What digital really means

Everyone wants to "go" digital. The first step is to truly understand what that is. CEOs often comment to marketers and strategists "if it's not digital, I'm not interested" as a way of demonstrating their digital commitment. Boards often receive information about the organisation's digital strategies and digital risks as if it is a standalone business segment.

But what does "digital" really mean? Some directors will comment that it is about technology, while others will say it's about communication with customers and a few will understand it's a completely new way of doing business.

A McKinsey & Company article titled What does digital really mean? states that digital is actually a "way of doing things" and really has three attributes: "creating value at new frontiers of business world, creating value in the processes that execute a vision of customer experiences, and building foundational capabilities that support the entire structure."

In a related study, a McKinsey & Company analysis of 150 companies around the world developed a metric of the company's digital maturity, which it calls its Digital Quotient (DQ). The analysis shows a wide range of performance, which may be explained by a lack of real understanding of what "digital" is. McKinsey states there are four lessons:

  • Companies must be clear about their digital strategy – is the business a potential large-scale disrupter, a fast follower, or an innovator. Is digital at the centre of the organisation?
  • Invest at scale in relevant digital capabilities. Have the IT platforms been implemented to allow rapid upscaling, quick implementation, diversification, automation, customer interaction? Can this be done cost effectively?
  • Technical capabilities are critical, as is the culture that encourages this. Is the culture pointed towards speed of execution and adaptability? Can it cope and facilitate new improvements in processes, or "test and learn" projects? Can the culture be genuinely seen as agile? Is the appetite for digital risk defined and communicated, or does a risk-averse culture kill innovation?
  • The organisational structure, talent, funding and KPIs must be aligned with the digital strategy – directors need to be digitally aware and inquisitive, and to encourage development of mid-level talent. KPIs need to reflect the digital world – fast, online, real-time and directors do need to develop their own key KPIs for digital.

In order to set the right environment to enable digital success, boards should be able to easily point to these lessons as being clearly in evidence in their own organisations and around the board table. These lessons are described as a high-level road map and should help "leaders steer organisations effectively as they make the transition to becoming more fully digital enterprises".

The full articles can be found here: