Digital Transformation in 30 Days or Less
How COVID-19 Accelerated the Speed of Business
Two years ago, I published an editorial entitled Evolve or Die, in which I hypothesized that Digital Transformation is the Industrial Revolution of our age. Written in response to a global survey of business leadership by McKinsey & Company, I pointed out that across all industries, every organization intent on surviving the next decade of economic disruption was shifting from analog to digital; that any company serious about advancing its brand and expanding its future was in the process of integrating digital technologies that will help them reimagine every aspect of their business.
But most of them were failing. According to that study, more than 80% of organizations had undertaken steps toward digital transformation over the prior five years, but only 16% said their efforts had successfully improved performance. Reported success rates in more traditional industries – like Pharma – were even more dismal (4%-11%).
Then came COVID-19. A worldwide crisis that, on one hand, brought everything to a screeching halt but, at the same time, accelerated the rate of digital transformation to something approximating warp speed.
By October of last year, executives participating in another McKinsey global business survey reported they had accelerated digitization of their customer interactions and internal operations by three to four years. And the percentage of digitally enabled products in their portfolios had accelerated by seven years.
Why? Because their survival depended on it. In early 2020, the dinosaurs of industry were struck by the metaphorical equivalent of an economic meteor that gave new meaning to the phrase “evolve or die.” Remaining competitive (or simply staying alive) in this new commercial climate meant giving more than lip service to digital transformation. It meant recognizing technology as a critical component of business, itself.
The most immediate and obvious step in this collective evolution was a rapid shift toward interacting with customers, clients and employees through digital channels.
In December 2019, (around the time COVID-19 was categorized as a pandemic), the average share of customer interactions that were digital among North American companies was 41%. By October of 2020, that figure had jumped to 65% – a level these companies weren’t expecting to reach until 2023 (based on prior rate of adoption).
Results of the new 2020 McKinsey study also indicated a seven-year increase in the rate at which companies developed more digital offerings – but that may have involved “digitization” of previous offerings, rather than large leaps in new product development.
What’s most surprising to me regarding digital transformation in response to the pandemic is not the degree to which successful companies were willing to evolve, but the speed at which that reinvention took place. On average, respondents to the study reported their companies acted 20-25 times faster than previously planned.
Much has already been written about the long-term effects of employing a remote workforce, but this study illuminates how quickly that practice can be implemented. Prior to the pandemic, these respondents believed it would take more than a year to develop a workable solution. In actuality, it took their companies an average of 11 days.
At the same time, digital transformations originally projected to require an average of 18 months to complete – like addressing changing needs of customers, meeting demand for online purchasing or services and migrating to the cloud – took an average of three weeks. Even more sophisticated initiatives like developing operational technologies – previously expected to take up to two years – were completed in less than one month.
Which again begs the question: Why? Why does it take a global crisis before we’re compelled to take action? Again, I’ll hypothesize (as I did two years ago) that it’s because digital transformation isn’t just about technology. It’s about leadership and partnership and stewardship.
When asked why their organizations didn’t implement these changes before the pandemic, roughly half of respondents in the McKinsey study said they weren’t a top priority. In fact, both B2B and B2C companies often cited a failure to prioritize as a key barrier.
In my experience, the most important component when it comes to determining the ultimate outcome of any transformation is a team of leaders who not only understand digital tech but also feel a sense of urgency about leveraging it; who can’t wait to start the process and bring the rest of the organization along.
That’s a tall order, becoming that kind of leader; the kind who’s willing to challenge the status quo, experiment with the unfamiliar and get comfortable with the prospect of failure. But the only time I’ve ever seen an organization enjoy dramatic growth is when they’ve tried something (or hired someone) dramatically different.
Which brings us to an equally potent ingredient of transformational leadership: Integrators. According to McKinsey, the leaders most likely to succeed in exacting change are those willing to step back and recruit uniquely qualified partners who’ll help them integrate and translate new digital tactics into evolving business strategies.
Given that description, it follows that the best integrators do more than just provide technical specs or practical explanations of the digital solutions being developed. They also excel at crafting and communicating a “change story” that helps employees and other stakeholders understand where the organization is headed, why it’s transforming itself, and what will happen when it does.
The partners you choose and the change stories they tell are particularly important when it comes to the evolution of your marketing systems. That digital transformation will eventually affect every aspect of your business, from product design to consumer packaging, prospect identification to customer service, email marketing to market analytics.
But building fully integrated digital systems calls for fully defined business strategies; the kind that turn big data into smart data, prospects into customers and industry challenges into marketing victories; the kind of strategies you only get from those who’ve already done it for others you respect, and who continue to do it every day.
It’s important to remember the research we’re discussing was published over a year ago. By now, category leading companies are probably managing more like 80% of their customer interactions via digital means. They’ve likely transformed their strategies, systems and practices to a point they hadn’t previously planned to achieve for another five years.
In other words, if your company isn’t already operating like it’s 2025, you’re not just behind the curve. You’re at risk of becoming extinct.
The good news is this study proves it’s never too late to evolve; that digital transformation isn’t really a matter of finding the right technology or software or partner. It’s more a matter of mind over matter; of shifting your focus, realigning your priorities and changing the way you think about your business.
In the words of those great American poets (and business strategists), Sister Hazel: