mckinsey 20141119 ebf digital strategy mckinsey
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7/24/2019 Mckinsey 20141119 EBF Digital Strategy McKinsey
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McKinsey Digital
Strategic principles forcompeting in the digital age
Paul Willmott | November 19, 2014
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Key trends are shaping the digital landscape
PRICEPRESSURE
01
UNEXPECTEDCOMPETITION
02
WINNERTAKES ALL
03
TALENTMISMATCH
04
GLOBALIZATIONAND
CENTRALIZATION
06
PLUG ANDPLAY
05
RELENTLESS
REINVENTION
07
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01 Price pressureTRENDS
Mobile research in EU
Share of respondents, percent
Other 26
In store 31
At home 75
5
9
11
Prof. review site 26
Same store website 33
Social Networks
Mobile Coupon site 13
Take photos 14
User review site 15
Videos on product
Barcode 10
Mobile Search
Family / friends 21
Price comparison
site/tool24
Other stores website 25
Where doing mobile
research?
What type of research done?
TransparencyCommoditization
Disintermediation
Niche players
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02 Unexpected competition
Hi-tech
Retail
Telco
Banking
Media
TRENDS
Reduced barriers
to entry
New ways to
differentiate
Digital brands
Unlimited shelf
space
Low transactioncosts
http://www.google.com/url?url=http://www.vision.org/visionmedia/news_from_reuters.aspx&rct=j&frm=1&q=&esrc=s&sa=U&ei=dT8PVN6TJ8HKigLz2ICQDQ&ved=0CCAQ9QEwBQ&usg=AFQjCNHHnT_ZAxuvpgWmg5m7uBK385WqGAhttp://www.google.com/url?url=http://www.vision.org/visionmedia/news_from_reuters.aspx&rct=j&frm=1&q=&esrc=s&sa=U&ei=dT8PVN6TJ8HKigLz2ICQDQ&ved=0CCAQ9QEwBQ&usg=AFQjCNHHnT_ZAxuvpgWmg5m7uBK385WqGAhttp://www.google.com/url?url=http://www.ranklogos.com/technology-logos/bt-logo/&rct=j&frm=1&q=&esrc=s&sa=U&ei=FD8PVOf4F-j-igKyuYHQBA&ved=0CBYQ9QEwAA&usg=AFQjCNE86UcRN0y4Wr__Y-evfnAo-dkiOQhttp://www.google.com/url?url=http://www.ranklogos.com/technology-logos/bt-logo/&rct=j&frm=1&q=&esrc=s&sa=U&ei=FD8PVOf4F-j-igKyuYHQBA&ved=0CBYQ9QEwAA&usg=AFQjCNE86UcRN0y4Wr__Y-evfnAo-dkiOQhttp://www.google.com/url?url=http://internetretailing.net/organisations/rtsc/&rct=j&frm=1&q=&esrc=s&sa=U&ei=6D4PVOaNDYScjAL0u4CoBA&ved=0CBgQ9QEwAQ&usg=AFQjCNGUEjEimgT60E6q1GENwxmaY93REghttp://www.google.com/url?url=http://internetretailing.net/organisations/rtsc/&rct=j&frm=1&q=&esrc=s&sa=U&ei=6D4PVOaNDYScjAL0u4CoBA&ved=0CBgQ9QEwAQ&usg=AFQjCNGUEjEimgT60E6q1GENwxmaY93REg -
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Revenue per employeeUSD Million
03 Winner takes all
0.63
0.69
0.86
1.011.01
0.93
0.220.210.200.200.190.19
FY 2013FY 2012FY 2010 FY 2011FY 2009FY 2008
Walmart
Amazon
TRENDS
Lower variable
costs
War for talent
Data power
Brand
concentration
Lower complexity
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04 Talent mismatch
Role growth
Data scientistUser experience designer
Massage therapist
Under pressure
Call center agentRetail worker
Administrator
Physician
TRENDS
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05 Plug and playTRENDS
Lower transaction
costsIncreased
economies of
scale
War for talent
Capital One Labs
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06 Globalization and centralization
1 Based on China data.
2 Excludes other VOIP minutes.
3 Based on US data.
NOTE: 2005 values for services are calculated by interpolating from prior and subsequent years based on constant growth rates.
