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Chapter 3 - Customer Journey Optimization: Lean Operations in the Age of Customer Centricity

Organizations with the capability to harness customer journey optimization strategies understand the potential for significant cost savings and increased customer satisfaction that it can bring. However, capturing this value requires a new level of operations planning that must include more robust and effective processes and technology in the back office delivered through an integrated operating model. Industry analysts from Gartner and McKinsey have both recently come out with a bold statement that a Business Operating System (Gartner) or a Next Generation Operating Model (McKinsey) holds the key to success. Gartner has even gone so far as to predict that organizations who utilize a business operating system will turn the 70% failure rate of transformation into a 70% success rate.

McKinsey’s Next Generation Operating Model, defined as “a new way of running the organization that combines digital technologies and operations capabilities in an integrated, well-sequenced way to achieve step-change improvements in revenue, customer experience, and cost” shares some key features with Gartner’s concept of a business operating system. According to Gartner, the simplest way to think about a business operating system is as a digital twin for an organization. In the physical world, the digital twin is a digital replica of the assets, processes, and systems that comprise a physical object. The digital twin creates a living simulation that updates and changes as its physical parts change. One of the current applications for digital twin of a physical thing comes from the industrial sector, which leverages digital twin in order to optimize the operation and maintenance of physical assets such as windmills in a wind farm. GE argues that this technology can boost one wind farm’s energy production by as much as 20% and create $100 million in extra value over the lifetime of the farm.

However, Gartner has recently applied that idea to business, saying “A digital twin of an organization (DTO) is a dynamic software model of any organization that relies on operational and/or other data to understand how an organization operationalizes its business model, connects with its current state, responds to changes, deploys resources and delivers expected customer value.” The digital twin has many applications that range from enterprise performance and cost optimization to customer experience management, but all applications of the digital twin are intended to support organizations in their decision making processes. Creating a virtual copy of an organization is meant to help business leaders explore their options, engage in scenario planning, and minimize the risk of the organization’s chosen path.

Due to the relative newness of the concept of Digital Twin of an Organization, it is difficult to predict the total impact (financial and otherwise) it could have. However, Gartner has done some research into which use cases produce greater impact than others. Currently, the highest impact can be realized with “Customer Experience Management”. A digital twin helps with customer experience management by aligning the internal operations of an organization with external customer interactions. This alignment helps organizations to better understand their customer segmentation and the expectations per segment, and how that translates into KPIs, process performance, and opportunities for performance improvement. Gartner suggests that this level of transparency “will allow organizations to put in place customer service guarantee levels.” It is precisely this need that drove a European insurance company to Mavim. Creating an outside-in view of internal operations helped Mavim’s customer to better understand their customer journeys and how their business operations could be improved to support their customers’ expectations.

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