North American gas outlook to 2030

Here’s what you need to know about the North American outlook for gas demand, supply, and price to 2030.
North American gas outlook to 2030

Matching talent to value

The roles that create the most value in your organization may not be at the top. Getting the right people in these critical seats can turbocharge performance.
Matching talent to value

Traditional company, new businesses: The pairing that can ensure an incumbent’s survival

To guard against disruption, established companies should launch new businesses that have start-up–like freedom—along with access to advantages that start-ups usually lack.
Traditional company, new businesses: The pairing that can ensure an incumbent’s survival

Defining a public-cloud strategy: An interview with Michael Ørnø, of Denmark’s Statens IT

Statens IT, the Danish government shared-service center for IT, has established a comprehensive government data center. The next step is to embrace the opportunities and challenges of the public cloud.
Defining a public-cloud strategy: An interview with Michael Ørnø, of Denmark’s Statens IT

Driving toward growth: Making difficult decisions and placing the customer first

The key to above-market growth at Aliaxis is a mind-set that keeps the customer first.
Driving toward growth: Making difficult decisions and placing the customer first

Tracking Non-Financial Performance Measures

Non-Financial Performance Measures

Understand how the organization’s financial success is set without having financials – non-financial performance measures really worth keeping track of.

Most of us have looked at a business balance sheet as well as been a part of a yearly evaluation that provides revisions about the organization’s monetary well being. However, not as many folks understand exactly how financial success is set without the need of concentrating on finances. Here, we’ll clarify the fundamentals and demonstrate certain examples for non-financial performance measures.

Non-financial performance KPIs and metrics

The best way to outline non-financial performance measures would be to clarify the things they are not. Non-financial metrics aren’t portrayed as being financial values in short, they are not immediately related to money involved. They concentrate on various other elements in the organization and so are frequently leading metrics, while financial metrics tend to be lagging metrics.

Although it’s correct that non-financial metrics aren’t related to financial circumstances, this doesn’t imply they are not number. These kinds of metrics could be both quantitative and qualitative. Numerous businesses look at employees’ skills as being the greatest contributing factors to non-financial overall performance, that may be measured in numerous ways.

How come non-financial performance measures are so important?

The two main explanations non-financial KPIs are crucial. To begin with, they assist to clarify and offer framework with regard to financial key performance indicators. Once earlier mentioned, monetary measures usually are lagging signals, that are simple enough to gather and evaluate since they’re looking backward. Lagging KPIs document what’s previously took place, for example sales made or purchases completed for any particular period of time.

Yet finances don’t often supply the complete scenario. Exactly why revenue significantly declined last month? Precisely why would the cashflow soar in the last quarter? Non-financial performance measures will be able to fill out the actual gaps and provide solutions about financial variances.

As an example, when advertising and marketing initiatives have missed the goal just one month, you could expect revenue to get sluggish the following month.

Next, non-financial metrics are simpler to connect to specific elements of your general strategy. Specifically, the majority of businesses don’t possess financial mission statement. If the vision would be to deliver the greatest customer support in the market, sales figures aren’t the best way to monitor this, however for example client satisfaction ratings will be.

Why must organizations monitor non-financial performance measures?

There’s without doubt that keeping track of financial metrics is crucial and perhaps the most notable goal for many businesses, however that doesn’t imply you need to neglect various other measures to help keep things straightforward. Organizations have to monitor non-financial performance measures given that they:

Assist seize weaknesses and strengths. Should you master customer support yet get wait times prior to a client gets to an agent, that may appear within a non-financial measure like a suggestions customer survey. These kinds of measures can easily expose the main expertise as well as emphasize other parts you didn’t understand had been struggling.

Impact business overall performance. Over and under performance is ultimately likely to appear inside your bottom line, and you’ll track that to the origin along with non-financial performance measures. By way of example, when the Human resources recruiting spending budget increased, you will see it’s due to the higher employee turnover and excessively high cost of recruiting.

Offer workers more effective feedback regarding how to fulfill strategic goals. Any time adequately built, non-financial metrics will be precise, quantifiable, and steps to the business overall strategy. Workers can see precisely what they really need to accomplish heading to their set goals and in addition they realize why they have to get exactly the same report month after month as well as how their particular presence results in work productivity. There’s a definite link between day-to-day duties and strategic focus.

Be more effective in changing for the purpose of external elements. All businesses encounter risks outside the control that may in a negative way influence metrics such as sales and costs. Should you be simply looking for financial metrics, that appears to be your company’s effectiveness has been beyond anticipation.

However non-financial performance measures will be mostly in your control and may give a distinct, much more holistic point of view. When you’re finding higher grades for business culture and client satisfaction, you’re achieving success within crucial areas of the strategy, which should lead to the long run success.

