Digital Transformation, One Discovery at a Time – Harvard Business Review Podcast

Written by HBR IdeaCast

Rita McGrath, professor at Columbia Business School, says the need for organizations to adopt digital business models is more important than ever. Change is accelerating as startups tackle incumbents. And suddenly the coronavirus crisis is forcing the hand of many companies that have put off digital transformations. She explains how established firms can avoid bet-the-farm moves and instead take small steps and quickly target their experiments. McGrath is the coauthor of the HBR article “Discovery-Driven Digital Transformation.”

Transcript

CURT NICKISCH:  Welcome to the HBR IdeaCast from Harvard Business Review.  I’m Curt Nickisch.

If your organization is not native to the digital economy, there’s one question that can strike fear in the hearts of its leaders.  And that is, what is your digital strategy?  Answering that question has accrued more offsite retreats, consulting hours and digital transformation meetings than anyone could ever count.  And suddenly like it or not, organizations everywhere are having to answer that question on the fly: what is our digital strategy?

Because the coronavirus pandemic has been such a titanic shift in worker and consumer behavior that if you didn’t have a digital strategy before, you’re figuring it out now.  As the CEO of Box, Aaron Levie said on Twitter, some companies will move faster in this new reality and others will grind to a halt.

The good news according to our guest today is that this rapid change of past decision making can feed right into a proven strategy for bridging the divide – a process called “Discovery-Driven Digital Transformation.”  In fact, that’s the title of her new article in the May-June 2020 issue of Harvard Business Review that she cowrote.

Our guest today is Rita McGrath.  She’s a professor at Columbia Business School and she joins me now.  Rita, thanks for being here.

RITA MCGRATH:  It’s a pleasure.  Thanks for having me.

CURT NICKISCH:  Let’s just start with what do you mean by discovery-driven digital transformation?  Digital transformation naturally is something that we all know.  What’s the discovery-driven part?

RITA MCGRATH:  Well the tendency when people see a big shift in their context coming, is to make a big move of some kind.  So there’s this sort of philosophy that says, if the shift in the environment is substantial, that you need to make an equivalently big shift in your strategy.  And the dilemma with that is that in a high uncertainty context, to make a big plan, to make a big splash you’re highly likely not to have that, right?

And so, what the process that I’m recommending is much more akin to the way you might approach an innovation program.  Where instead of launching it like a great big bang and running the risk of a huge failure, you take it more step by step.  So you plan to the limit of what you know and then you stop and say, well what have we learned since the last checkpoint that we had?  And depending on what your answer is, you plan and take the next step.  So it’s building up digital capability but in a very step-by-step kind of way.  And that also allows the organization to much more readily absorb the change.

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