How do digital companies succeed?

Want a successful digital company? Then McKinsey‘s Kate Smaje has advice on how you need to work. Find out the secrets of going digital and what you need to think about:

Needless to say you have to get the basics right such as having a product/service that the market wants, timing and so forth. Apart from that, according to Kate Smaje, it’s a bit like playing tennis “companies that are doing well digitally aim where the ball should be. They focus on where the ball is going and what disruptions could hit and challenge it.

Think long term

Short term focus doesn’t work, you need to focus on what will happen years from now.

If you already have a company, ask yourself if your current business model will work in the future. If not, you need to create a new and very different one. And contemplate if you are innovative and big enough when you convert how you operate.

Tough decisions the name of the game

You need to be willing and brave enough to take tough decisions in several ways. Have the guts to face what you need to stop doing now. An example Kate Smaje mentions is a company that knew they were spending too much money on apps and decided to use only 2-3 of them and focus investment on just those few.

Creative destruction policy

Speed is also of essence once the first core decisions have been taken. A great idea that was implemented but didn’t work out as well as planned needs to be abolished. Successful digital companies have a creative destruction policy and when something fails they simply move on.

A company that holds on to such ideas divert management attention and resources away from moving on to the next step. The next strategy may only be 20% different but 20 times better.

Are you interested in going digital? If so, have you started yet? Are you developing a new idea that is going to start up as a digital company? Or, do you already have a business that you would like to turn into a digital one? Do you have the guts and long term thinking Kate Smaje says the successful ones have? Are you brave enough to let go of the past? Even ideas that have worked for your company for decades? What do you hope to achieve with a digital company? 

Video: McKinsey & Co.

38 thoughts on “How do digital companies succeed?

  1. Interesting, sorry I missed it. I totally agree with what Kate Smaje where she says that companies are to look forward and shoot for what they want their company to offer in the future and what the world will want in the future. Hopefully companies have people in the company that only think about where the company wants to go and what they want to do 5 year from now and then help others see and help implement the vision. Thank you.

  2. I have an internet based company so we went digital years ago. With that said things are still changing. We just launched html emails from our website to make the experience more user friendly to our customers. Our eproofs customer's approve to see their logo on the item online is another way of going digital. Business is growing because of the ease of the digital world.
    My recent post New Google Logo and How an Updated Logo Reflects Your Business

    1. Being a veteran when it comes to digital companies, where do you see your company a couple of years from now, Arleen? What changes will you have had to do in order to be competitive and so forth?

  3. My editing and writing business have evolved in the digital realm. It's only a couple years in and after a shift to full-time that I am considering reaching out to local clients. So in many ways the shift to "in-person" contacts seems more challenging to me than the contacts I made online.

  4. I took heart when she says that you need to make decisions quickly. If an idea isn't working don't keep "flogging" it. So true. I wish I had known to take that advice 20 years ago when my business wasn't succeeding but I considered it a personal failure if I gave up so kept flogging. Big mistake. You've got to be smart and realize when something isn't working and move on.
    My recent post How Could You Cheat on Us Like You Did, Volkswagen?

  5. I agree with what a lot of comments are saying and was pointed out in the article. Speed is essential when it comes to digital companies. By its own definition, being a digital company, it must have speed. The world now can change in less than a sec, and if a company does not anticipate it, or adopt to it, they will be left behind.
    Thanks for sharing this informative post with us.

  6. One of the most important points she is making is the speed with which you have to act as a digital company. Whether you succeed or fail with a particular effort what matters is that you keep moving. It's a lesson that a lot of older companies failed to learn. Many tried to migrate pre-digital stuff online and waited for it to work the way it had in the past. Newspapers are a good example. They lost ground initially by focusing on simply migrating what they did in print to an online format.

