7 Success Mantras For Digital Transformation
Today, CEOs have to make decisions considering the digital transformation. 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, states management consulting firm McKinsey.
McKinsey lists seven mantras by which successful CEOs guide their business reinvention.
1: Create a plan for the digital transformation
Few decisions are more momentous than choosing the business direction. Data and analysis, as well as a disciplined framework for thinking through options, provide a helpful structure for making the decision. It’s important that any analysis be dynamic and forward-looking, based on an understanding of how digital technology could lead to changes in the future.
2: Decide who will lead the effort
A program that will deliver the needed degree of transformation is not something CEOs can delegate; they must lead the charge themselves.
CEOs, however, can’t do this on their own. Like the conductor of an orchestra, the CEO provides vision and ongoing direction. But a group of other senior leaders needs to drive the effort day-to-day. Thus, a key decision for the CEO is selection of the members of the orchestra, based on the skills needed to be harmonious and effective.
3: Understand how to ‘sell’ the vision to key stakeholders
Any change effort requires active communication of the vision and an explanation of why it’s necessary. For this reason, the CEO needs to decide not only what to say but also how—and how long—to communicate.
It’s crucial to decide when to communicate and with whom. The CEO should focus first on winning over influencers both inside and outside the company, then on propagating the change to their networks. CEOs also need to adopt a campaign mentality.
4: Position the firm within the digital ecosystem
New companies are able to challenge established businesses because an ecosystem of relatively cheap and plentiful resources—from technologies to platforms to vendors—is in place. This has been a boon to disruptive attackers, but the same resources can be used by incumbents, too.
CEOs need to figure out which capabilities, skills, and technologies available in the ecosystem complement and support their business’s strategic ambitions. How much to rely on these relationships and how to structure them, are also crucial decisions.
5: Decide on escalation rules during the transformation
No matter how well a transformation effort is designed, there will be surprises and unforeseen developments. To deal with this reality, the CEO and top team need to decide on governance and escalation rules to allow for inevitable course corrections.
6: Allocate funds rapidly and dynamically
The key lever CEOs and senior teams have to drive a digital transformation is resource allocation. This isn’t just about making sure resources get to the right places, a decision CEOs already make as part of their everyday work. With a digital transformation, the CEO needs to decide what the allocation process should be and at what tempo it should operate.
De-Risk—Increase the transformation’s prospects for success.
7: Know what to do when
More than 70 percent of transformation programs fail. While the decisions covered in this article go a long way toward improving the odds, loss of momentum can undo even the best transformation efforts. To forestall that possibility, CEOs should carefully decide how to sequence the transformation for quick wins that yield revenue payoffs and reduce costs, gains that can then be reinvested. Effective sequencing requires clear criteria to evaluate the potential payoff of various parts of the transformation initiative.
Digital is the defining challenge for today’s generation of CEOs. And the decisions they make will determine whether their businesses thrive or fade, concludes the article.
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