Here is a brief excerpt from an article written by David Edelman, Nathan Marston, and Paul Willmott for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out other resources, learn more about the firm, obtain subscription information, and register to receive email alerts, please click here.

To learn more about the McKinsey Quarterly, please click here.

* * *

Scaling digital models across the business is a high-risk endeavor, which explains why so many organizations struggle with it. The dynamics of deciding where to place bets and where to pull back will happen much more quickly than before, requiring new capabilities in three important areas.

Disruption of the workforce: Hiring new talent is one of the most important strategies for transformation. But that’s just one step. Leadership teams should also consider moving high performers out of legacy operations and into digital divisions or businesses. Focusing staffing and training efforts on newer parts of the business will build up those channels more quickly while sending a strong message to the rest of the organization that the career path goes directly through digital. In general, digital teams should have a mix of cross-functional talent that connects to back-office areas such as legal and finance to drive innovation more deeply into these core operations.

Disruption of core processes and priorities: Leadership teams can reinforce the new vision by adjusting some of their organization’s long-standing reporting structures, processes, and incentives. One global retailer has created a pool for over-the-top funding to all divisions for making digital progress, ensuring that digital investment remains strong even if cuts are needed elsewhere. A packaged-goods company has redesigned all of its planning processes and templates to prioritize building direct digital ties to consumers, with incentives in place for expanding opt-in lists and mobile-alert permissions. These types of changes to resource allocation and sales compensation are critical in motivating people to adjust their behaviors.

Disruption of the budget: The most direct way to scale digital disruption is to reallocate budgets, increasing investments in digital programs while explicitly managing down expenses in traditional channels or systems. This approach requires thinking about explicit shifts in how you aim to have customers interact with you and pulling out costs from legacy infrastructure. It also requires organizations to develop “surround” architectures that freeze spending on legacy systems and direct investment to the layers closer to customer interaction, as well as to replace the core with more dynamic systems of record eventually. The shifts can be painful but often are critical to increasing organizational attention on high-growth areas.

Many disruptive strategies fail to gain traction, for myriad reasons. For companies that are serious about becoming digital leaders, however, embracing disruption requires a commitment to scaling it.

* * *

Here is a direct link to the complete article.

David Edelman is a principal in McKinsey’s Boston office; Nathan Marston is a principal in the London office, where Paul Willmott is a director.