3.0
3.0
63.0
51.0
39.0
12.1
Category and flowDigital component
2005
2013
GoodsE-commerce share of
total goods trade1
Data and
communicationSkype share of
international calls2
ServicesDigitally enabled shareof total services trade3
TRENDS
Global price
arbitrage
Improved MIS
Service
expectations
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07 Relentless reinvention
10
26 8
0 0
2013
223
13
1
2007
31
2
Downloads
Streaming
subscription
Ad-supported
streaming
Physical
distribution
25
4
2017
10
5
Global recorded music market development
USD billion CAGRPercent
2007-13 2013-17
24 15
36 26
-11 -7
8 6
DIGITAL
17 43 61 Digital share
TRENDS
Low barriers to
entry
Increased
economies of
scale
Accelerating
diffusion
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Businesses
face criticaldecisions to
adapt to
thesechanges
Businesses
face criticaldecisions to
adapt to
thesechanges
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BUY ORSELL
01
02
LEAD ORFOLLOW
COOPERATEOR COMPETE
03
BUY ORSELL
01
04
DIVERSIFY ORDOUBLE DOWN
DELEGATE OROWN
06
SEPARATE ORINTEGRATE
05
The decisions
DECISIONS
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01 Buy or sell
or
Letter vs. parcels
Credit card vs. e-payments
Car insurance vs. health insurance
DECISIONS
Reasons to buy
Increase exposure to
upside
Mitigate downside
Reasons to sell
Reduce risk
Focus on core
DECISIONS
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02 Lead or follow
or
DECISIONS
Reasons to lead
Create first-mover
advantage
Tap new value pools
Accelerate new capabilities
Reasons to follow
Avoid cannibalization
Reduce risk
DECISIONS
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or
03 Cooperate or competeDECISIONS
Reasons to cooperate
Focus
Access to new capabilities
Agility capabilities
Reasons to compete
Prevent disintermediation
Protect franchise
Sustain informationaladvantage
DECISIONS
http://www.google.com/url?url=http://springboard.org/press/events/springboard-nonprofit-consumer-credit-management-to-host-first-financial-empowerment-seminar-for-women/attachment/chase-logo-blue/&rct=j&frm=1&q=&esrc=s&sa=U&ei=Q2oQVPC7C8TuaNaNgogF&ved=0CBYQ9QEwAA&usg=AFQjCNFr-24iEusmjPx_6aIoyQE0zNA2Jwhttp://www.google.com/url?url=http://springboard.org/press/events/springboard-nonprofit-consumer-credit-management-to-host-first-financial-empowerment-seminar-for-women/attachment/chase-logo-blue/&rct=j&frm=1&q=&esrc=s&sa=U&ei=Q2oQVPC7C8TuaNaNgogF&ved=0CBYQ9QEwAA&usg=AFQjCNFr-24iEusmjPx_6aIoyQE0zNA2Jwhttp://www.google.com/url?url=http://en.wikipedia.org/wiki/Citigroup&rct=j&frm=1&q=&esrc=s&sa=U&ei=UmoQVLWWHs3OaI6VgQg&ved=0CBYQ9QEwAA&usg=AFQjCNFOmTKUOOuJNO3sVWG9b-qPk6fnvQhttp://www.google.com/url?url=http://en.wikipedia.org/wiki/Citigroup&rct=j&frm=1&q=&esrc=s&sa=U&ei=UmoQVLWWHs3OaI6VgQg&ved=0CBYQ9QEwAA&usg=AFQjCNFOmTKUOOuJNO3sVWG9b-qPk6fnvQ -
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04 Diversify or double down
or
DECISIONS
Reasons to diversify
Reduce risk
Increase optionality
Reasons to doubledown
Create competitive
differentiation
Ensure focus
Act at scale
DECISIONS
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or
05 Separate or integrate
Reasons to separate
Create new culture
Attract digital talent
Accelerate execution
Reasons to integrate
Avoid turn-wars
Create integrated customer
experience
Fully leverage capabilities
DECISIONS
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06 Delegate or own
or
Reasons to delegate
Create point of focus
Onboard new talent
Avoid CEO overload
Reasons to own
Drive cultural shift
Enable cross-functional
collaboration
Drive full value
Avoid complexity
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Getting started
Step back to move forward
Quantify the upside and
the downside
Educate the executive
team
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www.McKinseyDigital.com
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Thank You
Paul_Willmott@McKinsey.com
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