Types Of Non-Financial Performance Metrics

Using the Balanced Scorecard strategy, you will find 4 points of views involved with strategy: customer, internal processes, learning and growth, and financial. Here are examples for KPIs structured through the 3 non-financial points of view:

Customer

Rate Of Conversion: The % of connections which create a purchase. Method: (Connections having Completed Purchases) / (Overall Sales Connections) = Rate Of Conversion
Retention Rate: The actual percentage of customers that stay customers for a whole reporting time period. Method: (Clients Lost within a Time period) / (Volume of Customers at the beginning of a period of time) = Retention Rate
Client Satisfaction: Evaluate success in meeting customer requirements.

Internal Processes

Customer Service: The volume of new requests, the volume of solved issues, as well as solution period.
Product Defects: This gives the portion of defective products and services within a specific period of time. Method: (Volume of Defective Products within a Provided Time period) / (Amount of Products Created in the Provided Time period) = (Product Defect %)
On Time Level: The proportion of time products and services had been provided by the due date as planned. Method: (Volume of On Time Products within a Specified Time) / (Amount of Products Delivered within a Provided Time) = (On Time Level)
Efficiency Metric: Efficiency could be calculated in a different way in each and every business, which means this typical metric will be different. For instance, a production business can calculate efficiency through examining the number of products are made each and every minute and also the up-time %.
Past due Project %: The volume of projects which are past due. This is often drawn out of your project reports and dashboards. Method: (Volume of Past due Projects within a Given Time period) / (Count of Projects within a Provided Time period) = (Overdue Project %)

Learning & Growth

Employee Productivity: Employees efficiency calculated with time. Method: (Overall Business Sales) / (Overall Number of Workers) = (Employee Productivity).
Average Hire Time: The actual efficiency in the candidate selection process calculated by time for you to recruit, job interview, and finally hire a new employee.

Make sure to monitor non-performance metrics which best match your organization’s requirements. You will find countless metrics and key performance indicators to select from. Concentrate on the types which make reaql sense when it comes to your business strategy.

Tracking Non-Financial Performance Measures

Economic Conditions Snapshot, June 2019: McKinsey Global Survey results

Executives’ sentiments on the global economy are the lowest in years, amid growing concerns over trade conflicts. Meanwhile, their expectations about conditions at home remain more negative than positive.
Economic Conditions Snapshot, June 2019: McKinsey Global Survey results

Development in the mobility technology ecosystem—how can 5G help?

Technology-driven ecosystems are emerging in the automotive industry. Here’s what companies need to know about the new automotive technology stack, the players driving this transformation, and the issues they are grappling with.
Development in the mobility technology ecosystem—how can 5G help?

Discussions in digital: Making machine-driven marketing work

To work effectively with machines, marketers need to set up guardrails, then let the machines crunch the data and the humans focus on creativity and personalization.
Discussions in digital: Making machine-driven marketing work

The drumbeat of digital: How winning teams play

Pace and power go hand in hand for digital leaders, which typically run four times faster and pull critical strategic levers two times harder than other companies do.
The drumbeat of digital: How winning teams play

The evolution of the CFO

CFOs are playing an increasingly pivotal role in driving change in their companies. How should they balance their traditional responsibilities with the new CFO mandate?
The evolution of the CFO

Getting a handle on warehousing costs

Rather than the traditional benchmark-based approach, a bottom-up analysis can determine what costs should be for any given warehouse, helping companies prioritize improvements and investments.
Getting a handle on warehousing costs

Inequality: A persisting challenge and its implications

While the wealth gap has narrowed globally, inequality within advanced economies has increased since the 1980s.
Inequality: A persisting challenge and its implications

McKinsey 7S Framework Model and Examples

McKinsey 7S Framework

Helping to make Every Aspect of the Business Operate in Balance

Maintain your business in good balance to accomplish the targets. Are you aware how good your business is placed to accomplish the goals? As well as exactly what components impact being able to put into action change effectively?

Designs of organization performance come and go, however McKinsey 7S framework seems to have endured test of the time.

The 7S model was created in 1970s by ex – consultants from McKinsey. These people discovered 7 intrinsic aspects of a company which need to line up so that it is productive.

In the following paragraphs, you’ll be able to discover the actual 7 elements at length, and discover how you can increase overall performance as well as handle change within your business through making sure all of them operate in balance.

When you should take advantage of the McKinsey 7S Model

You should use the model in a very wide range of circumstances in which it is helpful to look at the way the different parts of the business interact.
As an example, it will also help one to increase the efficiency of the business, or figure out the easiest method to put into action the planned strategy.

The actual framework can often check out the most likely results of potential changes in the business, or line up business units and operations throughout an organizational change. You can even make use of the McKinsey 7S model towards factors of the team or perhaps an assignment.

7 Factors of McKinsey 7S Framework

This system categorizes the actual 7 components:

Here are all the components separately:

Strategy – here’s your company’s strategy for creating as well as maintaining the competitive advantage beyond the competitors.

Structure – how your current business is structured – that’s, exactly how business units as well as teams tend to be organized, such as who is reporting to who.

Systems – your day to day activities and operations which employees work with to get a job finished.

