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What is a business transformation?

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A better path to growth and value

In the news

•

The need for speed. The pandemic showed corporate leaders that IT can deliver digital transformations at a rapid clip. Now, with fears of a global economic slowdown swirling, it is even more crucial to deliver transformative new technologies—and the value they bring—quickly. To do so, IT executives say that companies should help all leaders become more tech literate, so that they, too, can ask the right questions about whether digital initiatives are aggressive enough or the best solution to a problem. [CIO]

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A gap narrows. Advanced economies have also benefited from the pandemic-spurred adoption of transformative digital technologies. Following the COVID-19 crisis, digitization in mature economies increased by an average of six percentage points, IMF research finds. The digital gap narrowed by country and industry, with enduring implications for productivity and labor markets. Countries with a higher proportion of employees working from home saw bigger gains in labor force participation. And small companies, which typically rely more on manual processes, experienced larger increases in digitization. [WEF]

Waiting to “earn the right to grow” is no longer the best strategic or financial option. In such a dynamic business environment, focusing on new technologies is the way forward.

On McKinsey.com

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Why transform now? Companies undertake transformation in pursuit of a number of goals, including tackling urgent external challenges (disruptive, new market entrants), industry discontinuities (technology is changing consumer behavior), or macroeconomic pressures (supply chain woes). Almost all transformations are “digital transformations” because they require new investments in technology and tech-enabled processes .

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Who, what, how. The CEO helps a transformation succeed by communicating its significance, modeling the desired changes, building a strong top team, and getting personally involved, explain Wesley Walden , managing partner of McKinsey’s Australia and New Zealand office, and coauthors. The chief transformation officer (CTO) is the high-level orchestrator of the transformation process. A transformation office defines goals, models new ways of working, and ensures that the overall program and specific work streams stay on track. Discover what makes a business transformation successful.

Learn what it takes to transform

— Edited by Barbara Tierney, senior editor, New York

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by "McKinsey On Point" <publishing@email.mckinsey.com> - 12:10 - 27 Apr 2023

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What is a business transformation?

A better path to growth and value

In the news

Waiting to “earn the right to grow” is no longer the best strategic or financial option. In such a dynamic business environment, focusing on new technologies is the way forward.

On McKinsey.com