating model helps organisations focus on value building. It brings discipline to the digital process occurring now in many mid-sized organisations across Australia. Furthermore, McKinsey outlines two stages to the model:

Identify the end-to-end customer journey: The first part focuses on organising efforts around end-to-end customer journeys, as well as internal back-office processes. This means identifying the critical journeys, understanding the customer journey end-to-end and where value exists. Examples of customer journeys include a customer using your website to make an online payment or lodging an email enquiry for one of your products or services to then have an engagement with a sales member.

Applying technology to these journeys in combination: The second part is to move away from piecemeal, individual technologies and operations capabilities. Instead, apply them to customer journeys in combination and in the right sequence.

What are the top considerations when developing it?

While the theory behind the next-generation operating model is fairly simple, practically there are challenges because of conflicting priorities across the organisation. There are different customer journeys to consider as well when to apply different technologies correctly. Invariably, they are all owned by different people too.

If we consider some of the typical roles within your organisation, there are people looking after operations, digital, data and user experience to name just a few. Getting everyone to interact and coordinate isn’t as easy as it sounds. Everyone has their own priorities, KPIs and pipelines to deliver. So how’s it done?

From the top down

Something as far-reaching as this has to come from the top, because it touches so many parts of the organisation. It’s strikes to the core of business, impacting IT, operations, marketing, supply chain, in fact, everything. For that reason, it needs to have active leadership from the C-suite.

Customer journey prioritisation

Identify the most important customer journeys and most significant pain points that will add value. This will dictate what assets, digital, analytics, or other capabilities will be required and when.

A new way of working

Implementing a next-generation operating model requires the organisation to act in a more agile way, adapt rapidly and be flexible to market and customer demands. It requires the ability to test and learn, as well as being OK with failure, yet fixing quickly. Your people need to be open to moving roles and adapting.

Accountability

Agree KPIs and metrics that look at end-to-end value versus siloed impact. This makes individuals accountable by thinking about what happens before them and after them.

How do you benefit?

Customers don’t just expect more, the expectations themselves also change quickly, which can radically shift profit. This means their journeys are in constant flux too, which impacts their expectations in terms of their ability to do self-service, speed of execution, responsiveness, and so forth. But get it right, and you’ll gain a clear cut advantage and maximise profit.

Through understanding the best combination and sequence of technologies in the customer journey to use, you will see significant uplift in customer satisfaction, while at the same time improving efficiency too.

Implementing a next-generation operating model is a real game-changer for mid-sized organisations over often larger, yet slower to react incumbents. Seize your ability to be more nimble and act quickly. It will put you on the pathway towards gaining a greater proportion of market share and driving that all important growth target.