Shared values – fundamental essentials core values in the business, as established in the company culture along with basic work ethics.

Style – style from management implemented.

Staff – employees as well as their typical abilities.

Skills – the specific skills along with expertise of your company’s personnel.

Putting shared values in the heart of the actual model highlights these values usually are core for the growth and development of the rest of the crucial components.

This model suggests that your 7 elements have to balance and also strengthen one another for a business to execute effectively.

Using McKinsey 7S Model

It can be used to recognize what factors you should straighten to further improve overall performance, or retain positioning and overall performance throughout additional changes. These types of changes might incorporate restructuring, brand new procedures, merger, completely new methods, along with change in management.

Adopt these measures:

Begin with your current shared values: could they be in line with your current structure, system, and also methods? Otherwise, exactly what must change?
How good will each one of these assist the others? Determine exactly where changes are necessary.
Following that, consider the soft components. Will they assist the sought after hard components? Will they aid each other? Otherwise, what exactly has to change?

While you change and line up your components, you’ll want to utilize a repetitive technique of getting changes, after which examining how this impacts additional factors as well as their positioning. The outcome of higher performance is definitely worth that.

You should use 7S to help you evaluate your scenario, the planned potential scenario and also to recognize gaps along with incongruencies together.

To look at where you stand now, take advantage of the information that you have discovered from the list issues to complete the actual chart, placing a mark in a field in which the 2 connected components come together effectively. When the 2 components are not operating effectively with each other, place a cross over.

The 7-S model is a good framework to assist you ask the appropriate questions, however it will not provide you with every one of the solutions. With regard to this, you’ll want to gather the appropriate individuals with the appropriate understanding, experience and skills.

Step-by-step Questions for McKinsey 7S Model

These questions can be a place to start with regard to looking at your circumstances with regard to the 7S model. Rely on them to investigate your present scenario initially, after which repeat the actual activity for the planned scenario.

Strategy

• Exactly what is the strategy?
• How can we plan to accomplish the goals?
• How should we handle competing demand?
• Precisely how are changes within customer needs handled?
• How’s strategy fine-tuned with regard to environment challenges?

Structure

• How’s the actual organization and groups broken down?
• What’s the structure?
• How can the different business units organize routines?
• How can your team members coordinate and align on their own?
• Will be making decisions and managing central or perhaps decentralized? Is it appropriately, provided exactly what we are executing?
• Exactly where would be the lines in communicating? Specific and implied?

Systems

• Do you know the primary systems running the business? Think about financial along with Human resources systems and marketing communications along with record storing.
• Where will be the controls and ways in which could they be supervised and examined?
• Exactly what internal guidelines and operations will the team work with to help keep on target?

Shared Values

• Do you know the core values?
• Is there a corporate culture?
• Precisely how solid will be the values?
• Do you know the basic values the organization has been developed on?

Style

• Just how participative will be the leadership type?
• How efficient is management?
• Do employees are usually competing or supportive?
• Do you have actual teams working in the business or is it simply groups?

Staff

• What jobs as well as areas of expertise tend to be available in the staff?
• What opportunities must be fulfilled?
• Do you have gaps within needed expertise?

Skills

• Do you know the most powerful skills available in the organization?
• What are the gaps in skills?
• What’s the organization recognized for being successful?
• Will the existing employees get the job done?
• How will be capabilities supervised and evaluated?

Tips

You are able to use the McKinsey 7S framework to just about any kind of business or workforce performance situation.
When something in your business or even team is not functioning, odds are there’s inconsistency among a few of the 7 elements revealed within the model.

When you uncover these types of incongruencies, you are able to try to align these components to ensure all are adding to the actual shared goals as well as values.
The procedure of examining where you stand at this time when it comes to these components is worth it by itself.

However, you really can shift your business as well as team ahead through figuring out the required potential future state for every single element.

McKinsey 7S Framework Model and Examples

The global economy's next winners

Even as critics of free trade gain the upper hand, globalization, wholly of its own accord, is transforming in rich countries’ favor, write Susan Lund, James Manyika, and Michael Spence in Foreign Affairs.
The global economy's next winners

Fine-tuning the growth engine: M&A in engineering and construction

The engineering-and-construction sector is seeing a merger wave. To avoid a wipeout, focus on culture, capabilities, and value capture.
Fine-tuning the growth engine: M&A in engineering and construction

Tackling the IoT opportunity for commercial lines insurance

The Internet of Things connects the world in truly exciting ways. Insurance carriers that capture the opportunities of IoT stand to boost revenues and reduce claims expenses.
Tackling the IoT opportunity for commercial lines insurance

How will changes in the automotive-component market affect semiconductor companies?

The rise of domain control units (DCUs) will open new opportunities for semiconductor companies.
How will changes in the automotive-component market affect semiconductor companies?

What Does an AI Ethicist Do?

