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Digital technologies are radically changing how enterprises run, arguably with greater and deeper impact than that of any previous IT evolution. Many industries—and their competitive dynamics—will be forever altered.

There are challenges, however. The surge of digital transformation will also result in misguided efforts. In fact, our research indicates that if the right strategies aren’t adopted, nearly US$400 billion per year could end up in initiatives that return inadequate ROI. What’s more, these mistakes could provoke strategically dangerous delays in adopting digital business and operating models—and that could result in significant missed opportunities.

The current challenge has several root causes. For one thing, many established companies aren’t able to align initiatives to deliver measurable impact. As well, some are slow to embrace digital for the value chain beyond the front office. For other firms, the complexity of pre-existing, often “legacy” technology, processes—and sometime people—seems insurmountable.

Yet solutions exist. Our experience indicates that a combination of classic and cutting edge methods—specifically, Lean principles, advanced digital technologies and analytics, and a discovery process that involves design thinking—is powerful, practical and may prove effective for large enterprises. This approach can help companies do what the Lean startup movement has done for fast-growing challengers: harness digital’s revolutionary power in an agile way. It will also help prevent the digitization of broken processes, can simplify interventions and can discourage the bias towards small, tactical improvements that some Lean management practitioners have. Perhaps most important, these methods harness digital’s power to completely reimagine the middle and back office, thus unlocking disproportionate client value. Ultimately, the emergence of Lean Digital practices can help many generate material impact through the latest technology, faster.

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