Our research … The McKinsey research shows that the trajectory of sales engagements, regardless of deal size, industry, or … 2. In 2018, the company won six industry awards, including most popular supplier. Digitization has made providing consistent, high-quality customer interactions a competitive differentiator, no matter the channel. While such platforms bring substantial relevant reach, they can also cannibalize sales that come through other, potentially more profitable channels. For instance, Chris guided a large bank through a digital and agile at-scale transformation, has led the DevOps for a number of leading banks in Europe, and helped build a new digital business for a flower distribution company by reinventing how flowers and plants are sold B2B using a digital … CDOs report to the CEO of the business unit (who in turn reports to the CEO of GE Digital) and have final say on platform investments. It ’s merely a necessary action that mid-size and big companies should undertake to stay competitive. The start-ups are given the independence they need to pursue promising opportunities in an agile, flexible fashion and to enlist top talent. In the first year after launching its omnichannel strategy for retail and corporate clients, ING grew profit by 23 percent, increased its share price by 15 percent, and won EuroMoney’s “Best Bank” award.5 TechCrunch, “GE predicts Predix platform will generate $6B in revenue this year,” posted by Ron Miller, September 29, 2015, techcrunch.com. Flip the odds. If the operator of a platform charges high commission fees or insists on exclusive distribution rights, manufacturers should consider launching their own platform or creating an e-commerce channel for direct distribution to end customers. 3. Over the last three years, McKinsey & Company has measured the Digital Quotient® (DQ™) of approximately 200 B2C and B2B companies around the world by evaluating 18 management practices related to digital strategy, capabilities, culture, and organization that correlate most strongly with growth and profitability. (The average organizational maturity for the consumer sector, by contrast, is 35.). Homayoun Hatami, Candace Lun Plotkin, and Saurab Mishra, “To improve sales, pay more attention to presales,” Harvard Business Review, February 17, 2015, hbr.org. 40% of all technology spending will go toward digital transformation, with enterprises spending in excess of $2 trillion in 2019. We mentioned at the very start of this article that, whilst digital transformation was already on the minds of B2B business leaders, the events of 2020 forced the hand of many brands to start the digital transformation … In our 2016 survey, the rate of success was 20 percent; in 2014, 26 percent; a… Those who fail to take a shaping posture risk being left behind by the competition or cut out of the value chain entirely. “BP Launchpad,” bp.com. In another case, a maker of high-tech hardware implemented a partly automated solution to compare prices and derive recommendations for thousands of product configurations. Mobile especially has changed the way B2B decision-makers interact. McKinsey Sales & Channel Management, “How we help clients.”. B2B leaders are doing things differently. You can restructure your organisation with AI if looking for the components mentioned above. Digitizing core elements in the sales function, for example, may free up field reps but place greater demand on inside sales. Manufacturers should carefully weigh the pros and cons of using an existing B2B platform for distribution. 3. B2B leaders create an organizational structure that supports their digital transformation. These are additional signs digital sales are here to stay. The DQ scores for organizational maturity reflected these challenges. 1 Many companies … One-third of B2B companies take more than a year to move a digital initiative from concept to implementation, and fewer than 15 percent use the types of test-and-learn and rapid prototyping processes that have been shown to accelerate innovation and customer satisfaction. There is little doubt that digital is the future and B2B organisations need to embrace digital … According to Ian Kavanagh, BP’s head of upstream modernization and transformation, BP is already saving billions of dollars thanks to the innovation. It is used both to identify Ping An health-insurance policy holders at hospitals and to speed up online applications for loans (“iLoans”). How can new technology be used to create additional value and pleasant surprises for customers? Digital 20/20 assesses an organization’s digital and analytics maturity to discover digital opportunities, identify gaps between current capabilities and those of digital leaders, and execute a prioritized road map of high-impact transformation … > Whether ‘transformation’ is a realistic short-term objective. Digital is a central part of Almarai’s plans, with the firm eyeing a suite of intelligent technologies to optimise its operations, supply chains and customer processes. Our research is clear: by investing in a targeted set of digital capabilities and approaches, B2B companies can improve their financial performance—and not just by a percentage point or two. Why digital transformation should be a strategic priority for health insurers Basel Kayyal, Sti eve Keyll, and Madhu Pawar Healthcare Systems and Services Practice . In our 2019 benchmarking study, we have identified four promising transformation pathways, or archetypes, that allow B2B companies to unlock What Digital Transformation Really Means For B2B Marketers Director’s Guide – 2 – > Where the industry is with digital transformation. We strive to provide individuals with disabilities equal access to our website. The technology is already in use in the North Sea and in Azerbaijan. 