Rewired

"A digital transformation is the effort to rewire a company to create value by continuously deploying technology at scale."

— Eric Lamarre, Kate Smaje and Rodney Zemmel

The three authors are McKinsey partners and wrote Rewired after accompanying hundreds of companies through digital transformations, many of which failed to achieve the value they sought. The pattern to avoid is this: companies buy technology, hire consultants and launch pilots, and two years later they have dozens of proofs of concept and no change in business results. The cause isn't the technology; it's that transformation requires rebuilding how the company operates.

The method is six capabilities built in parallel:

• Business-led roadmap. Not a list of technologies, but a few business domains (sales, collections, service) where technology will move the main business indicator, with owners and economic targets.
• Talent. In-house engineers, data scientists and product designers, not just vendors, which forces a change in how people are hired, paid and developed.
• Operating model. Small, multidisciplinary teams that own a product or a process end to end, with autonomy and agile cadence.
• Technology. A cloud, modular, automated architecture that lets many teams deliver without getting in each other's way.
• Data. Clean, governed, accessible and reusable data, because AI runs on orderly data.
• Adoption and scaling. Change management, measuring the value captured and the discipline of taking a pilot to the whole operation.

The authors insist that most companies invest in technology and operating model, and neglect the roadmap and adoption. That's why they build capability without capturing value.

The difference between doing it well and doing it badly shows quickly. Done well, the CEO and the business heads lead the transformation and the technology area supports them, and each domain has a target in dollars. Done badly, the technology area leads it alone, the business watches and the goal is measured in number of pilots.

A simple place to begin, startup edition: choose a single domain of your business where AI can measurably move revenue or costs. Assign it an owner who isn't from technology, put together a team of three combining business, data and engineering, and set the target in money at ninety days.

As a founder it will help you decide in which capabilities your company is born with an advantage for being digital and in which ones you have to invest deliberately. And if your customer is an established company, it's the map for understanding why change is so hard for them and how to help.