Based on the McKinsey Quarterly podcast on “Facing up to digital disruption: Reinventing the core with bold business strategy”, below is the high-level summary on how to face digital disruption and reinvent with a revised business strategy.

The podcast discusses digital reinvention and the importance of digital strategy and execution for organizations to achieve increased revenue growth and return on investment. It highlights the widespread adoption of digital as a core strategy across various industries. The guests, Paul Willmott and Laura LaBerge from McKinsey, emphasize the need to understand various aspects of digitization beyond just channels, such as marketing, products, services, ecosystems, and processes.  They start their podcast by defining “digital” and “digitization”, as most of them use it interchangeably (very loosely). The research findings reveal that while digital creates pockets of high growth, overall economic performance is declining for many companies. Many organizations are not on a viable path to navigate digitization successfully. Surprisingly, the winners in the digital space are not limited to specific types of disruption but rather encompass various areas.

There are several opportunities for companies to consider and they should broaden their focus on different areas of digitization, including supply chain and product/service innovation. Fast following is not a reliable strategy, as companies that are bold and proactive in responding to digitization outperform their competitors. The importance of strategy is highlighted, as companies with well-defined and aligned strategies tend to be digital winners. While execution is crucial, having a clear direction and understanding the economic reality of the industry is equally important.

The research emphasizes the significance of organizational culture in achieving the desired impact from digital initiatives. Elements such as risk aversion, siloed mindsets, and customer-centricity play a crucial role. Collaboration across functions and breaking down organizational silos are essential for effective responses to digital challenges.

The podcast concludes by suggesting that companies should focus on being first movers in the digital aspects relevant to their industry. Digitization offers potential benefits in every industry, and companies need to align their digital plays with their overall business and corporate strategies. The transformation process typically involves phases of denial, confusion, and frustration, with the need for early capability building and hiring the right talent for success.

Reference:

Facing up to Digital Disruption: Reinventing the Core with Bold Business Strategy | McKinsey. https://www.mckinsey.com/capabilities/mckinsey-digital/our-insights/facing-up-to-digital-disruption-reinventing-the-core-with-bold-business-strategy. Accessed 23 May 2023.