Digital transformation: Improving the odds of success

Most digital transformations don’t yield the benefits that leaders expect. New research shows that five practices maximize the chance of extraordinary outcomes

For established companies, the pressure to digitize business models and products has reached new intensity. McKinsey research shows that the best-performing decile of digitized incumbents earns as much as 80 percent of the digital revenues generated in their industries. Ascending to that elite group is far from easy. In a new survey of more than 1,700 C-suite executives, we learned that the average digital transformation—an effort to enable existing business models by integrating advanced technologies—stands a 45 percent chance of delivering less profit than expected. The likelihood of surpassing profit expectations, on average, is just one in ten.1

The average digital transformation stands a 45 percent chance of delivering less profit than expected.

The good news is that executives can decisively increase the chance that a transformation focused on digital enablement will beat performance expectations. (For more of McKinsey’s research on the success factors in broad business transformations, see “Why your next transformation should be ‘all in’” and “The numbers behind successful transformations.”) Our latest research shows that exceptionally effective digital transformations are distinguished mostly by the practices that executives choose to follow. Adhering to a well-defined set of transformation practices lifts the likelihood of exceeding profit expectations to more than 50 percent—about five times better than transformations that involve none of these practices (Exhibit 1). What’s more, the same combination of practices works for every type of digital-enablement effort that our survey covered.



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