The commercial response to cost volatility: How to protect margins against inflation and tariffs

For companies that respond strategically, input-cost increases can be an opportunity to restructure pricing, upgrade sales skills, and improve account management.
The commercial response to cost volatility: How to protect margins against inflation and tariffs

Education reform in Norway: Looking beyond politics to bring sustained change

Education policy in Norway has been shaped by data more than by doctrine. As a result, education reforms in the country have been supported by various governments across a broad political spectrum for more than a decade.
Education reform in Norway: Looking beyond politics to bring sustained change

How To Improve Employee Engagement Ideas And Tips

Employee Engagement

It’s fairly simple in making all of the ideal noises regarding employee engagement; to undergo the activities, nevertheless absolutely fail to influence people’s feeling of dedication to your organization. Consider it some sort of formula: utilizing the same elements, one manager can create success while another can fail.

Similarly, getting the ideal elements for the purpose of employee engagement won’t automatically assure good results: these factors should be successfully implemented. Therefore let’s examine how you can make sure a business increases the advantages of the employee engagement program.

“To begin with, don’t think that employee engagement is simple to accomplish”

Here is the plain truth: the majority of employees are not really engaged. These people lack determination and so are not likely to do the hassle to satisfy business goals.

Now how could businesses dedicated to employee engagement change these types of sad facts?

Actual change occurs nearby whenever management sets anticipations throughout the business. Organizations profit from engagement practices any time management blends employee engagement straight into performance metrics and allows executives to work to these objectives.

Virtually all employees in all stages should have a feeling of empowerment as well as really feel empowered in order to make any difference within their work environment. Management that actually works along with employees to determine interference to engagement and also possibilities to put into practice good change will ultimately enjoy higher degrees of engagement.

Employees are going to be with business systems and also the characteristics of the teams. Therefore it is sensible that employees would be best positioned to optimize and acquire much better overall performance, company creativity, plus more engaging places of work.

Employee Engagement: Activities are required to follow ideas

Basically, informing employees you have confidence in, and need these to completely engage with the business as well as their fellow workers, won’t do the job. Followup good ideas and motives with activities and programs that report a realistic look at the promises.

Everyone is complex. Life isn’t getting turned off whenever an employee passes across the workplace. You will find home relationships, spouse and children problems, children as well as any variety of non work associated issues calling for consideration in the work lifetime of virtually any staff member.

Businesses that identify and accept this kind of truth can get far better outcomes through employees. Establish obvious objectives with support programs that will really assist any time life outside the office impacts effectiveness as well as engagement.

Getting executives which acknowledge the function of motivation truly makes a difference
Who deploys engagement practices? This doesn’t simply take place. It’ll be a collection of programs, procedures, and practices that the business looks for to add to the everyday life of your organization.

In a strategic levels, this is management along with Human resources professionals however it will undoubtedly come to operational supervision to apply and use these kinds of tactics. Therefore, it’s crucial that supervisors see the significance of engagement for the efficiency in the business and performance evaluations.

Line supervisors tend to be essential. Micromanagement can be definitely unproductive.

Empowerment along with employee engagement go together

Staff members should understand the actual organization’s objectives right away. This talks to training practices in which the overall tone throughout the employee’s work is going to be established. Goal setting and providing clear goals matter yet higher engagement will run from employees that, once set on the right path, receive free control to accomplish these targets employing their own effort. They have to really feel empowered.

The actual takeaway is employee engagement is a lot more than the usual key phrase. It should be maintained by actual actions. Employees have to listen to exactly what you’re telling as well as see that in action.

How To Improve Employee Engagement Ideas And Tips

Modernizing the US nuclear deterrent: An interview with Elizabeth Durham-Ruiz

The director of US Strategic Command’s Nuclear Command, Control, and Communications Enterprise Center describes recent efforts to engage the private sector in modernizing the US nuclear deterrent.
Modernizing the US nuclear deterrent: An interview with Elizabeth Durham-Ruiz

Promoting an overdue digital transformation in healthcare

Research from over 30 countries offers insight into providing digital healthcare, including practical steps for key stakeholders.
Promoting an overdue digital transformation in healthcare

Building an offshore wind industry along the US East Coast: The role of state collaboration

Collaboration among state governments across several tasks will contribute to the timely and cost-effective scaling of the emerging offshore wind industry along the US East Coast.
Building an offshore wind industry along the US East Coast: The role of state collaboration

Confronting overconfidence in talent strategy, management, and development

Best practices are well understood. But are companies following them as closely as their leaders claim?
Confronting overconfidence in talent strategy, management, and development

Marketing’s moment is now: The C-suite partnership to deliver on growth

Is your marketing executive a Unifier, Loner, or Friend? The CMO’s rapport with the C-suite is crucial in establishing marketing’s role as a growth driver.
Marketing’s moment is now: The C-suite partnership to deliver on growth

What Tech Pioneers Can Learn From Emerging Markets

Six governing considerations to modernize marketing

Legacy structures and operations are keeping companies from taking full advantage of technology.
Six governing considerations to modernize marketing

