Digital-physical mashups

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This article originally appeared in Harvard Business Review (subscription required).

In the early days of the digital revolution, many leaders of established companies did their best to ignore the upheaval, convinced that the threat from new technologies wouldn’t ever amount to much. As that premise faltered, many flipped in their thinking, concluding that digital would inexorably destroy their positions. To survive, it seemed, they’d have to stop throwing money at the old businesses, salvage what they could, and launch independent digital ventures. The existing units probably wouldn’t survive, but disruptive digital businesses could replace the zombies in a company’s portfolio.

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Both views proved misguided. The failure of the first hardly needs elaboration: No company can safely ignore the changes wrought by digital technologies. The failure of the second may be less obvious but is now well documented. Companies that milked existing businesses while betting on independent digital start-ups that had no competitive advantages usually wound up discarding decades’ worth of physical assets and gambling away millions in real value. Sears Holdings may be the poster child for this kind of miscalculation: Underinvesting in its stores while pouring resources into online ventures, it has suffered a 75% decline in stock price over the past seven years. Similar examples crop up in many industries.

Read the full article in Harvard Business Review (subscription required)

Darrell K. Rigby is a partner in the Boston office of Bain & Company and heads the firm’s global retail practice. He is the author of Winning in Turbulence (Harvard Business Review Press, 2009), among other books.

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Partner Darrell Rigby discusses how companies can fuse digital and physical retail experiences to engage customers in this webinar hosted by the Harvard Business Review. View