Digital transformation is on everyone's mind. For example, during a recent appearance on CNBC, Salesforce chairman and CEO Marc Benioff called digital transformation a "massive" opportunity.
Although the opportunity is clear, transforming an established organization remains one of the largest challenges in business. Genuine transformation touches the entire organization, including product development, marketing, sales, culture, business model, and so on. This level of change is a major undertaking for any company.
As part of the CxOTalk series of conversations with the world's top innovators in business, technology, government, and education, I explored this topic with a senior partner at McKinsey & Company.
Ari Libarikian leads Leap by McKinsey, the firm's initiative to help organizations transform. Its approach is helping organizations build and nurture new businesses that combine the best attributes of big companies and startups.
While this approach is not the only path to transformation, it brings together business operations, culture, and market-facing focus on the customer.
Check out the video embedded above to watch the conversation and read (lightly edited) key points below. You can also read the complete transcript.
A digital business is basically a business that's centered around technology in the construction, delivery, service of the product. The experience for the customers ends up being typically faster, cheaper, more seamless, and easier because it's accessible everywhere, and it's much more user-friendly.
At McKinsey, when we talk about digital transformation, we mean two things at the highest level: transforming the core, which is taking what we do today and leveraging technology to do it better, faster, cheaper, more effectively.
And, we talk about new business building, which is stepping out of the core and creating something that didn't exist. Typically, business-building is a much more radical step for companies because many executives who are very good at running a large company, don't have the experience of building something and scaling it.
Our belief, as McKinsey, is that business-building is a requirement for long-term success. If you look at the Fortune 20 today versus the list 20 years ago, it's almost entirely different. Every company on the list today has regenerated itself through business-building or was a startup a few years ago and has scaled massively.
In my view, culture is the most important issue here. A great culture in a company that knows how to build something ground up will eventually land on a great idea and scale a great business.
When I say culture, I mean what's the way of working? What type of people are you hiring? How are you learning from mistakes? Are you blending different functions together?
One of the exciting things you see in successful new businesses is, you see a designer with a technologist with a businessperson with a marketer with legal and compliance, all of them together every day, engaging in rapid conversation. They all have the mindset of how do we push this thing forward quickly.
Disclosure: McKinsey is a CxOTalk underwriter.