Digital transformation is about sweeping change. It changes everything about how products are designed, manufactured, sold, delivered, and serviced””and it forces CEOs to rethink how companies execute, with new business processes, management practices, and information systems, as well as everything about the nature of customer relationships. I”™m seeing leaders who get this. They”™re all over it: they want to launch five transformation initiatives right now; they”™re talking to me and every digital leader they know about where the technology threats are coming from; and they”™re hiring the best people to advise them. Yet I”™m shocked by””even fearful for””the many CEOs I know who seem to be asleep at the switch. They just don”™t see the massive disruption headed their way from digital threats, seen or unseen, and they don”™t seem to understand it will happen very quickly.
McKinsey will often post thoughtful articles on leadership and change. This one, on digital transformation, makes the case that the CEO has to take on the dynamics of technology leadership.
When assessing the implications, consider the fact that that new digital business models are the principal reason why just over half of the names of companies on the Fortune 500 have disappeared since the year 2000. And yet, we are only at the beginning of what the World Economic Forum calls the “Fourth Industrial Revolution,” characterized not only by mass adoption of digital technologies but by innovations in everything from energy to biosciences.
Looks as though many CEOs are literally making life or death decisions for the longer term health of the companies they lead.
The odds are roughly 50/50.