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How do I go about implementing the levers which create compound impact across the company?

In considering which levers to use and how to apply them, it’s important to think in a holistic way and keep the entire journey in mind. Three design guidelines are crucial:<br/><br/>

1. Organisations need to ensure that each lever is used to maximum effect.<br/><br/>

Many companies believe they’re applying the capabilities to the fullest, but they’re actually not getting as much out of them as they could. Some companies apply a few predictive models and think they’re really pushing the envelope with analytics but are only capturing a small fraction of the potential value. This often breeds a false complacency, insulating the organisations from the learnings that would otherwise drive them to higher performance because it is “already under way” or “has been tried”. Having something already under way is a truism: everyone has something under way in these kinds of domains, but it is the companies that press to the limit that reap the rewards. Executives need to be vigilant, challenge their people, and resist the easy answer.<br/><br/>

For example, in the case of analytics maxing out potential requires using sophisticated modelling techniques and data sources in a concerted, cross-functional effort, while also ensuring that front-line employees then execute in a top-flight way on the insights generated by the models.<br/><br/>

2. Implementing each lever in the right sequence.<br/><br/>

There is no universal recipe on sequencing these levers because so many variables are involved, such as an organisation’s legacy state and the existing interconnections between customer-facing and internal processes. However, the best results come when the levers can build on each other. That means, in practice, figuring out which one depends on the successful implementation of another.<br/><br/>

Systematic analysis is necessary to guide decision making. Some institutions have started by outlining an in-house versus outsource strategy rooted in a fundamental question: “What is core to our value proposition?” Key considerations include whether the activities involved are strategic or confer competitive advantage or whether sensitive data or regulatory constraints are present.<br/><br/>

The next step is to use a structured set of questions to evaluate how much opportunity there is to apply each of the remaining levers and then to estimate the potential impact of each lever on costs and customer experience. This exercise results in each lever being assigned an overall score to help develop a preliminary point of view on which sequence to use in implementing the levers.<br/><br/>

There’s also a need to vet the envisioned sequences in the context of the overall enterprise. For example, even if the optimal sequence for a particular customer journey may be “IPA then lean then digital,” if the company’s strategic aspiration is to become “digital first,” it may make more sense to digitise processes first.<br/><br/>

This systematic approach allows executives to consider various sequencing scenarios, evaluate the implications of each, and make decisions that benefit the entire business.<br/><br/>

3. Finally, the levers should interact with each other to provide a multiplier effect.<br/><br/>

For example, one bank only saw significant impact from its lean and digitisation efforts in the mortgage application journey after both efforts were working in tandem. A lean initiative for branch offices included a new scorecard that measured customer adoption of online banking, forums for
associates to problem solve how to overcome roadblocks to adoption, and scripts they could use with customers to encourage them to begin mortgage applications online. This, in turn, drove up usage of online banking solutions. Software developers were then able to incorporate feedback from branch associates, which made future digital releases easier to use for customers. This in turn drove increased adoption of digital banking, thereby reducing the number of transactions
done in branches.<br/><br/>

Some companies have developed end-to-end journey “heat maps” that provide a company-wide perspective on the potential impact and scale of opportunity of each lever on each journey. These maps include estimates for each journey of how much costs can be reduced (measured in terms of both head count and financial metrics) and how much the customer experience can be improved.<br/><br/>

Companies find heat maps a valuable way to engage the leadership team in strategic discussions about which approaches and capabilities to use and how to prioritise them.<br/><br/>

© McKinsey and Company

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