November 22, 2020

Digital Transformation

Digital Transformation what's the next step beyond digital transformation? For many large organizations, it's buildinga new business within the established company. We're speaking with Ari Libarikian who isa senior partner with McKinsey & Company. Hey, Ari. How are you? I'm good, Michael., How are you? I'm excellent. We're talking, about digital business. What is a digital business? In this era, customers are expecting moreand more technologically enabled services. They want to go online and buy stuff., A digital business is basically a businessthat's centered around technology, both in the construction of the product as well.

Asdelivery and the service of the product. The, experience for the customers ends up beingtypically faster, cheaper, more seamless, and easier because it's accessible everywhereand it's much more user-friendly. For an.

Established company, they're stillselling their original set of products and services or is it something different? A lot of cases, what they do is, they leveragesome of the intelligence and experience they have. In the core company, but they leveragethat into a digital business and they build something that looks completely different,ground up,. To serve customers. How is this different from digital transformation? At McKinsey,. When we talk about digital transformation,we talk about two things at the highest level: transforming the core, which is taking whatwe do today and. Leveraging technology to do it better, faster, cheaper, more effectively;and we talk about new business building, which really is stepping out of the core and creatingsomething that didn't. Exist., Typically, that business building is a muchmore radical step out for companies because the executives who are very good at runninga large company, some of them, many. Of them don't have the experience of building somethingand scaling it. Why is it so important, to build a digitalbusiness? Our belief, as McKinsey, is that it's a requirementfor long-term success. If you at the Fortune 20 companies today versusthe list 20 years ago, it's almost entirely different. Every company. On the list today has, regenerateditself through business-building or was a startup a few years ago and has scaled massively. There are risks that are associated with notembracing this kind of digital business building., Mm-hmm. Tell us about that. The obvious risk is viability and long-termsuccess is put at risk. A lot of industries are being disrupted bystartups, by. Venture capital and private equity-backed companies. The risk is if incumbents today don't thinkabout. Business building and reinventing themselves that way, they could be out of business or,at a minimum, not as successful as they. Today, just in a few years. Ari, let's.

Talk about the strategy of buildinga business. How does a company begin? It is a tough process and primarily becausemost companies don't have the capability or the muscle to do this. The first step. Is always grounding this newbusiness.

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