The new digital edge: Rethinking strategy for the postpandemic era

| Survey

One year into the COVID-19 crisis, our newest McKinsey Global Survey on digital strategy1 indicates that the pandemic has increased the pace of business and that technology capabilities will be critical to companies’ COVID-19 exit strategies as well as to what comes next. After seeing how the pandemic had sped up the adoption of digital technologies by several years, we took a closer look at how companies are rethinking the role of digital technology in their overall business strategy and how to conduct business at the quickening pace that’s now needed to operate.

The imperative for a strategic approach to technology is universal, yet some companies are already leading the pack; their responses show that better overall technology capabilities, talent, leadership, and resources (what we call a company’s “technology endowment”) are linked to better economic outcomes. At the same time, the results confirm that many organizations could be missing opportunities to invest in the areas of their business models that are most at risk of digital disruption.

The pandemic has dramatically increased the speed at which digital is fundamentally changing business

The COVID-19 pandemic has fundamentally changed the pace of business, and the companies with superior technology capabilities are winning the race.
Looking toward 2023, most companies will need to build new digital businesses to stay economically viable.
In all sectors, respondents report several areas of their businesses that are very vulnerable to digital disruption.

To meet new demands, companies are making digital and technology investments across the business model

Spending on digital and technology increased during the pandemic, despite belt-tightening elsewhere in the business.
After the acceleration of digital adoption during the pandemic, a majority of companies view technology capabilities as a strategic differentiator.
McKinsey Global Surveys

McKinsey’s original survey research

The highest-performing companies made bolder investments in technology and possess stronger overall capabilities

Top performers are already significantly ahead of their peers on almost all elements of their technology endowment, making catching up a challenge.
Top performers are more likely than their peers to fill talent gaps through hiring.
Compared with their peers, the top economic performers have been more likely to invest in new partnerships, talent, and R&D.
Top economic performers were more innovative than their peers during the COVID-19 crisis.
Looking ahead, top economic performers are planning to double down  on tech as a differentiator.

Tech-savvy leadership helped set top performers apart—and will be even more valuable in the future

Effective digital- and technology-driven strategies require deep involvement from technology leaders.
Organizations with tech-savvy leadership teams significantly outperformed their peers in their ability to build top-performing tech endowments.
Across the leadership team, the call to become more tech savvy is urgent—even for roles that have typically engaged very little with technology.

Looking ahead

The corporate recovery from the COVID-19 crisis will involve permanent changes to many dimensions of an organization: the pace at which it conducts its business, the very nature of that business’s value proposition, and the talent, capabilities, and leadership that are necessary for success. With digital and technology-driven disruptions creating winner-takes-all dynamics in more and more industries, only a small subset of organizations is likely to thrive—and even these companies have much more room to strengthen their technology endowments. Our survey results confirm not only that a strong technology foundation is critical but also that leading companies are far ahead of competitors in building theirs. For everyone else, the time is now to make bold investments in technology and capabilities that will equip their businesses to outperform others in a rapidly evolving landscape .

The time is now for companies to make bold investments in technology and capabilities that will equip their businesses to outperform others.

1The online survey was in the field from January 19 to January 29, 2021, and garnered responses from 1,140 C-level executives, senior managers, and business-unit, department, or division heads representing the full range of regions, industries, company sizes, and functional specialties.
2Companies with a top-decile tech endowment are those where respondents strongly agreed with at least seven statements (out of 13 total) about the role of technology in their organizations’ strategies and the overall role of technology in their organizations; n = 158.
3Respondents who report increases of at least 15 percent in their companies’ revenue and in earnings before interest and taxes (EBIT) over the past three years.
4That is, company leaders who respond in a well-informed manner when others raise decisions related to technology.
5That is, company leaders who respond sporadically and not always in a well-informed manner in technology-related discussions or who are not engaged at all in technology-related discussions.
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