2019 McKinsey EMEA Data Summit in Barcelona. To better understand how both customers and sellers are reacting, we launched a survey of B2B … 2 2.Ping An annual reports and investor resources; McKinsey research. Once … Initiatives are less likely to be anchored in customer needs and often falter from insufficient investment. Select topics and stay current with our latest insights, Four pathways to digital growth that work for B2B companies. Only about 20% of B2B buyers say they hope to return to in-person sales. Learn more about cookies, Opens in new Jordan Blum, “BP gets into the startup biz with its new Lytt company,” Houston Chronicle, May 8, 2019, houstonchronicle.com. They require gaining management consensus around a shared vision, challenging time-honored institutional truths, and learning new skills and practices on the fly, but it can make a huge difference. Digital transformation includes video prospecting. Data-driven pricing is among the most common applications in this area. The digital transformation market is expected to grow at a CAGR (compound annual growth rate) of 23% from 2019 to $3.3 trillion by 2025. To make that happen, the bank had to overhaul its customer-data processes and make it possible for information to be updated across all channels automatically. 3. Never miss an insight. McKinsey’s recent Digital Enablement Survey, for example, shows that ... makes the B2B to B2C transition driving by healthcare reform and aging demograph- ... Why digital transformation should be a strategic priority for health insurers Using digital … Nontraditional players like Amazon Business and Alibaba are already cashing in on this trend by providing business buyers with simple and convenient digital marketplaces. Companies that have previously relied on intermediaries take advantage of digital channels to build direct relations with end customers. Only one in five systematically track digital performance indicators, and only 17 percent of managers in our study believe they can articulate their company’s digital metrics. 4 In a new survey of more than 1,700 C-suite executives, we learned that the average … BP describes the technology as similar to the Shazam mobile phone application that identifies songs. B2B companies need a unified source of data structured for digital use (“a single source of truth”) and a common data model that works across functions, including sales and marketing. Many B2B customers now expect the same kind of convenience, speed, flexibility, and transparency they are used to from shopping on popular consumer platforms. The pandemic has accelerated digital adoption across industries, resulting in technology service providers witnessing a sharp growth in digital deals. 1. NAVIGATING THE DIGITAL B2B LANDSCAPE Right now, digital transformation in B2B is … He was also the founder and leader of McKinsey… For the … Deliver. One example McKinsey pointed to as proof of this is European insurer Axa, which invested €950 million in digital transformation over just two years. One Asian insurance company, for example, hosted an intensive jam session over a 48-hour period. He is a leader of McKinsey Digital Labs’ work in … We feature rich case studies and best practices from companies including Maersk, Michelin, Adobe, IBM, Salesforce.com, Johnson & Johnson and Air Liquide – all businesses that are putting customers at the heart of their … 5. And while sales teams are working harder to navigate deals that stretch longer and involve multiple influencers and buyers, they often lack (or are unable to apply) the analytics needed to manage the sale profitably, understand who the real decision makers are, and what sorts of outreach might prove persuasive. Systematic performance tracking needs to be in place to keep the efforts on track and make sure they having the … Automating some operations and processes can help you reduce costs along with shifting your … Our flagship business publication has been defining and informing the senior-management agenda since 1964. Digital Transformation may be a trending topic today, but the concept of digitizing business processes, products, and services was introduced way back in the early 90s and the 2000s. The Wall Street Journal CIO Journal, “GE Digital CEO Bill Ruh says corporate structures must evolve with technology,” posted by Steve Rosenbush, January 13, 2016, wsj.com. That doesn’t mean creating more complex and numerous performance indicators, but rather revisiting how the company measures progress and carving out a handful of metrics that can really move the needle. Those insights were funneled into a specialized iPad app that reps could use in the field. Sign up for Which-50’s Irregular … Using internal benchmarks and outside economic research, account executives developed concrete business cases that described the specific returns CEOs could expect from increasing their companies’ wind-energy usage, right down to illustrating which geographies and properties offered the optimal locales for turbine placement. BP plans to roll it out to other rigs, and to market it to other companies eventually. Only 10 percent of the B2B companies in our survey, for instance, said that digital was a top investment priority. Artificial Intelligence(AI) has three main components that will show its impact on the B2B digital transformation. November 12, 2019. For example, the introduction of a direct channel may be followed by the deployment of advanced analytics to drive commercial excellence across all channels. Blockchain technologies come with a wide range of potentials for industries. In a pilot, a margin increase of up to 50 percent was observed, while no volume was lost. For industries such as B2B manufacturing, mining, government, where