Accelerate innovation with a 2-speed-architecture

oliverboThe digital revolution not only changes our personal lives, but has massive implications on the competitive landscape. To win in this new environment, companies need to quickly develop new products, interact across channels, analyze customer behavior in real-time, and automate their processes.

McKinsey & Company research supports that some industries will go through a radical reshaping transformation over the next years. As shown in the following graphic, especially industries that are directly customer facing have the highest potential of being impacted by digital.

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In contrast to “digital native” players, most large incumbents have a historically grown architecture that acts not as a competitive weapon, but rather hinders innovation. Since today’s environment doesn’t allow for a year-long transformation, companies must transform the technology architecture at two speeds not just within IT, but even more importantly, the organizational and process architecture within the business.

If one would aim to accelerate an entire large Fortune 500 company up to the level of IT agility and flexibility of a digital native, the approach would fail – much the same as a large tanker ship can’t be accelerated to move at the same speed as a speed boat one-tenth the size.

Therefore, we recommend that established companies create an architecture of two speeds: a fast speed for the functionalities that are essential for the real-time customer experience that have to change rapidly and one transaction speed that works at slower speed on the remaining functionalities.

While this concept sounds simple there are many challenges to overcome:

The technology has to change massively to support a faster time to market, cross-channel deployment and upgrades with no maintenance windows – just to name a few.

But even more importantly the organization and the processes will have to change as IT is no longer only a “cost position” but an investment into new business models. This requires different processes e.g. for portfolio and project management.

Last but not least the biggest obstacle is the mindset of the people in the organization. In a digital business IT becomes a boardroom topic and needs a much higher involvement from the management than formerly.

Only if the digital transformation is driven in sync between these three factors established companies have a chance to win against digital natives.  

-Dr. Oliver Bossert
Senior Knowledge Expert
McKinsey & Company, Inc.

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