You can’t avoid the digital dimension of your business, even if you wanted to!

Rita McGrath
7 min readMay 6, 2022

Asking what your digital strategy is today is a lot like asking what your electricity strategy was at the turn of the last century. Seems absurd. Yet both questions reflect how a shift in an underlying technology fundamentally changes what is possible.

Electrification of factories and plants took a long time. I mean, a really long time. Usable electric light bulbs were invented in the 1870’s. Thomas Edison build electricity generating plants in New York City and London in 1881. Yet, by 1900, less than 5% of mechanical drive power was supplied by electric motors. Instead, the last-generation technology, steam power, stubbornly remained the go-to technology for manufacturers. The norm for factories at the time was that they were powered by a central source — a massive steam engine or a river, for instance. That meant that every operation within the complex was designed around the logic of a central driveshaft, with ingenious devices connected to it by pulleys, ropes and ties.

Once small electric motors were introduced, it became possible for every station in a factory to operate on its own power, when and as needed. But to take advantage of that new capability required rethinking everything — how equipment was built and used, how workers were recruited, trained and paid, how costs were allocated, and a myriad of other major shifts in operations. No wonder the early factory owners balked at making such a momentous shift. Indeed, just as leaders today try to do what they have always done but use digital to make it faster and cheaper, leaders then tried to use electricity but to keep their factories more or less the same.

Eventually, of course, the old steam engines simply were not able to compete with new firms taking advantage of the brand new capabilities electrification offered. One example was Ford’s invention of the production line, which revolutionized manufacturing, making formerly expensive and inaccessible goods affordable, and ushering in an era of skyrocketing productivity.

Rita McGrath

Columbia Business School Professor. Thinkers50 top 10 & #1 in strategy. Bestselling author of The End of Competitive Advantage & Seeing Around Corners.