  7. I can see how thinking long-term makes such a difference. Companies that can’t change with the times remain stuck. I know that happened with a lot of bookstores. Successful chains went out of business with the advent of digital readers. Some could adapt and look at the bigger picture. Others quickly became outdated. The digital world is a bit scary because it does change so quickly. But it is important to embrace since, without it, you are left behind.

  8. Good to see another enterprising Brit with the Golden Gate Bridge in the background! Businesses need to move with the times but it's always scary to make major policy shifts. But the example Kate uses of consolidating apps, is really just common sense akin to finding the best places to advertise and sticking with those rather than spreading your ad. budget too thin in areas that have little return. Good to "see" you again Catarina:-)
    My recent post Lack of fREADom Sucks…No More Banned #Books

    1. Is the woman in the Airbnb picture British, AK? Today business is taking a huge policy shift. Starting and running a digital company like Airbnb is very different from a normal company.

  9. I love the concept of creative destruction and its shameless nature. So often bad ideas just keep being dragged along until they finally make an organization falter.

  10. Catarina, I like the term ‘creative destruction’ and I think including this in any management plan would make it easier to let go of ideas that didn’t’ work. Someone (or several someones) developed the ‘good’ idea and knowing it was good but having to let it go would be hard. Using a term like creative destruction when making that decision somehow seems to say “It’s a good idea but not for this time”.

  11. A good post Catarina. I think there's a fundamental difference between existing companies looking to go digital, and somebody looking to start a digital company, though. Existing companies need to look at their existing model, as Kate says, and determine how that business will change over the next few years due to the digital impact, and work towards that. A new business, though, is about finding an unmet need now, and addressing that – adapting it as the business progresses.

    The key to both, though, is adaptability – be prepared to adapt your plans as things evolve in unforeseen directions (the impact of the iPad when introduced in April 2010 is a classic case here, for example), and learn from your failures, while continuing to innovate.

  12. Excellent topic and one that many Entrepreneurs find particularly challenging. In the beginning you’re so anxious to get started, to make something happen now, it’s hard to focus on the future beyond just getting to a point where you’re finally in the black. Also sometimes the vision morphs once you get into the thick of the business at hand.

    When I left coaching I was burned out and wanted nothing more than to write and I’ve really enjoyed that. But for the past year or so I’ve been mentoring a few people here and there and gradually shifting back toward coaching so I’m just in the process of a rebranding initiative in preparation to shift to online coaching. Given my frame of mind at the beginning of this particular journey I never would have seen myself where I am today, but looking forward I have a very clear path in mind for the next year, five years, ten years … and it feels great! Terrific article and advice!

  13. Everything moves so fast and our business must remain 'current' in order to stay ahead. At times we have to let go of old ideas to make way for new ones even if they once worked.

  14. This is such good advice. It’s fairly easy to get rid of all the apps that aren’t needed. A brainstorming session could sort them out pretty fast. I think it is harder to let go of a great idea that didn’t work. So much time and effort is wasted in trying to make it better when it should just be let go.

  15. Insightful post, Catarina. As an freelance writer and author, I was pre-occupied to sell my written words in paper format. I had to make the transition to digital, first with my freelance clients, and then with my own core business of Chocolatour, where the books are no longer the pivotal focus of my world. Yes, I'd like to sell more books, and many are now seeking the digital version, which I do offer. But I am now much more, offering events and other such things which are slowly taking priority over the written words. If we let our businesses evolve organically, it generally ends up going in the right direction.

  16. She's so articulate. I enjoyed the video very much and though I like the idea of knowing where the ball is going, it's pretty challenging to surmise what the future holds, given the leaps and bounds technology continues to take. Si I would agree that flexibility is key, in addition to those hard decisions including creative destruction!

    1. She's spot on, isn't she, Jacqueline. And what she says is not only relevant to digital companies but most things in life. Where to we want the ball to go? It's often detrimental to base what we say and do on past experiences but we frequently do. Not least when we answer someone.

Leave a Reply

Your email address will not be published. Required fields are marked *