McKinsey Quarterly2018 Number 2 McKinsey Quarterly = AT me Digital disruption is hitting every industry at varying speeds and intensity, Executives know this, and they also recognize that time is of the essence ‘ecospbaaggetina ie reatorm cgta om a threat into an opportunity. ‘That urgency, though, sometimes gives rise to haphazard responses, such as the one described by McKinsey director Angus Dawson ina recent McKinsey Podcast: Twas having a conversation witha client a couple of weeks ago. They went through what they were describing as their digital strategy. Having explored ita bit with them, we ended up coming to an agreement that what they had wasn'ta digital strategy, it was a list of priorities for digitization. Explicitly it was ‘how are we going to reduce the cycle time in our end-to-end processes, how are ‘we going o improve the customer experience and build new apps, and so forth. twas about how they digitize. twas not actualy the choices they were making stboutabig disruptive economic force... The word “strategy” used (00 loosely with di digitization, not the choices we're going to ‘make in terms of where and how we compete... | Listen to the podcast with Angus and Martin Hirt, the global knowledge devel- ‘opment leader for McK insey’s Strategy Practice, on ‘Tunes or McKinsey.com, And read about how to make those strategic choices in this issue's cover: story, where Angus, Martin, and their colleague Jay Scanlan lay out “The eco- | homic essentials of digital strategy.” To getstrategic about digital, - need to ground it in economies, starting with the fundamentals of supplyOn the « | | and demand. The importance of those fundamentals is reinforced by new research from the McKinsey Global Institute, which shows that the economic impact of digital information flows is rapidly overtaking that ul suggests several priorities ior leaders seeking to exploit the resulting opportunities, of traditional trade in goodsand services, forsi A powerful digital strategy, of course, isa necessary but not sufficient condition forsuccess in the digital age. Truly being digital also requires transforming corporate operating model ue of the Quarterly offers perspectives from McKins ning officer Nick van Dam and two colleagues on the shift underway toward a “blended” learning model that integrates digital platforms with personal ‘engagement, You'll find an article by three MeKinsey HR experts on the role digital tools ean play in upendling our outdated, inefficient, and often frustrating systems for evaluating peopleand giving feedback on their perform. ance. Digital communications platforms also havea powerful role to play number of critical areas. For example, this 'schiefles in galv. Sel nizing support fi say McKinsey’s Tessa Basford and Bill wer in, “Winning isin the 2ist century.” Integrating an effective digital strategy with a rational setof digital initiatives. isa leadership challenge of the first order, "Leading in the digital age Coffer wiscdom on how to navigate from two seasoned business leaders and two academies. And who better than Ed Catmull, who cofounded and: Pixar, the company that created the world film, to inspire the digital leaders of tomorrow? Interviewing Catmull was reat. His management approach, which emphasizes embracing me sending subtle signals, and counteracting fear, is avaluable reminder that lNleads rst computer-animated feature Feature even in the most digital organizations, people make all the difference. Y a Allen P. Webb Editor in chief, Seattle office McKinsey & Company