A guidebook for heavy industry's digital journey

Heavy industry has a lot to gain from the digital revolution. To capture the benefits, companies need the right kind of transformation plan.
A guidebook for heavy industry's digital journey

Imaginary Time Travel as a Leadership Tool

Modular construction: From projects to products

Shifting construction away from traditional sites and into factories could dramatically change the way we build. Will modular construction make a sustainable impact this time around?
Modular construction: From projects to products

The future of personalization—and how to get ready for it

Personalization will be the prime driver of marketing success within five years. Here are the capabilities companies need to develop to stay ahead of the curve.
The future of personalization—and how to get ready for it

How to win in insurance: Climbing the power curve

A small group of winners captures much of the economic profit in the insurance industry. New research quantifies just how far ahead the leaders are—and what other insurers can do to catch up.
How to win in insurance: Climbing the power curve

Making Corporate Venture Capital Work

Pathways to Progress for Women Entrepreneurs

Social Responsibility Report 2018

In this report, we share stories of the things we are doing, beyond our client work, to make a difference in our communities and for our planet.
Social Responsibility Report 2018

For better healthcare claims management, think “digital first”

Although end-to-end digital claims management is still a distant vision, much can be gained from digitizing portions of the claims process today.
For better healthcare claims management, think “digital first”

The importance of a growth-leadership mindset in capturing growth

Business leaders need three capabilities to drive growth: mind-set, curiosity, and a willingness to adapt to the client and the market.
The importance of a growth-leadership mindset in capturing growth

Capturing value in machinery and industrial automation as market dynamics change

Shifting growth patterns and digitization are reshaping the sector. A strategic response can help machinery and industrial automation companies to keep pace.
Capturing value in machinery and industrial automation as market dynamics change

Defining ‘on-time, in-full’ in the consumer sector

Managing modern consumer-goods supply chains is demanding, but measuring supply-chain performance should be simple. It isn’t yet— because of an inconsistent approach to the critical OTIF metric.
Defining ‘on-time, in-full’ in the consumer sector

A vision for medical affairs in 2025

Four core areas of medical-affairs activity combine to maximize patient experiences and outcomes.
A vision for medical affairs in 2025

Meet the missing ingredient in successful sales transformations: Science

Data and analytics, combined with a personalized approach to performance management, are helping B2B sales execs inculcate best practices and significantly improve growth.
Meet the missing ingredient in successful sales transformations: Science

A vision for medical affairs in 2025

Four core areas of medical-affairs activity combine to maximize patient experiences and outcomes.
A vision for medical affairs in 2025

Meet the missing ingredient in successful sales transformations: Science

Data and analytics, combined with a personalized approach to performance management, are helping B2B sales execs inculcate best practices and significantly improve growth.
Meet the missing ingredient in successful sales transformations: Science

Change vehicles: How robo-taxis and shuttles will reinvent mobility

Uncertainties surround the future of shared autonomous vehicles. Modeling scenarios for their development and adoption can help companies on the road ahead.
Change vehicles: How robo-taxis and shuttles will reinvent mobility

All in: From recovery to agility at Spark New Zealand

Three members of the telco’s top team describe the challenges and rewards of implementing agile rapidly—and the power of a “no plan B” approach to change.
All in: From recovery to agility at Spark New Zealand

An Executive Guide to the Summer 2019 Issue

People and Machines: Partners in Innovation

Senén Barro and Thomas H. Davenport

Thoughtful adoption of intelligent technologies will be essential to survival for many companies. But simply implementing the newest technologies and automation tools won’t be enough. Success, the authors argue, will depend on whether organizations use them to innovate in their operations and in their products and services — and whether they acquire and train the human capital to do so.

Surveys show that most senior executives believe AI will substantially transform their organizations within the next few years, which means humans will need to find ways to work closely with machines. Few organizations have begun the necessary job redesign, re-skilling, or retraining programs, the authors say. Moreover, most individuals aren’t being adequately prepared for automation-enabled work. Smart organizations will need to adopt intelligent technologies, and they will need to recruit and retrain people for skilled roles and redesign tasks and jobs. What’s more, they will need to use artificial intelligence as an enabler of innovation in products, processes, and business models. Rather than being implemented systematically, the authors expect “innovation based on intelligent automation” to occur on a job-by-job, task-by-task basis.

While the potential for AI-enabled innovation exists in virtually every aspect of business and society, the authors say it is largely unrealized today. Technology vendors are conceiving and producing innovations ranging from self-driving cars and trucks to the “self-driving enterprise.” But few would-be adopters have even begun the process of envisioning how AI will change jobs in their companies and what new skills must be developed.

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Strategy For and With AI

David Kiron and Michael Schrage

Executives intent on exploiting AI to enhance processes or products tend to focus on having a strategy for AI. But creating strategy with AI can matter as much or even more.