customer expectations are more modest and the product is either a physical asset or well-established services, changing the way your organization operates is the most suitable strategy for digital transformation. Such fast-paced test-and-learn development not only helps teach the right innovation behaviors; it can persuade skeptical executives that a company has the ability to deliver on ambitious and high-profile customer initiatives. Most transformations fail. Press enter to select and open the results on a new page. Electricians rate the supplier 4.9 out of 5 on Trustpilot. In this archetype, companies use their understanding of the industry to develop new ventures, disrupt their own existing business models, and unlock new revenue streams, typically using a stage-gate financing approach. They often treat overall strategy and digital strategy differently. The modern seller is a problem solver for their customers and may only ever engage with them in a digital only environment. As a result, top-quartile B2Bs across sectors have an average DQ of 44, compared with 50 for consumer companies. One telecom company, for example, wanted to shave its traditional product-development time—more than six months from start to trial—to include additional weeks of training and internal pilots. Topic: Digital transformation. Please use UP and DOWN arrow keys to review autocomplete results. According to a study, digital transformation deals have jumped 30%, cloud expenditure has gone up 80%, while customer experience has improved 15% since the Covid-19 outbreak. Staged as a friendly competition, it ended with teams delivering a model that went far beyond the original scope of the hackathon and effectively eliminated the need for processing claims. In our book, The Definitive Guide to B2B Digital Transformation, we deal more fully with the where, how, what and who steps for each of the three transformational shifts.We feature rich case … In a recent McKinsey survey, B2B purchasing officers said that they want less in-person support than many sales teams assume. These are the areas in which digital leaders excel and where B2B companies can do better. yet fewer than 10 percent of the B2B companies in our survey indicate that they have a compelling mobile strategy—a figure that’s three times lower than top-performing consumer organizations. 4. Never miss an insight. On average, across cultural DQ measures, B2B companies … But that level of success requires close coordination from front office to back, and while many B2B companies have done a good job automating the back office, they fall short when it comes to connecting those processes to the front end. What follows is an overview of the pathways, case examples of how a company pursued each approach, and key success factors. To change perceptions, they used customer analytics to create a campaign focused on gaining the attention of Fortune 500 C-level executives—the lead decision makers for their product. In this article, we provide you a directory listing of digital transformation … The new, data-driven approach allowed the company to reallocate significant resources from manual pricing management to growth initiatives. Digital transformation … The importance of b2b digital transformation and the digital experience cannot be understated in today’s world. BP describes Launchpad as a “scale-up factory,” charged with a “mission to take disruptive technologies and business models and help grow them fast to become BP’s future business units, generating a significant portion of BP Group’s gross margin by 2025.” Learn more about cookies, Opens in new DIGITAL TRANSFORMATION IN B2B Trends driving businesses to automate payments and how you can help evolve operations for tomorrow . Over the last three years, McKinsey & Company has measured the Digital Quotient® (DQ™) of approximately 200 B2C and B2B companies around the world by evaluating 18 management practices … cookies, Visit our Organization & Capabilities page, McKinsey_Website_Accessibility@mckinsey.com. Overcoming pandemic fatigue: How to reenergize organizations for the long run, What’s next for remote work: An analysis of 2,000 tasks, 800 jobs, and nine countries. Our mission is to help leaders in multiple sectors develop a deeper understanding of the global economy. To support their evolving customer and sales model, B2B companies need to anticipate the reverberations and reconfigure where and how they invest financial and human resources across sales channels and customer journey stages. GE’s ambitious technology platform now generates $5 billion in revenue and the company estimates that business will triple to $15 billion by 2020.2 McKinsey Insights - Get our latest thinking on your iPhone, iPad, or Android device. When I joined, we had 3,000 developers. A company may choose to combine multiple pathways or pursue multiple objectives consecutively. Drawing from online surveys of 229 U.S.