Insights

The C-Suite Playbook: Unlocking Operational Excellence through Digital Transformation

For companies across industries, the path to operational excellence is being radically reshaped by digital technologies. Embarking on a successful digital transformation journey can unlock new levels of performance, efficiency, and customer excellence. However, as the experiences of leaders highlight, this journey is riddled with challenges that require a strategic and comprehensive approach

As McKinsey senior partners, Eric Lamarre, Kate Smaje, and Rodney Zemmel emphasize, digital transformation is an ongoing endeavor that demands a profound rewiring of an organization's DNA – its strategy, talent, operating models, and culture

Overcoming the barriers to realizing its full potential necessitates a holistic, multi-pronged strategy championed by the C-suite. This digital transformation playbook seeks inspiration from Rewired: The McKinsey Guide to Outcompeting in the Age of Digital and AI ‎(Wiley, June 20, 2023), and McKinsey’s interview with Empresas CMPC’s CEO, Francisco Ruiz-Tagle Edwards. 

Aligning on the Vision and Building Conviction

The first step is to foster alignment and conviction among the leadership team on the art of the possible with digital. As Eric Lamarre recounts, "That first trip was a crystallizing moment where ambitions went up, confidence went up. Alignment on what we needed to do to be more like a tech company and embed that technology mindset inside our bank was important."

Immersive learning experiences, like visiting leading digital-native companies, can help demystify the digital realm and build confidence that driving such a transformation is an achievable goal.

Putting the Business First

"If you're not focused on where the money is and how you're going to reimagine the business to really create value, rather than just take a bunch of processes and do them better or launch some little thing, the rest doesn't matter," cautions Rodney Zemmel. Digital transformation must be anchored in a clear strategic vision of how it will drive tangible business outcomes and profitability.

Embracing a Product-Centric Mindset

Overcoming the legacy "requirements" mindset that plagues IT projects is critical. As Zemmel advises, "You need a business leader and a technology leader together. Or maybe that becomes one person, a business leader who's tech savvy, or a tech leader who's business savvy. Those people together need to own a problem and a solution to a problem on an ongoing basis. They need to own a digital product or an AI product."

This product-centric approach, where cross-functional teams own and continuously enhance digital solutions, is the hallmark of a truly digital enterprise.

Leveraging Digital for Competitive Advantage and Sustainability

As Francisco Ruiz-Tagle Edwards, chief executive officer at Empresas CMPC highlights, "Digitalization helps us to improve our competitiveness, while contributing to a greener and more environmentally sustainable world in a way that is scalable." Digital transformation can be a powerful enabler for companies to drive operational excellence while pursuing strategic goals like sustainability and customer centricity.

Fostering a Digital Culture and Upskilling

Cultural transformation is fundamental, and as Kate Smaje underscores, "None of that matters unless you actually have a way of delivering it." Upskilling the workforce, attracting digital talent, and empowering teams to experiment and adapt are essential for effective execution.

As Sami Al-Rowaithey of Alinma Bank highlights, "We wanted to start small but fast. So, we launched two parallel tracks, the first of which relied on vendors and contractors, to ramp up quickly. We also launched a parallel track looking for people to recruit within the bank, so we managed to scale up very quickly, in just a few months."

Embedding Digital Capabilities for Scale

Finally, realizing the full potential of digital transformation requires building the right technological foundation and organizational capabilities for scale. This includes establishing robust data management, cloud infrastructure, AI operations, and agile delivery practices.

Enhancing End-to-End Visibility and Customer Excellence

Edwards emphasizes how digitalization allows CMPC "to better serve our clients with better visibility across the value chain, including logistics and digital transactions." This end-to-end visibility, powered by integrated data and systems, is key to optimizing processes and delivering superior customer experiences.

Empowering the Workforce 

A critical aspect is the human element. As Edwards notes, digitalization "allows us to improve workforce life, not only boosting productivity, also improving their life quality, releasing time from their calendars to engage in more value-added activities." Upskilling and empowering employees is vital for both enablement and buy-in.

Driving Operational Agility and End-to-End Thinking

CMPC overcame the challenge of siloed operations by using digital to provide "operators... the vision of the whole process, starting from the forest to different operations in the mills." This end-to-end perspective fosters operational agility and breaks down functional boundaries.

Fostering A Culture of Continuous Improvement

However, as Edwards cautions, "the most complex side is adoption, and that technology is integrated into the day-to-day of the operation." Cultural transformation toward a mindset of continuous improvement with technology is crucial, requiring organizations to "adapt...management to the new processes that are infused with technology."https://digitalexperience.live/phygital-experiences-next-gen-cx

By thoughtfully integrating digital capabilities with operational excellence principles, organizations can unlock wide-ranging benefits spanning productivity gains, sustainability initiatives, workforce empowerment, and customer-centricity as CMPC's example demonstrates.

As the leaders remind us, digital transformation is a perpetual journey, not a finite project. By adopting a holistic, business-centric approach and continually honing their digital capabilities, C-suite executives can position their organizations as leaders in operational excellence for years to come.