As Information Technology continues to evolve in an accelerated fashion, it appears that the evolution of associated enterprise IT management practices and standards to harness IT’s ever growing ...potential for business value is lagging. This paper outlines a rationale for the creation of a new IT Management framework, motivated by the current lack of an existing integrating Chief Information Officer (CIO) framework which addresses all of the important processes the CIO needs to manage in order to improve capability and create more value from IT. The paper summarizes an inventory of existing IT frameworks, their utility and possible limitations. The authors discuss the development and adoption of an emerging new approach - the IT Capability Maturity Framework (IT-CMF). Research and development of the IT-CMF used a Design Science research approach coupled with open-innovation and engaged scholarship to develop an integrating value based framework for CIOs. The paper also discusses the research governance process used to oversee the engaged scholarship research.
...we’ve spoken to business leaders who believe in such an outcome—and companies such as Amazon and Alibaba are already beginning to make it a reality. ...machines are rapidly improving at tasks that ...require creativity and intelligence, such as composing music, grading or even taking university entrance exams, and detecting emotions. ...some studies have shown that the most successful companies tend to invest less in IT than their peers do.1 Notes: 1 Megan Santosus, “ How Company Size Relates to IT Spending,” TechTarget, September 2005. To evaluate investment opportunities, the firm runs the data through its predictive analytics algorithm; humans then perform a more holistic review of the opportunities that pass the algorithmic screen. ...machines and people each contribute their unique strengths to make accurate investment decisions.
Yet despite the additional time and effort, they often find that their underlying assumptions are wrong and have to revise and rebuild the product anyway. ...customer feedback comes in, everything is ...theoretical. Build Boost Leap phase Test release “Family and friends” 1-city release 10-city release Countrywide release Scope Number of locations 1 2-3 <10 10+ Sellers on platform 10-20 100+ 200+ 1,000+ Friendly business Categories Pilot 2-3 high-frequency categories to generate traction cosmetics, personal care cooking products Scale to 5-10 other high-value-pool or high-frequency categories and expand in the test-release categories clothing electronics furniture Expand to the full target list of categories health audiobooks entertainment Build for scale from the beginning Starting a new venture requires daily attention, but leaders cannot lose focus on the long-term strategic vision. ...leaders can transform their regular steering-committee meetings from the traditional “report and oversee” agenda into agile ceremonies that instead focus on creating alignment, unblocking impediments, and driving the business forward. ...successful ventures often adopt a flat hierarchy and a hands-on communication culture that delegates decision making to the lowest possible level, enabling greater speed and accountability throughout the organization. ---
According to the 57 senior life-sciences executives who responded to the survey, companies in the industry launched, on average, around four new businesses each in the past ten years. According to ...the 2020 business-building survey, 74 percent of companies with new-business building as their primary growth strategy outgrew the market, compared with 58 percent of companies with other organic growth strategies (Exhibit 2). Furthermore, organizations that rely primarily on new-business building are 2.5 times more likely than those that execute other organic growth strategies to have grown at more than 10 percent above the market rate: 35 percent, versus 13 percent. exhibit 2 In life sciences, many companies, including medtech companies, doubled down on business building during the COVID-19 pandemic to meet the surge in demand for digital solutions to support telemedicine and a host of other virtual business activities. According to a McKinsey global talent survey, high performers typically are more than eight times more productive in performing high-complexity activities than average performers; it pays to bring in the A-team.
The new priority for organic growth Exhibit Even before the pandemic, our own experience indicated that business building had become more important for incumbent companies looking to use innovative ...business models, products, and services to meet the threats and opportunities of a digitizing world. ...while M&A remains an essential part of the growth playbook, P/E multiples remain high, and acquisitions can be expensive. ...organic growth often creates greater excess returns to shareholders;than dealmaking does, even during more normal times. ...Goldman Sachs sees business building as a crucial pathway to the growth and durability of its earnings in the context of the company’s longer-term financial goals, which include ROE, efficiency, and CET1. Exhibit The role of leadership It might seem obvious that respondents would cite the leadership role of both the parent company’s CEO and the head of the new business as the most important differentiator of successful business builders.
...only one in five incumbents succeed in scaling their business after their initial success. Based on an analysis of US venture-capital (VC) data, two-thirds of value is created when a company ...scales up to penetrate a significant portion of the target market (Exhibit 1). The issue tends to be that companies focus on the customer-acquisition cost but not on the quality of the customer, as measured in terms of revenue, margin, or customer lifetime value. When a Scandinavian asset-management firm, for example, launched a new business, it developed an artificial-intelligence-based lead-scoring engine built on more than 70 data points from its web analytics, internal benchmarks on lifetime value of previous customer segments (high-net-worth individuals with at least five to six investments), and external databases (Exhibit 3).
Overall, four practices stand out: architecture (that is rigorously scalable), operating model (supported by processes that scale), customer insights (that are targeted and applied to product ...development), and talent and performance management (grounded on entrepreneurial talent). Co-create with customers One of the defining root causes for the business’s lack of success in scaling promising minimum viable products (MVPs) was that its software-developer culture demanded technical perfection before launching products to the broader market. ...this business became one of the top three performers in the sector in less than three years. 2. ...a double-digit team built proprietary accounting and billing systems, even though they had no impact on the customer experience and there were already plenty of good options in the marketplace.
The criteria for success depend on a company’s starting point, target customers, and other factors, but as a rule of thumb, they should include: delivery by the referral program of at least 20 ...percent of daily new customers daily active users accounting for at least 10 percent of the customer base acquisition cost per customer less than 15 percent of projected annual revenue per customer more than 40 percent of current customers who would be “very disappointed” if the new product disappeared tomorrow For incumbents and start-ups alike, the odds of success with a new business are low. Observe customer preferences, don’t ask about them Incumbents tend to rely on familiar forms of customer and market research, such as focus groups and quantitative surveys. ...an Asian company tested different value propositions for a home wireless broadband business not by asking consumers which features they liked but by running short video ads on social media and tracking audience response rates. After a telecommunications company in the Philippines had completed initial research for its new loyalty program, it launched video story ads on Instagram to test whether consumers wanted a points or membership program and whether they preferred cash back or other kinds of rewards.
Anton is also an early-stage investor focusing on the combination of connected devices, medicine, and digital services. S&ST disrupted the industry by building an ecosystem to provide an open ...platform where software developers can build apps to run on many different types of security cameras. During a recent virtual discussion, Gayane Gyurjyan, a partner in McKinsey’s London office, explored the business-building imperative in the medtech industry with Benoit Clinchamps, president of MicroPort CRM; Anton Kittelberger, CEO of mySugr; Florian Nickels-Teske, director of Helios Health Institute; and Hartmut Schaper, CEO and general manager of Security & Safety Things. Joining the discussion were Ralf Dreischmeier, senior partner and the global leader of Leap by McKinsey, our business-building practice, and Chris Llewellyn, a senior partner in the London office.
