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June2023
Mckunsey
company
McKinseyExplainers
Whatisdigitaltransformation?
Digitaltransformationistherewiringofanorganization,withthegoalofcreatingvaluebycontinuouslydeployingtechatscale.
Digitaltransformationisthefundamentalrewiringofhowanorganizationoperates.Thegoalofadigitaltransformation,asoutlinedinthenewMcKinsey
bookRewired:AMcKinseyGuidetoOutcompetingintheAgeofDigitalandAI(Wiley,June20,2023),shouldbetobuildacompetitiveadvantageby
continuouslydeployingtechatscaletoimprovecustomerexperienceandlowercosts.
Likemanycommonlyusedphrases,“digital
transformation”hasdevolvedintoacatchalltermthatmeansdifferentthingstodifferentpeople.
That’saproblem.Digitaltransformationiscriticalfororganizationstonotonlycompetebutsurvive.Ifleaderscan’tbeclearaboutwhatadigital
transformationis—andaligntheirorganizationaroundaspecificprogram—theycan’texpecttobesuccessful.
Digitaltransformationsaredifferentfromregular
businesstransformations,inbothsmallandbigways.Foronething,businesstransformationsusually
endonceanewbehaviorhasbeenachieved.Digitaltransformations,ontheotherhand,arelong-term
effortstorewirehowanorganizationcontinuouslyimprovesandchanges(andthatmeansreallylongterm;mostexecutiveswillbeonthisjourneyfortherestoftheircareers).That’sbecausetechnology
isnotonlybecomingfurtherintegratedinbusinessbutalsoconstantlyevolving.Forexample,giventhegrowingimportanceofAIingeneratingbusiness
insightsandenablingdecision-makinglogic,anydigitaltransformationshouldalsobe
anAItransformation.
Aswe’llshow,successfuldigitaltransformationshingelessonhowcompaniesusedigitalandmoreonhowtheybecomedigital.
Whatcapabilitiesareneededtomovetheneedleondigitaltransformation?
Successfuldigitaltransformationrequiresavarietyofcoordinatedac
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