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Building a digital culture might be the most difficult issue companies face. Using a “digital factory” is one way to get there.
In many large companies, using digitization to improve how things get done—whether it’s a customer experience or an internal-facing process—has boosted revenue, increased customer loyalty, and removed big chunks of internal costs. The best companies, however, do more than just improve these journeys, they systematically reinvent them.
As many are experiencing, going beyond one or two pilot projects requires a concerted effort to scale a new way of working. One approach that consistently works is to establish what we call a digital factory.
Like its bricks-and-mortar counterpart, a digital factory brings together the skills, processes, and inputs required to produce high-quality outputs. These outputs are generally journeys, a series of interactions to complete a task.
They might include a new way to help customers resolve service issues or a new process for applying for a mortgage. The factory models a new way of working to develop new products, which are then introduced and integrated into the broader business. It uses advanced methodologies such as design thinking, zero-based process reengineering, and agile software development.
The way the factory works is defined by a set of standard operating guidelines and methodologies that lay out the required deliverables, governance steps, and working processes—such as which decisions can be made by factory leaders and which require escalation. The goal is a balance between the structured predictability required to transform a large organization and the flexibility and agility required for a rapidly changing digital world.
This approach enables large organizations to incubate a new digital culture and operating model while allowing the broader business to touch and feel the change and see the power of a new way of working. The process of introducing a new way of working and actively integrating new products into the existing business—which in turn requires people to adopt new ways of working to work with the new product—is a conscious effort to shift the culture of the entire organization.
When executed well, the digital factory provides a blueprint for the future of work that energizes the business and excites employees. It creates a vortex for innovation and creativity that attracts the best talent from inside and outside the organization. And it delivers results. The best digital factories can put a new product or customer experience into production in as little as ten weeks. The innovation can then be introduced and scaled up across the business in eight to 12 months.
Companies adopting this approach need to put in place both a culture that embodies the new way of working and the management practices to support it.
Source: McKinsey