Why do some transformations thrive while others falter?

Companies with significant financial success have a unique approach to technology transformations, setting them apart from the majority. Their strategies provide a blueprint for other organizations aiming for similar success in their digital transformation endeavors.

For years, IT departments have grappled with the question: Why do some technology transformations thrive while others falter? This dilemma represents both a golden opportunity for expansion and the peril of lagging behind. A recent McKinsey Global Survey study sheds light on this issue. By examining the strategies of the most financially thriving organizations, termed "top performers," the research underscores the pronounced advantages these entities derive from their tech transformation initiatives.

The survey findings reveal several distinct strategies employed by these top performers. Primarily, they integrate their technology and digital plans with their overarching business goals, ensuring alignment and synergy. Furthermore, they excel in creating an atmosphere conducive to organizational change, ensuring the entire team is on board with the transformation. These leading entities also prioritize investment in foundational technologies, recognizing their pivotal role in digital endeavors. Notably, they have a knack for retaining their tech professionals, understanding their invaluable role in driving successful transformations. A standout trait of these top performers is their adeptness at amalgamating various initiatives to optimize business value.

The strategies of these top-tier companies serve as a foundation for successful tech transformations. They also highlight five pivotal subjects every organization should consider to bolster their chances of mirroring such success in their tech journeys.

Assessing the value derived from IT

Most of those experienced in tech transformations have consistently highlighted significant advantages from their endeavors. For instance, over 60% of survey participants state that their tech transformations have positively influenced various performance indicators.

However, the top performers have outpaced their counterparts in leveraging the full potential of these transformations, particularly in driving business expansion. These individuals have noted a more pronounced financial growth from their tech transformation investments. Specifically, 87% of these top-tier participants observed a favorable influence on creating new revenue streams, starkly contrasting to the 58% reported by the rest.

So, what's their secret? A key factor behind their triumph seems to be their ability to intertwine their technology and digital plans with their overarching business objectives. The survey indicates that participants from these top-performing entities are 14% more inclined to synchronize their business, technology, and digital strategies, amplifying the business benefits of their tech transformations.

A comprehensive enough transformation approach 

Generally speaking, top performers seem to adopt a more thorough and strategic stance towards their technological transformations than their counterparts. Not only have these frontrunners engaged in a greater number of tech initiatives (averaging 3.5 out of the 8, in contrast to 2.7), but their uniqueness extends beyond just the sheer number. Consistent with other studies, the survey data underscores that merging certain strategies can yield a more profound impact than when executed separately, given the intertwined nature of these strategies.

A closer look at the combinations favored by the majority of top performers sheds light on the synergies between the initiatives that have been pivotal to their achievements. This offers a blueprint for other businesses to replicate. For instance, over half of these leading performers, who claim their firms have pivoted their business strategy to be more tech-centric, have concurrently embarked on initiatives like overhauling their tech organizational structure, amplifying their data-centric capabilities, and revamping talent acquisition and management.

Developing and deploying new technology

The survey findings reveal that top performers are more proactive than their counterparts in investing in enhancing and protecting their IT backbone, encompassing their systems, data, and cybersecurity. This proactive stance empowers them to roll out technological solutions swiftly and adeptly. Remarkably, they are thrice as likely as others to highlight their endeavors in crafting state-of-the-art data platforms and seamlessly integrating artificial intelligence applications across their operations. Moreover, these companies emphasize bolstering their cybersecurity measures and rejuvenating their infrastructure, leveraging tools like automation and cloud-centric migration and management strategies.

Furthermore, it's noteworthy that these high-achieving companies face fewer roadblocks when harnessing their current technological foundation to meet their tech goals. A mere 22% of these entities pinpoint the lethargy of their traditional platforms as a primary obstacle during their digital metamorphosis, in stark contrast to the 38% of their peers who share this sentiment. Additionally, these leading companies demonstrate superior proficiency in orchestrating their data architecture and underlying infrastructure.

However, several challenges can deter companies from maximizing the potential of their tech foundations. One significant barrier is the scarcity of investment. Tech divisions often find themselves stretched thin, catering to the sporadic demands of diverse business stakeholders. This leaves them with scant time and resources to channel into foundational enhancements, which are inherently complex and demand significant time investment. Another challenge stems from the siloed development approach, where a palpable disconnect between tech and business teams leads to disjointed progress. Lastly, rallying support for the modernization of age-old tech systems can be an uphill battle without a compelling business rationale or a unified vision underscoring the urgency of such upgrades.

Making the most of the talent you already have

Securing and maintaining top tech talent remains a consistent challenge, ranking high on the priority list for most technology and business leaders. As organizations aim to draw in and keep a workforce that's increasingly agile, driven, and motivated by purpose, the competition for tech talent is set to escalate.

However, the top performers stand out from the crowd regarding overarching issues like talent acquisition and retention. Survey data indicates that these companies outpace their competitors. They are more frequently recognized for their prowess in retaining elite talent, onboarding fresh talent, upskilling their current workforce, and fostering a positive IT work environment.

Embracing product and platform-centric models for enhanced performance

While overhauling the IT structure and operational blueprint is essential for businesses to harness the full potential of their technology, this shift by itself doesn't assure superior outcomes. Intriguingly, the share of respondents who believe they've established a mature operational model remains consistent between the industry's top performers and the general populace. Yet, the defining trait of these leading entities is their pronounced preference for operating models centered around products and platforms, making them stand out.

Drawing from our hands-on experiences, we've observed that such specialized operating models, with a keen focus on the end user's journey, bring many business benefits. To elucidate, these models are adept at refining the product development cycle, accelerating the product's journey to the market, trimming down operational costs, instilling a culture of accountability within teams, and ensuring the delivery of products that are second to none in quality.