McKinsey explains what it takes to succeed at digital transformation
DIGITAL transformation is hard, and although companies promise to commit to a strong digital agenda, not many succeed at morphing into a more digital-first business.
In fact, according to a recent study by McKinsey, roughly 70 percent of transformations fail.
McKinsey Senior Partner Harry Robinson, who has reverse-engineered some of these failures to create a strategy for success, believes that the root causes of most failures are straight forward.
Robinson believes that a lack of leadership, inadequate skills, and poor change management are to blame for botched digital transformation projects in most organizations — all of which he explains in greater detail:
“Often the CEO doesn’t set a sufficiently high aspiration. During the early stages of the transformation, he or she doesn’t build conviction within the team about the importance of this change or craft a change narrative that convinces people they need to make the transformation happen.”
According to Robinson, when people throughout the organization don’t buy-in and they don’t want to invest extra energy to make change happen, it’s easy for such projects to fail.
The McKinsey Senior Partner also finds that many organizations aspire to complete great digital transformation projects without the right skills — which ultimately leads to failure.
“They don’t have the capabilities to drive their transformation, or the key capabilities sit with people who have other day jobs, and they don’t get freed up to be able to work on the transformation.”
In terms of change management, it seems as though leaders often neglect to help facilitate a smooth transition.
“Companies often miss all sorts of procedural elements that make a transformation thrive. They don’t put the right change-management infrastructure in place, or they don’t establish a cadence of leadership oversight meetings.
“They don’t create a transformation office or set regular performance-management discussions to track progress,” explained Robinson.
How do you succeed at digital transformation?
While Robinson makes it clear that succeeding at digital transformation isn’t easy, McKinsey Senior Partners Jon Garcia and Wesley Walden highlight the five essential conditions that must be met before an organization embarks on the journey to digital:
“The first is to have a CEO who is completely committed to the transformation and treats it as a top priority. That person must be willing to devote a high level of engagement, attention, and focus to the project.
“The second prerequisite is having a CEO who is willing to go after the full potential for the transformation. It’s critical that CEOs have a desire to shoot for an aspiration that’s above and beyond anything they’ve ever seen,” explained Walden.
“You’ve got to really want to be outstanding and to achieve your full potential. But wanting something isn’t enough. You’ve also got to be willing to work for it,” emphasized Garcia.
The third, Walden continues, is a willingness to commit the organization to going digital by allocating the best possible resources available to it — and providing it with all the support from the learger leadership team.
The fourth, Walden adds, is a willingness to follow the transformation “recipe,” as McKinsey calls it.
“This process doesn’t just involve setting targets and pursuing a series of initiatives or projects. It’s all about following a particular recipe to identify a company’s potential and then build bottom-up plans and granular initiatives to deliver that potential.
“It also requires that you engage the entire organization to execute and deliver on those plans. In addition, the recipe requires that you think about organizational health, including improving attitudes and capabilities in your organization to sustain the transformation,” said Walden.
Finally, Walden explains that CEOs or organization considering a transformation need to learn from other organizations that have (successfully) transformed themselves.
At the end of the day, the message is loud and clear — digital transformations must be driven by CEOs, with the right resources, in order for it to be a success. Lest they risk joining the 70 percent of corporate transformations that fail.
- Thailand network operators invest $3.2B to secure 5G spectrum licenses
- IDC says Australian enterprises are implementing IoT to boost efficiency
- Apple helps retailers bring augmented reality-powered catalogs to life
- Will traditional players be rattled by HK’s first digital bank?
- What traits are shared by cybersecurity-savvy businesses?