What does strategy with AI mean? Like any corporate strategy, it expresses what enterprise leaders deliberately seek to emphasize over a given time frame. It articulates how and why the organization expects to succeed in its chosen market. These aspirations might involve, for example, superior customer experience and satisfaction, increased growth or profitability, greater market share, or agile fast-followership.

Whatever the specific strategy, virtually all organizations create corresponding measures to characterize and communicate desirable strategic outcomes. In a machine learning era, enterprise strategy is defined by the key performance indicators (KPIs) leaders choose to optimize. Those are the measures organizations use to create value, accountability, and competitive advantage. AI can help determine what KPIs are measured, how they are measured, and how best to prioritize them. Indeed, world-class organizations can no longer meaningfully discuss optimizing strategic KPIs without embracing machine learning capabilities.

Because metrics drive strategy, determining the optimal “metrics mix” for key enterprise stakeholders becomes an executive imperative. Achieving KPI outcomes (and suggesting new KPIs) is what smart machines must do — and must learn to do. Of course, AI and machine learning are both a means to an end. The true strategic opportunity of these technologies is the chance to rethink and redefine how the enterprise optimizes value for itself and its customers.

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Using AI to Enhance Business Operations

Monideepa Tarafdar, Cynthia M. Beath, and Jeanne W. Ross

Artificial intelligence invariably conjures up visions of self-driving vehicles, obliging personal assistants, and intelligent robots. But AI’s effect on how companies operate is no less transformational than its impact on such products.

The use of AI to enhance business operations, or enterprise cognitive computing (ECC), involves embedding algorithms into applications that support organizational processes. ECC applications can automate repetitive, formulaic tasks and, in doing so, deliver orders-of-magnitude improvements in the speed of information analysis and in the reliability and accuracy of outputs.

Although business and technology leaders are optimistic about the value-creating potential of ECC, the rate of adoption is low, and benefits have proved elusive. Generating value from ECC applications is not easy — and that reality has caught many business leaders off guard. Often, companies that hope but fail to benefit from ECC have not developed the necessary organizational capabilities.

To help address that problem, the authors undertook a program of research aimed at identifying the foundations of ECC competence. They found that companies need to develop five capabilities in order to splice the ECC gene into their organization’s DNA: data science competence, business domain proficiency, enterprise architecture expertise, an operational IT backbone, and digital inquisitiveness. Organizations must then apply those capabilities to derive value from applications. Four practices in particular help them do that: Develop clear and realistic use cases, manage ECC application learning, cocreate throughout the application life cycle, and think “cognitive.” These practices create the conditions for applications — and their underlying AI algorithms — to deliver on their promise.

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AI Can Help Us Live More Deliberately

Julian Friedland

AI is a powerful technology that spares us from having to undergo many mundane, time-consuming annoyances. The problem is that such annoyances play a key adaptive function. Our interactions with people and the wider world of physical objects help us learn to adjust our conduct in relation to one another and the world around us. Engaging directly with a grocery bagger, for instance, forces us to confront her humanity, and the interaction (ideally) reminds us not to get testy just because the line isn’t moving as quickly as we’d like. Walking, bicycling, or driving in a crowded city teaches us how to compensate for unforeseen obstacles, such as varying road and weather conditions.

Through the give-and-take of such encounters, we learn to temper our impulses by exercising compassion and self-control. In countless occasions every day, each of us seeks out an optimal compromise between shaping ourselves to fit the world and shaping the world to fit ourselves. This kind of adaptation has led us to become self-reflective, capable of ethical considerations and aspirations.

But increasingly, AI takes such interactions out of our days, allowing us to off-load cognitive, emotional, and ethical labor to software. As a result, we may gradually lose the inclination and capacity to engage in critically reflective thought. This article considers that problem and provides a framework to help AI designers tackle it through system enhancements in smartphones and other products and services in the burgeoning internet of things marketplace.

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A New Era for Culture, Change, and Leadership

Edgar H. Schein and Peter A. Schein

When social psychologist Edgar Schein joined MIT’s Sloan School of Management in the 1950s, it had just launched the great experiment of teaching management through formal disciplines like mathematics, social psychology, economics, and history. That was a radical departure from expounding “the practice of management” through cases taught by professors who had been managers most of their careers. The new approach sparked close, unlikely collaborations and deep, innovative thinking about leadership, group cultures, and organizational change — all nascent fields of study at the time. It was in this environment that Ed and his colleagues embarked on what he calls “an exciting quarter century of model building,” which helped define how people thought about and engaged with organizations.

Decades later, in a digital era, it is time for a new model, one that is built on close professional relationships, openness, and trust. That is what Ed and Peter Schein, his son and collaborator, have been working on for the past couple of years. Peter spent most of his career as a strategy executive in a number of Silicon Valley companies before he decided to join Ed in analyzing and describing the changes afoot as the tasks of management become more complex, interdependent, and volatile. In this conversation, they share their perspectives on organizational life, a brief history of ideas leading up to this moment, and their thoughts about the future.

