A CEO’s guide to reinvention
A successful digital transformation requires making trade-off decisions. Here’s how successful CEOs guide their business’s reinvention. Being the CEO of a large company facing digital disruption can seem like being a gambler at a roulette table. You know you need to place bets to win, but you have no idea where to put your chips. Of course, digital transformations aren’t games of chance. But they do require big and bold commitments in the midst of uncertainty to reinvent the business rather than just improve it.
Many of the digital initiatives large incumbents have already tried to date have tended to operate at the margins of the business. Innovation labs or apps can be useful for learning and can even provide a boost to the company. Meanwhile, the legacy business remains in place, largely unperturbed.
Without a transformation of the core—the value proposition, people, processes, and technologies that are the lifeblood of the business—any digital initiative is likely to be a short-term fix. The legacy organization will inevitably exert a gravitational pull that drives a reversion to established practices. Reinvention of a business is, by its nature, bold. But it’s one thing to be bold; it’s another to be thoughtfully bold. A digital reinvention requires the CEO to make tough decisions, which involve hard trade-offs that it is tempting to ignore, defer, or rush into. Yet knowing which decisions to prioritize and how to implement them can make the difference between a successful transformation effort and one that struggles.
These decisions occur in the four phases of a successful digital transformation program:
Discovering the ambition for the business based on where value is migrating
Designing a transformation program that targets profitable customer journeys
Delivering the change through an ecosystem of partners
De-risking the transformation process to maximize the chances of success
In each of these areas, the CEO has a lot of things to do, from modeling new behavior to driving a change in culture to executing strategy.1 But this article focuses on some of the big decisions CEOs need to make, and how they can go about making them. Based on our experience with dozens of digital transformations, we believe these seven decisions are the most important ones.
Decision 1: Where the business should go
Decision 2: Who will lead the effort
Decision 3: How to ‘sell’ the vision to key stakeholders
Decision 4: Where to position the firm within the digital ecosystem
Decision 5: How to decide during the transformation
Decision 6: How to allocate funds rapidly and dynamically
Decision 7: What to do when
More: McKinsey
About the authors
Peter Dahlström and Driek Desmet, both based in London, and Marc Singer, based in San Francisco, are all senior partners and leaders of Digital McKinsey.