Designing a digital strategy and the impact of COVID-19

By Georgia Wilson
Business Chief EMEA takes a look at McKinsey’s 10 factors for a successful digital transformation strategy and the impact of COVID-19...

When it comes to designing a digital transformation strategy, McKinsey explains that “clear targets, management buy-in, and targeting easy wins early are just some of the key aspects of a successful digital transformation. Firms should also look to rapidly up-skill the digital expertise of their workers, and deploy agile ways of working.”

Realising digital potential - 10 factors for a successful digital transformation framework

While it is no secret that digital transformation and industry 4.0 is providing organisations with a multitude of opportunities for customer experience, growth, innovation, optimisation, transparency and agility, to drive sustainable and efficient operations.

“However, mounting evidence shows that digital transformations are easier said than done, with more than half of all UK projects estimated to fail at realising their desired goals,” says McKnisey. To help organisations navigate the challenges of developing a successful digital transformation strategy, McKinsey outlines 10 factors that can help an organisation realise the digital potential for an effective strategy.

First on the list is senior management buy-in. When it comes to budgets and decision making, having executives onboard and taking a proactive approach will drive quicker decision making and gain support across the entire organisation, as well as a smooth transition process and clear priority focus. “The CEO cannot simply sanction a digital transformation; he or she must communicate a vision of what needs to be achieved, and why, in order to demonstrate that digital is an unquestionable priority,” states McKinsey, this clear communication is crucial to maintain momentum and reduce failures when digitally transforming operations, which leads to the importance of identifying key milestones and targets to aim for, with a clear roadmap and regular progress updates. “Targets are needed for each source of value creation – cost savings, revenues, improved performance of agents, and satisfaction of employees and customers—and for new ways of working and the new capabilities required,” adds McKinsey.

Another key element to designing a digital transformation strategy is investment. When it comes to investing in a digital transformation strategy, McKinsey explains that “investment is likely to result in lower profits for a while. But without it there is a serious risk to profits in the longer term,” organisations willing to truly commit to the investment needed will be able to pull off a digital transformation strategy. While investment is a core element of designing a digital transformation strategy, resources are not unlimited and particularly in the current climate it is important to manage the risk when investing in projects. McKinsey therefore, highlights the importance of sequencing initiatives. As the more value a digital transformation captures, the more it becomes self-funding and builds great support.

“A company’s financial pressures will shape the sequencing to some degree. So will its IT, if legacy systems restrict initial choices. Companies must be more flexible. It could prove hard to recruit the particular people needed, while technology and customer behaviour will continue to evolve. When initiatives are successful and deliver the intended financial benefits, the board and top team should be emboldened to push to achieve more,” states McKinsey. As a result the establishment of ‘easy win targets’ in order to build the momentum for the projects - known as a ‘lighthouse project’ - could be a key way to build support. These short term and well defined projects act as a measurable model for projects going forward that are perhaps more broader. 

As an increasing number of organisations look to design a digital transformation strategy, there has also been a rise in the need for skilled talent, in particular a Chief Digital Officer (CDO) to lead the digital disruption and innovation. Recent statistics show that 19% of top global companies now have a CDO - 60% of which have been hired since 2015. “The importance of securing a high-calibre launch team, often under a CDO, cannot be overstated. A CDO can prove invaluable in co-ordinating a transformation – avoiding duplication by devising a methodology for the redesign of customer journeys that can be replicated across the organisation as digitisation efforts are extended.” 

With this in mind the importance of having a central launch team managing the overall operations leads into the need for agile ways working. With speed and autonomy at its core, agility as a process is defined as the division of tasks into short phases of work and the frequent reassessment and adaptation of plans. CDOs and executive leaders can help to promote new ways of working within an organisation that are essential for digital success, including: agile product development, maintaining focus on customers, and cross-functional teams. McKinsey does however, highlight that “separating a digital component from the rest of the organisation is not entirely the answer. They can start to create channel conflict, particularly if innovations threaten to cannibalise revenue streams. The digital unit therefore needs to be reintegrated at some stage, and that becomes more difficult as time passes. Whatever the choice, the ultimate goal has to be to enmesh the old and the new.”

