ESSENTIALS FOR LEADERS AND THOSE THEY LEAD

“You stay in Wonderland, and I show you how deep the rabbit hole goes,” says the character Morpheus in the classic sci-fi thriller The Matrix, which showcases the extent to which the lines between the virtual and the real can blur. Today, digital technologies have enabled organizations to simulate, experiment, and innovate in imaginative ways and at speeds that would be almost impossible in a solely physical environment. This week, join us as we go down the rabbit hole—to a world where fantasy and reality can meet.

AN IDEA

Experiment with digital virtualization

“The line between the digital and the physical has dissolved completely” for some companies, according to McKinsey senior partner Kimberly Borden and colleagues in a new article on digital innovation. “It’s now possible to create digital representations of components, products, and processes that precisely replicate the behavior of their real-world counterparts,” they note. For example, by creating virtual prototypes to simulate thousands of different racing conditions, a sailboat team won two major competitions; a heart pump maker deployed high-performance virtualization to reduce design optimization time by over a factor of 1,000. To be successful at digital virtualization, “build it to a code that verifiably matches digital results to the physical world, within an acceptable error range,” suggest the authors. “At that point, the virtualization can be trusted as authoritative and safe to use.”

A BIG NUMBER

$20 billion

That’s the potential size of the opportunity for the virtual travel industry by 2030, McKinsey research shows. The metaverse—a collective space where physical and digital worlds converge to deliver immersive, interactive user experiences—is already transforming many sectors: “You can attend concerts, shop, test products, visit attractions, and take workshops, all without physically traveling anywhere,” observe McKinsey partner Margaux Constantin and colleagues. To gain first-mover advantage in the metaverse, travel companies may need to focus on four key steps, including finding the right talent. “Developing any offer will likely require new skills—not just to make your immersive world look good but to ensure that it’s smooth and exhilarating to use,” say the McKinsey experts.

A QUOTE

“We learn by doing things ourselves.”

That’s Camille Kroely, chief metaverse and Web3 officer at L’Oréal, on how the global cosmetics company trains its own executives to become proficient in digital skills. L’Oréal has launched several initiatives to blend the physical, digital, and virtual worlds in its product marketing—for example, by working with avatar developers to offer virtual makeup looks. “Upskilling is now part of our road map,” says Kroely. “One of the first things that we did with our executive committee members was to train and upskill them so that they can keep learning by themselves—such as opening their own wallets, customizing their avatars, testing the platform, and going on [the online game platform] Roblox.”

A SPOTLIGHT INTERVIEW

Creating a dedicated digital unit can sometimes be the most efficient way to quickly spread innovative digital practices throughout the organization. That strategy has worked for Saudi Arabia’s Alinma Bank, according to chief digital officer Sami Al-Rowaithey. Recently, the bank established a “digital factory,” says Al-Rowaithey in a conversation with McKinsey partner Sonia Wedrychowicz. “It’s responsible for managing the entire digital structure and its associated strategies, business development, product innovation, experience management, performance management, and digital profitability,” he says. While that may seem like a daunting task, it helps to act fast, adds Al-Rowaithey. “The first thing I would say is to not spend a lot of time trying to figure out all the details of the journey. It’s important to start quick, learn as you go, be flexible, modify, and move on.”

– Edited by Rama Ramaswami, senior editor, New York

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