The Nine Elements of Digital Transformation

In-depth research with executives at a wide range of companies shows how managers can use technology to redefine their businesses.

George Westerman, Didier Bonnet, and Andrew McAfee Reading Time: 10 min 

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Digital transformation — the use of technology to radically improve performance or reach of enterprises — is a hot topic for companies across the globe. Executives in all industries are using digital advances such as analytics, mobility, social media and smart embedded devices as well as improving their use of traditional technologies such as ERP to change customer relationships, internal processes and value propositions. Other executives, seeing how fast digital technology disrupted media industries in the past decade, know they need to pay attention to changes in their industries now.

Where can you look for digital transformation opportunities? We interviewed 157 executives in 50 companies to find out. These companies are large — typically $1 billion or more in annual sales — and spanned 15 countries. To provide balanced perspectives, approximately half of the interviewees were business leaders such as CEOs, line of business managers, marketing heads or COOs, while the other half were IT and technology leaders.

The companies we interviewed are moving forward with digital transformation at varying paces and experiencing varying levels of success. Some are transforming many parts of their organizations while others are still doing only the basics. Others are encountering organizational issues or other challenges that prevent them from transforming successfully.

But one thing we found was clear. The best companies — those we call Digirati — combine digital activity with strong leadership to turn technology into transformation. This is what we call Digital Maturity. Companies vary in their digital maturity, and those that are more mature outperform those that are not.

Leading digital change requires managers to have a vision of how to transform their company for a digital world. So, where can you look? What digital activities represent good opportunities for your business?

Analysis of the interviews shows clear patterns. Executives are digitally transforming three key areas of their enterprises: customer experience, operational processes and business models. And each of these three pillars has three different elements that are changing. These nine elements form a set of building blocks for digital transformation.

Currently, no company in our sample has fully transformed all nine elements.

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About the Authors

George Westerman is a research scientist at the MIT Center for Digital Business. Didier Bonnet is global practice leader and executive sponsor of Digital Transformation at Capgemini Consulting. Andrew McAfee is assistant director at the MIT Center for Digital Business. This essay was excerpted and adapted from their report Digital Transformation: A Roadmap for Billion-Dollar Organizations, which was named one of the top five thought-leadership pieces of the decade by Whitespace/Source.com.

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Comments (15)
Ram Kumar
Excellent article and still relevant.  It is important that technology and business are lock step to make any digital transformation successful.  In my opinion the key to success is the identification of the focus area (s) that maximizes business value.
JOhan Snyman
Great Job, as a UNI Reference, tHe practicality hold true
Shashi Ranjan
The digital capabilities are increasing all fronts. And even the uneducated people are now becoming digital savvy. Having said this I would like to draw attention to the treats in digital age. For example banks are using ATM’s. People do go to ATM’s, the withdraw money or even deposit the money.
However the lively touch of speaking with bank employees fro a short moment has vanished. The bank transactions are becoming abstract and boring specially for the old people. They are already under the impression that no one cares for them. And the ATM’s are adding fuel to the fire. So are we really leading in the right direction.
Subsequently the number of frauds due to digitalization are increasing four fold.. Loot in banks due to ATM card miss handling is a common phenomenon. Bankruptcy due to duplicate ATM cards are tremendous. And this happens with educated elite class of people. People are loosing faith on bank employees and ATM kiosks. People are afraid to park vehicles in underground parkings, In spite of digital cameras all around in the parking. So the question again arises are we safe in the digital World.
Mehmet Akyuz
An article from 2014 but still relevant. Correctly pointing to the essential elements which differentiate digital transformation from any other transformation. Here is my attempt to list the Digital Transformation Anti-Patterns, basically a transformation without the core elements listed in this article. https://www.linkedin.com/pulse/how-successfully-fail-digital-transformation-mehmet-akyuz/
Alex Truedman
Agree, digital transformation is more of a journey rather than a single leap from paper-based to digital technology in experiences, workforce and operations. Great point on #worker enablement. This element of digital transformation refers to the whole step of transformation journey - preparing employees and leadership to changes. Acquiring digital competence is in fact, a serious part of the whole transformation strategy for any company on the way to digital innovation. Here we explain this step in more details https://goo.gl/LdKkpJ along with defining goals and building digital ecosystem within a company. Would appreciate your opinion. Thanks!
Zulfiqar Taj
Great article. I really like the point about how Digital Transformation is defined fundamentally about turning technology into transformation. 

I would like to share our experience in Digital Transformation but not sure which category this would fit. We are exploring the digital B2B platforms such as GT Nexus and SAP Ariba to help us with sourcing suppliers and logistic partners. The platforms provide sourcing options and collaboration never like before. I think such type of systems or platforms are true essence of value in extending the ecosystem of partners in a digitally connected world. We would never have found such options of sourcing in the physical world :)
Vertebrand Consulting
Quite an interesting and informative read on Digital Transformation...
Ravi Kulkarni
The digital capabilities are increasing all fronts. And even the uneducated people are now becoming digital savvy. Having said this I would like to draw attention to the treats in digital age. For example banks are using ATM's. People do go to ATM's, the withdraw money or even deposit the money. 
               However the lively touch of speaking with bank employees fro a short moment has vanished. The bank transactions are becoming abstract and boring specially for the old people. They are already under the impression that no one cares for them.  And the ATM's are adding fuel to the fire. So are we really leading in the right direction. 
             Subsequently the number of frauds due to digitalization are increasing four fold.. Loot in banks due to ATM card miss handling is a common phenomenon.  Bankruptcy due to duplicate ATM cards are tremendous. And this happens with educated elite class of people. People are loosing faith on bank employees and ATM kiosks. People are afraid to park vehicles in underground parkings, In spite of digital cameras all around in the parking.  So the question again arises are we safe in the digital World.
CIO Pages
All these are great elements.  However, a true digital capability map can help help companies get their arms around the entire set of digital business capabilities. It can be a foundational tool to assess the current state, plot the target state, and leverage the capabilities to evolve to the desired target state.  One such example list of capabilities is https://www.capstera.com/product/digital-business-capability-map/.
Ankush Borse
I enjoyed reading MIT Sloan and Cap Gemini about Nine elements of digital transformation dated January 7th, 2014 (https://dev03.mitsmr.io/article/the-nine-elements-of-digital-transformation/) and express my thankful appreciation for crisp clear information. I am very curious to seek your observation and opinion how those nine elements are evolved over few years in 2017 and what would be current Digital transformation entitles from business and technologies perspective as well as sustainability over the period of future course of technology evolution. 

I would humble take liberty to share my idea and intent to start "Digital Transformation User Group" which I am currently working on. And would like to refer your thoughts frameworks around Digital Transformation for presentation and reference material.
Martin Lois
Very informative article.
Kameshwar Singh
This is great article, consolidated almost all aspects of digitization.
Soumya patil
Well written I loved reading this article. I believe all the above elements are very essential for a successful digital transformation.  It all needs strong and supportive leadership with vision for organization. CIO is the critical link for empowerment from digital perspective.
Steve Fitzpatrick
Firstly thanks for the Article

One question:  Did you see any difference in approaches between Direct or in-direct companies in their approach? 

As working for a indirect business the last few years we have invested heavily on process digitization, with SAP and manufacturing Automation and very, very, specific worker enablement tools like perfumery creation app. Also using Customer/consumer understanding tools, for big data, ...  But have largely our Customer touch points haven't changed much.   is this the same with other indirect businesses?
Bhavi swadas
Great to know about all of the elements and I especially like 3rd one.