A recurring theme within these key factors is the need for a digital mindset to maintain momentum. It is important for organisations designing a digital transformation strategy to encourage a digital culture. One way to develop such culture is through education. It is important for employees to understand the changes that are happening within the organisation and how the changes will impact their way of working. It is also important when it comes to education to boost the skills and system. The success of a digital transformation strategy requires the ability to acquire and develop competencies relating to digital skills, technologies, processes and operating models to avoid skill gaps and shortages.

Ultimately, “whatever structures a company chooses initially, it will reach the stage when only a fundamental organisational redesign will do,” comments McKinsey. Organisations will need to redesign many fundamental aspects of its operating model in order to realise the true potential of a digital transformation strategy. “Silos drawn along functional lines have always been a drag on collaboration and performance in large organisations. In the digital age, when companies need to reinvent the way they work on the fly, an inability to connect all parts of the organisation to share data, expertise, and talent can be crippling,” concludes McKinsey. 

The impact of COVID-19 on designing a digital transformation strategy

When it comes to the future of digital transformation, organisations, when asked: who led your digital transformation? will answer - COVID-19. 

It is no secret that since the outbreak of COVID-19, organisations all over the world have had their operations impacted by the virus. While 70% of organisations had a digital transformation strategy in place, most were not far enough ahead to make the impact of COVID-19 a non-issue. As a result, organisations have been forced to drive rapid digital transformation in order to adapt to new working constraints as a result of lockdown measures.

“This is certainly a before-and-after moment in the history of the economy and the digital transformation,” noted Andrew Filev, a Forbes contributor. “Even when the COVID-19 outbreak is contained, it’s unlikely things will return to normal. Instead, we’re seeing the forced acceleration of previously slow-moving trends that are likely to shape the future for the long haul.”

Accelerated adoption of digital trends as a result of COVID-19 include:


While remote working is not an unfamiliar concept, a recent survey revealed that 49% of workers have never worked from home. As a result, telecommuting technology has been the most widely adopted change due to the outbreak of COVID-19. “Whatever objections businesses have previously had to telecommuting, COVID-19 may be the moment that brings it into the mainstream and shows leaders that with the right technology, culture, and expectations, employees can be just as productive and effective from home,” says Filev. 

On-demand food and services

With thousands of businesses due to social distancing guidelines forced to close, the on-demand economy has further reinforced its importance as part of digital transformation. With the likes of Uber Eats and Just Eat, digital delivery apps are providing revenue for those who had to close their brick and mortar stores. 

“If it works for restaurants, we may see new aggressive adoption of drive-up or on-demand local delivery of essential goods as a result. Some businesses might even find this model provides lower costs, helps manage inventory, and makes revenue more predictable,” believes Filev. However, “communities and surrounding businesses may need to compensate for a decrease in foot traffic in certain anchor locations, and it could also mean the painful loss of jobs in the retail and service sector.”

Virtual events

Events - an industry hit particularly hard due to the impact of COVID-19, alongside the travel and hospitality industry that supports it. As a result conferences and trade shows have been cancelled or postponed due to mitigate the spread of the virus.

However, some of these events are turning to technology, transforming their physical event into a virtual one, something “which in the end may not just be a 2020 phenomenon but the new standard for experiences,” highlights Filev. It is unknown yet as to whether virtual events will drive business to the same extent that a physical one can, “but if they can, their appeal may be lasting. With lower costs for attendees and promoters and more flexibility in content formats, I wouldn’t be surprised to see some events remain virtual in the future.”

The cloud

Finally - the cloud. The driving force allowed organisations to rapidly adapt their operating models as the disruption of COVID-19 impacted their operations. Cloud technology provides organisations with instant communication from any location. 

Ultimately, “digital transformation has already saved millions of jobs, helped slow the spread of the virus, and allowed businesses to maintain a level of normalcy amidst a chaotic situation,” concluded Filev.


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