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Building Digital-Ready Culture in Traditional Organizations

George Westerman, Deborah L. Soule, and Anand Eswaran

Even though traditional organizations find much to admire and learn from in the cultures of born-digital companies, many are trying to embrace aspects of digital culture without abandoning everything that has made them strong. For instance, industrial giant Haier has spent years transforming its culture in pursuit of greater speed and innovation while maintaining the efficiency and stability of its traditional manufacturing and logistics processes. KBC Bank is adapting to fight fast-moving fintech entrants while complying with strict European privacy and employee protection regulations.

For many legacy companies, culture change is the biggest challenge of digital transformation. How can a company become more agile and innovative without exposing itself to the less-than-desirable qualities of Silicon Valley startups or wrecking the best of its existing practices? And what does it mean to have a digital-ready culture?

The authors have been studying these questions for the past three years. Based on their findings, they have developed a framework to guide traditional companies in any industry. The process begins with understanding the four critical values of digital culture: impact, speed, openness, and autonomy. It then involves adopting or refining a set of digital-ready practices, grounded in these values, which will shape employee actions and organizational performance.

Contrary to much that’s been written, incorporating the best of digital culture into a legacy culture doesn’t mean sacrificing integrity, stability, employee morale, or a company’s heritage. And traditional companies aren’t the only ones that can benefit from this framework. The insights also apply to startups striving to mature.

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Beat the Odds in M&A Turnarounds

Martin Reeves, Lars Faeste, Daniel Friedman, and Hen Lotan

As long-term growth rates trend downward in many economies, business leaders are turning to acquisitions to fuel growth. Turnarounds are becoming imperative as well. Companies face a seemingly endless stream of disruptions from new technology, emerging competitors, shifts in consumer behavior, regulatory changes, slowing economic growth, and other threats, any of which can hurt performance and require substantial and prompt changes in operations and strategy.

However, most M&A deals fail to create value, and only about one in four turnaround programs leads to long-term improvements in performance. Although M&A deals and turnarounds are individually hard to pull off, combining the two can be even more challenging.

Yet based on an analysis of roughly 1,400 M&A-based turnarounds between 2005 and 2018, the authors have identified six factors (all within the control of management) that can help acquiring companies improve their odds of success: high investment in R&D, a long-term orientation, a well-defined purpose, sufficient investment in transformation, ambitious synergy targets, and a willingness to act quickly. While these six factors can improve post-deal performance on their own, combining them is even more powerful. Indeed, there is a direct relationship between the number of success factors deployed and three-year TSR (total shareholder return) performance.

Turnaround acquisitions have a high failure rate. But those that succeed bring considerable rewards. This group of winners generates gains in both revenue growth and profit margins, as well as significantly better returns.

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Older and Wiser? How Management Style Varies With Age

Julian Birkinshaw, James Manktelow, Vittorio D’Amato, Elena Tosca, and Francesca Macchi

One of the most profound recent changes in the workplace has been the increase in age diversity. Large organizations have employees from as many as five generations. Age diversity, like other forms of diversity, the authors say, can bring significant benefits to the organizations that embrace it, but it also creates challenges. Different generations have their own expectations and demands, and working relationships can become strained: It’s not always easy to report to someone who is significantly older or younger than you.

The authors surveyed more than 10,000 managers ages 21 to 70 across multiple industry sectors to learn about their preferred styles of working. By asking managers to identify the techniques and tools they saw as most important, the authors discovered significant differences. They found that management style varied more with age than other factors (such as position in the organization and gender). Younger managers (typically in their 20s and 30s) took a more self-centered approach and put a lot of stock in making good first impressions and asserting themselves. They preferred concrete management techniques (such as knowing how to run an effective meeting). Older managers (typically in their 50s and 60s) favored a more inclusive and collaborative approach, and relied on more intuitive and holistic techniques. The framework, the authors write, can help people understand how their management styles align with those of their peers or boss and make it easier for individuals to navigate their working relationships.

An Executive Guide to the Summer 2019 Issue

Let Your Mind Wander

When my family went on vacation this April, we all needed the break — kind of desperately. The kids were tightly wound from school and activities. Everyone was having trouble sleeping. I was even starting to worry about short-term memory loss. On our way out the door, I realized I had forgotten my daughter’s medicine. After 10 minutes of retracing my steps, I discovered that I had inadvertently stashed it in our kitchen junk drawer, maybe while fishing for a pen. It’s hard to say.

We’re familiar with the costs of burnout: Energy, motivation, productivity, engagement, and commitment can all take a hit, at work and at home. And many of the fixes are fairly intuitive: Regularly unplug. Reduce unnecessary meetings. Exercise. Schedule small breaks during the day. Take vacations even if you think you can’t afford to be away from work, because you can’t afford not to be away now and then.

