Amit Nagar: A Smarter Approach to Digital Operations



Companies that start experimenting now with their approach to digital operations will become the leaders of the future. Amit Nagar, a principal with Bain's Performance Improvement practice, summarizes five guidelines companies can follow when deciding how to invest in the future of digital operations.

Read the Bain Brief: A Smarter Approach to Digital Operations

Read the transcript below.

AMIT NAGAR: For many boards today, investing in digital operations actually poses a dilemma. On one hand, do you spend multiple millions of dollars to try to keep up with your rivals? On the other hand, do you wait to make the investments to see how these digital technologies play out within your industry or other companies before you make the investment?

On top of that, what we are starting to see is it's quite difficult to reconcile these investment choices with the long lead times it requires to actually enable your assets within operations to be digitized. What we have seen successful companies recognize is the inability to make a decision on these investments actually creates more vulnerability for that company. A great example here is when you think about Amazon's play within the rapid delivery space. A lot of Amazon's rivals that chose not to invest to try to keep up with this trend, ended up falling behind. And if you look at them today, they're struggling quite a bit.

Digital leaders end up looking at a couple trends within the industry, and they have the ability to say either A, these are going to be opportunities for me in the future, or B, these are going to pose major risks for me. On top of that, these digital leaders very much recognize that it is imperative to take a first step to actually do something, as opposed to not doing anything. And these first steps are absolutely critical—potentially not even knowing what the second or third step might be thereafter.

There are five guidelines that we have established after studying a lot of different companies that have been able to successfully execute a digital operational strategy. Number one is making sure that we're giving operations a bigger seat at the table when devising a strategy. Number two is around making sure that when you're looking at trends within the industry, you are able to pinpoint what those critical trends are for your company and being able to help incorporate that into your strategy.

Number three is around just setting targets. Right? We have seen companies that set [efficiency targets] anywhere between 10% to 15% ... not just set, but also achieved, within a three-year time frame. Number four is around making sure that you have the right talent. You need to be able to have people within your team that are able to identify what digital operational capabilities you need, and on top of that, be able to supplement that with, what digital technologies do I need to have in place in order to enable those capabilities.

And last but not least is making sure that as you build your team, you build that team with a cross-functional group of folks, what we call the dreamers and the doers. The dreamers are those digital folks that have a vision out of, here's what the digital landscape's going to be in the next 10 to 15 years. And the doers are those that are the operators that live these operations day to day and make these things more practical.

At Bain, we believe that companies that take on a very smart digital approach and start experimenting now will end up becoming the leaders of the future.

Read the Bain Brief: A Smarter Approach to Digital Operations