We’re all familiar with the stories of Blockbuster Video, Radio Shack, and Kodak—business school case studies on failing to anticipate future market needs—but are we effectively preparing our own companies to avoid the same fate?
I’d argue not. In today’s hyperconnected, technology-driven world, companies must invest in digital transformation to survive. But BCG estimates that only 30% of companies navigate a digital transformation successfully. Two of the most common reasons for failure are that companies try to completely reinvent themselves and lose their core DNA in the process, or they fail to recognize disruptive forces until they’re already causing businesses to plateau or decline.
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Successful digital transformation requires leaders to 1) embrace a “both, and” mindset that enables them to preserve what they’re good at while implementing new technologies, processes, and services to prepare for the future, and 2) focus more diligently on external forces and how they should impact strategy. Here are three other strategies executives should keep in mind when positioning themselves for the future:
Think 10x
Use “10X thinking” to help you identify where you want to go. This involves coming up with radical solutions to big problems—solutions that provide a 10x improvement rather than incremental improvement—and asking “why not?” instead of “why should we?”
A classic example of a company that successfully applied 10X thinking to stay relevant is Netflix, which moved from mailing DVDs to streaming movies online to developing and producing original content. Their ability to see and invest in building capabilities for the next frontier before their current business model started declining has been key to their success. Their core mission to offer entertainment hasn’t changed; they’ve transformed how, where, and what to deliver through each iteration, anticipating major shifts in consumer expectations and leveraging technology as a platform enabler. Microsoft’s recent $10 billion investment in OpenAI will be another example to watch.
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Start with tangible problems worth solving.
To drive a successful 10x transformation, start by focusing on a specific problem to solve for customers rather than attempting to reinvent everything all at once. Doing so can prevent you from having to scope requirements and find a budget for a massive transformation initiative that may ultimately move too slowly and generate minimal value.
I learned the value of defining scope shortly after joining Google and laying out a vision to enable data interoperability for health devices, which included remote patient monitoring, consumer wearables and medical devices. These connected devices generate enormous amounts of data that can provide a more holistic view of patients across the care continuum. However, with one billion connected health devices in the world today, trying to solve for many variations of technology all at once was unmanageable. An experienced engineer advised me to “start with one device and solve for that”—advice that made all the difference. We started by solving for one device but designed the underlying architecture to accommodate more devices over time.
Be both open and closed.
After identifying the 10X vision and relevant problems to solve, companies must understand and gather the required capabilities—whether that means building, buying, or partnering. Typically, organizations fail by being either too internally or externally focused—either wanting to build everything inside the company or sourcing everything from outside. To develop a clear perspective on what should be open vs. closed, leaders must ask these two questions:
- What are the capabilities required for digital transformation that the company does not currently have and may take significant time and resources to build internally? These often include technical infrastructure, software development tools and talent, customer experience design, and new go-to-market models. These are areas that should be open and addressed via an ecosystem of partners and/or buying the capability (keeping in mind that acquisitions can take time).
- What are the company’s critical assets and strengths that we must preserve? These likely include their customers and clients, domain expertise and IP, key suppliers, regulatory relationships, and top business talent. These are areas that should be maintained and protected.
Execution of your digital transformation strategy requires a balance of both an open and closed approach. Finding the right balance for your company is an important topic for executives and boards to discuss.
Regardless of industry, all legacy companies should be preparing themselves for digital disruption. This may seem daunting, but I can guarantee it will be less painful to start disrupting your own processes today than to find yourself disrupted—or even replaced—tomorrow.
Picture: z_wei, Getty Images
Alissa is a senior health technology executive with over 20 years of global MedTech and Consumer Goods experience. She currently leads MedTech Strategy and Solutions for Google Cloud, working closely with C-Suite executives at healthcare organizations to drive digital transformation.
Previously, she was Vice President at Johnson & Johnson and led multibillion-dollar international businesses in operational and strategic roles while living in the United States, China, and the Europe, Middle East and Africa region. Prior to her business career, she traveled and performed around the world as a professional modern dancer.
Alissa earned a bachelor’s degree in English from Princeton University and an MBA from Columbia Business School. She is a Henry Crown Fellow of the Aspen Institute and serves as a member of the Board of Trustees of American Ballet Theatre and the Board of Directors of ePrep, Inc.