What many of us don’t realize, though, is that leisure time in particular does two important jobs for us. Recharging is the obvious one — it can help prevent or reverse the effects of fatigue. But as Kellogg School of Management professor Adam Waytz points out in the summer issue of MIT SMR, leisure can also heighten our powers of creativity, thanks to the cognitive benefits of occasionally letting our minds wander. And that, Waytz says, can give us a leg up on automation as we’re looking for ways to keep contributing and stay relevant in organizations and industries that are planning to incorporate AI into more and more of their processes. He draws on findings from several studies to make his case. I find it compelling.

That article opens our special package on talent in a digital age. You’ll want to check out the other pieces, as well. Will Poindexter and Steve Berez, partners at Bain & Co., argue for a fresh approach to hiring and managing technical talent (this is adapted from their online article about getting the most out of agile approaches). Harvard Business School professor William R. Kerr looks at the obstacles that older tech workers face in a global market and urges companies not to overlook the value these employees bring. David Waller, a partner at Oliver Wyman Labs, explains why forward-looking companies train people to conduct and share business analysis in code, not spreadsheets and formulas. And Paul Michelman, MIT SMR’s editor in chief, catches up with Paul R. Daugherty and H. James Wilson at Accenture — coauthors (along with Nicola Morini Bianzino) of the hit article “The Jobs That Artificial Intelligence Will Create” — to find out what they’ve learned about new job categories spawned by AI since their initial round of research. I hope you enjoy the issue.

Let Your Mind Wander

People and Machines: Partners in Innovation

AI Can Help Us Live More Deliberately

Strategy For and With AI

Using AI to Enhance Business Operations

The future of women at work in the United Kingdom

Millions of women in the United Kingdom may need to transition between occupations and into higher-skilled jobs due to automation but those transitions could be challenging.
The future of women at work in the United Kingdom

Artificial intelligence in the United Kingdom: Prospects and challenges

The United Kingdom is one of Europe’s AI leaders, and now needs to build on its strengths and tackle weaknesses.
Artificial intelligence in the United Kingdom: Prospects and challenges

How banks can use ecosystems to win in the SME market

Profitably serving small and medium-sized enterprises has been a challenge for banks. An ecosystem approach may be the key to tapping this vast market.
How banks can use ecosystems to win in the SME market

Where China Is Leading the Mobility Revolution

Blockchain and retail banking: Making the connection

Caution is understandable when it comes to blockchain, but there are a number of areas where the technology could create value for retail banks.
Blockchain and retail banking: Making the connection

How to unlock marketing-led growth: Data, creativity, and credibility

Marketing has been on the front lines of the digital revolution, but the landscape has become much more complicated, requiring a focus on growth, data, and new modes of creativity.
How to unlock marketing-led growth: Data, creativity, and credibility

Agile: The new active ingredient in pharma development

Roche’s Frank Duff and Malte Schutz explain how trust, a faster pace, and evolutionary design have transformed their highly technical (and highly regulated) work.
Agile: The new active ingredient in pharma development

Women in the healthcare industry

To see how the healthcare sector stacks up on gender equality, we look at employee experiences, policies, and the effectiveness of industry programs intended to promote diversity and inclusion.
Women in the healthcare industry

Used cars, new platforms: Accelerating sales in a digitally disrupted market

Dealers, investors, and disruptors can up their games to cater to digitally savvy used-car consumers.
Used cars, new platforms: Accelerating sales in a digitally disrupted market

Tackling bias in artificial intelligence (and in humans)

AI has the potential to help humans make fairer decisions—but only if we carefully work toward fairness in AI systems as well.
Tackling bias in artificial intelligence (and in humans)

Why personalization matters for consumer privacy

A recent survey shows that personalized benefits can help address consumer data-privacy concerns.
Why personalization matters for consumer privacy

Why Personalization Matters for Consumer Privacy

Solutions and services in medical devices: White space or white elephants?

Medical-device players are venturing into adjacent value pools through solutions and services. What do they require to capitalize on the opportunity and deliver on their profitable growth aspirations?
Solutions and services in medical devices: White space or white elephants?

Finding the future of care provision: the role of smart hospitals

Smart hospitals make extensive use of innovative technologies to improve care quality and patient experience while reducing costs.
Finding the future of care provision: the role of smart hospitals

The present and future of women at work in Canada

The future of the Canadian economy holds opportunities for women but to capture them, women will need to successfully reskill and transition.
The present and future of women at work in Canada

The future of women at work: Transitions in the age of automation

Concerted and creative new solutions are needed to enable women to seize new opportunities in the automation age; without them, women may fall further behind in the world of work.
The future of women at work: Transitions in the age of automation

Navigating Asia’s booming art market: An interview with Rebecca Wei, chairman of Christie’s Asia

This 253-year-old auction house is betting on China as a source of growth.
Navigating Asia’s booming art market: An interview with Rebecca Wei, chairman of Christie’s Asia

Five fifty: Getting small

Small, independent teams are the lifeblood of agile. Here’s how senior executives can help them thrive.
Five fifty: Getting small

A New Era for Culture, Change, and Leadership

The Risks and Rewards of Digital Maturity

Customer Centricity in the Digital Age