The five core IT shifts of scaled agile organizations - McKinsey & Company (Full Access)   

The rise of digital companies over the past 20 years has forced traditional players across industries to radically rethink their operating models—for greater speed, customer experience, and flexibility. Indeed, while incumbents are struggling with existing processes and technology to adapt their offerings and provide digital services, new digital players are able to quickly offer mobile-first services, which take a couple of minutes and a few clicks to, for example, open a bank account or set up home internet.

Over the past five years, many companies across industries have started to experiment with the benefits of agility—and some of them (banks, telecoms, retailers, and other companies) have even made the move toward enterprise agility, which is based on creating fluid organizations that continually evolve to capture market opportunities while highly engaging their employees. The benefits are straightforward: companies that successfully embrace enterprise agility can improve financial performance by 20–30 percent, according to McKinsey research. This performance is underpinned by a 30–50 percent improvement in operational performance, a customer satisfaction score boost of 10–30 points, and a boost in employee engagement score of 20–30 points. Combined with their existing experience and client base, this enhanced performance in turn helps traditional companies catch up and compete effectively with digital disrupters.

Successful agile organizations—of any size and across industries—take a similar approach to five key elements: strategy, structure, process, people, and technology. And while many companies successfully tackle the first four elements, they often still struggle with technology. In this article, we discuss the common challenges of achieving enterprise agility through the lens of IT and outline five shifts that CEOs and chief information officers (CIOs) can make together to get on the right track, increase the speed of IT by up to ten times, and reduce IT costs to match the level achieved by digital leaders.

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Technology’s generational moment with generative AI: A CIO and CTO guide - McKinsey & Company (Full Access)   

Hardly a day goes by without some new business-busting development related to generative AI surfacing in the media. The excitement is well deserved—McKinsey research estimates that generative AI could add the equivalent of $2.6 trillion to $4.4 trillion of value annually.1“The economic potential of generative AI: The next productivity frontier,” McKinsey, June 14, 2023.

This article is a collaborative effort by Aamer Baig, Sven Blumberg, Eva Li, Douglas Merrill, Adi Pradhan, Megha Sinha, Alexander Sukharevsky, and Stephen Xu, representing views from McKinsey Digital.

CIOs and chief technology officers (CTOs) have a critical role in capturing that value, but it’s worth remembering we’ve seen this movie before. New technologies emerged—the internet, mobile, social media—that set off a melee of experiments and pilots, though significant business value often proved harder to come by. Many of the lessons learned from those developments still apply, especially when it comes to getting past the pilot stage to reach scale. For the CIO and CTO, the generative AI boom presents a unique opportunity to apply those lessons to guide the C-suite in turning the promise of generative AI into sustainable value for the business.

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Navigating inflation: A new playbook for CEOs - McKinsey & Company (Full Access)   

Last year, policy makers, economists, and financial-market participants fiercely debated the higher inflation then under way. Was it a transitory problem, caused by dislocations from the COVID-19 pandemic that would inevitably fade, or was it a more fundamental and potentially permanent shift? CEOs told us that they viewed this debate as detached from the business environment in which they operated. For them, higher inflation was already “permanent enough” to start asking whether a fundamental shift in the way they led and managed their organizations was required. We agreed.

In the first months of 2022, it became increasingly apparent that this year and next—and possibly longer—inflation rates well above the approximately 2.0 percent that planners have come to expect (and central banks have targeted) will prevail. The consumer price index rose by 8.5 percent from March 2021 to March 2022 in the United States, a 40-year high, 7.5 percent in the eurozone, and 7 percent in the United Kingdom. Some 60 percent of advanced economies grapple with year-on-year inflation above 5 percent.1Agustín Carstens, general manager of the Bank for International Settlements, in a speech to the International Center for Monetary and Banking Studies, April 5, 2022. Russia’s invasion of Ukraine, and the resulting disruptions to the energy, agriculture, and minerals markets, have made it likely that inflation will be higher and more persistent than even revised expectations suggest (Exhibit 1).

Following a well-established inflation management playbook, central banks worldwide are raising interest rates to temper demand and regularly issuing statements to try and keep in check consumer and business expectations of future inflation. This task is becoming more urgent, as markets now expect inflation over the next five years in the United States, the United Kingdom, and Germany to be 1.5 to 2.0 percent higher than their 2010–2019 average.

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The Rise of Quantum Computing - McKinsey & Company (Full Access)   

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