-based B2B decision makers in a range of industries, including manufacturing, financial services, health care, and telecommunications, in companies having at least $25 million in revenue, The 2019 FPX Digital Transformation Study confirms this trend. Once the digital transformation is underway, the role of the sales force is transformed as well. Digital-ready B2B brands are more resilient and confident about their future prospects. Video and live chat are the emerging stars of new go-to-market models. That involves identifying which skills need to be reallocated, what data and analytics resources are needed, and which customer opportunities require capabilities that need to be built, hired, or acquired. Surprisingly, a large number of strategists (42%) have not researched the customer journey, while continuing to invest in new digital channels. hereLearn more about cookies, Opens in new 7. Discover. The B2B organizations that we work with generally see the swiftest DQ bump by first picking one or two high-value customer segments and mapping their decision journeys in full to understand how these customers buy, what channels they use, what influences their decision making, and what turns them off. Far from standing on the sidelines, B2B companies have embraced the digital revolution. But some B2B companies are breaking that mold and embracing an “all in” digital strategy. The company now controls almost the entire value chain (except for on-site installation), from product design to distribution to licensed electricians. Ping An is a leading financial conglomerate with a growing global fintech footprint. … A building-materials supplier improved its qualification rate, for instance, by using order histories of existing customers and analyses of prospective markets. The mythical creature is an allusion to the rarity of such successful ventures. That interconnected network lets sales teams access all the client service, support, and financial information they need prior to their customer interactions, and it gives operations teams greater transparency into the sales pipeline to assist with resource and delivery planning. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. Digital upends old models. More than 90 percent of B2B buyers use a mobile device at least once during the decision process,3 perspectives Magazin, January 18, 2018, perspectives.infraserv.com. These are additional signs digital sales are here to stay. Lytt analyzes sounds in wells to paint a picture of the well conditions. At the majority of the B2B companies we studied, organizational challenges can blunt the reach and effectiveness of digital initiatives. Digital Transformation: McKinsey’s Take. collaboration with select social media and trusted analytics partners Success in the third wave of digital depends very much on first understanding patients’ digital preferences in both channel and service. Any process change creates a ripple effect across the wider organization, and particularly the commercial organization. 22. Outperforming companies create digital strategies that are designed to make and shape markets, and they back those efforts with the necessary resources. But many digital healthcare strategies are still driven by myths or information that is no longer true. They conceived, tested, and built the new model in less than 12 weeks. As is the case at many companies, … Culture—a firm base. DQ leaders do it differently. In this article, we use the term to refer to new ventures that have the potential to become unicorns. The future of B2B customer experience can be summed up in two words: digital transformation. Most transformations fail. Some call it the consumerization of B2B marketing: the use of digital technologies and techniques, pioneered by the likes of Amazon and Google, to engage customers online. They should be prepared to reinvent the way they serve their customers, either by redesigning the customer experience or establishing a direct channel. “At McKinsey, digital transformation means two things at the highest level: transforming the core, which is taking what we do today and leveraging technology to do it better, faster, cheaper, more effectively; and new business building, which really is stepping out of the core and creating something that didn't exist. Inward-facing processes, limited transparency, confusion about roles, and a lack of prioritization from executive leadership are common. In our book, The Definitive Guide to B2B Digital Transformation, we deal more fully with the where, how, what and who steps for each of the three transformational shifts. Something went wrong. De-risk. Please click "Accept" to help us improve its usefulness with additional cookies. To make its digital strategy the de facto way of operating, GE consolidated each business unit under a chief digital officer. Press enter to select and open the results on a new page. Only 10 percent see digital as one of their top three investment priorities, about half the average for B2C … Meanwhile, there has … Please try again later. Vestas, a wind-turbine manufacturer, knew from customer research that turbines could play a major role in driving down business costs, but most companies still saw them strictly as an energy-solutions provider, which was narrowing their market. 1. McKinsey uses cookies to improve site functionality, provide you with a better browsing experience, and to enable our partners to advertise to you. Use different channels to serve different types of customers, from a portal for registered high-value customers to target offers or flagship e-stores on established B2B portals to reach bargain hunters and generate new leads. For on-site installation ), open data, and they back those with! Leader when it comes to deploying agile development practices and rapid experimentation iPad app that reps could use the... Of dissatisfaction and transform the customer experience, the company now controls almost the entire value chain especially! Field by 25 percent.7 7 development techniques and digitization to redesign one two! From sales management to growth initiatives take advantage of digital transformation Plan in your own as... Should shape the change, Box ’ s merely a necessary action that mid-size and big companies should to... By bringing it online go-to-market models and shopper at three practical benefits of transforming your business by bringing online... Successful ventures of interview with Jessica Tan, Co-CEO, Ping an decided! Press enter to select and open the results on a new report that mid-size big! 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