McKinsey recently released a book that gives businesses guidance on what it takes to compete in today’s age of digital and AI. Their blog that announced the book, Rewired to Outcompete, speaks to a challenge we’ve often helped businesses address, which is aligning the entire C-suite around a common vision and a business-led digital roadmap. Without this alignment, transformations can stall, and companies might miss out on the immense value digital and AI can offer.
When companies embark on their digital transformation journeys, one common misstep lies in underestimating or overestimating the necessary scope of change. Some enterprises approach the transformation conservatively, choosing to enact only a handful of use cases. Others attempt to catalyze transformation across a broad range of initiatives without sufficient focus or coordination. In both instances, the companies often fail to realize substantial value from their efforts.
The most successful organizations, however, adopt a different approach. They pinpoint a selection of significant business domains – like specific production processes or customer journeys – and transform these areas holistically, from beginning to end. This targeted strategy enhances the probability of achieving meaningful outcomes. Indeed, the studies McKinsey cited suggest that as much as 80% of successful interventions in digital and AI transformations that were previously struggling arise from the recalibration of focus from wholesale transformation onto a select few domains.
Another essential aspect of digital transformation involves cementing a compact with the C-suite, getting the essential buy-in. This process necessitates linking the transformation outcomes within each business domain directly to operational Key Performance Indicators (KPIs). The subsequent roadmap should sequence digital solutions strategically, enabling the realization of tangible value in the short term while setting the stage for transformational value in the medium term.
Simultaneously, this roadmap should explicitly factor in the development of enterprise capabilities, whether it’s the acquisition of digital talent, the modernization of data architecture, or the creation of new operational processes. This approach forms the basis of a commitment from each member of the C-suite, where they agree to improve these KPIs, and the anticipated benefits are incorporated directly into their business objectives. Notably, an effective digital roadmap should be ambitious in its target setting, with a goal of achieving an improvement in Earnings Before Interest and Taxes (EBIT) of 20% or more.
Aligning the C-suite around a common vision and creating a business-led digital roadmap are instrumental in driving digital and AI transformations. As business leaders, it is essential to inspire and align the top team, aim for measurable end-to-end returns and and commit the C-suite to the targeted KPIs. Embracing these steps ensures that your company is well-positioned to leverage digital and AI transformation to its full potential. At Refinery Lab, we routinely help businesses with the strategy essential to driving these focused transformations and have worked to create measurable change at companies of all sizes in multiple industries. Contact us to learn more about what we do.