World Economic Forum
This article originally appeared on the World Economic Forum Global Agenda.
"Digital will be like air." This statement came from one executive at a recent workshop on digital strategy organized by the World Economic Forum, but it could have been said by almost anyone there that day.
In November, approximately 20 global executives from across industries met in London to discuss how to become a digital enterprise, as well as the challenges faced and lessons learned along the way.
Digital transformation is a topic of rich and vital discussion in boardrooms and among executive teams around the world. Here are some insights on what it takes to lead and deliver a digital transformation.
The group agreed that Step 1 on that journey is establishing a digital strategy. This requires understanding your point of departure, the direction your industry is headed in and the role your company should play in that digital future, and then articulating the path forward for the organization.
Yes, these are challenges executives have faced for decades, but getting to the right answer feels harder today, the group agreed. The pace of change is faster and more relentless, the level of uncertainty higher and the degree of complexity greater than it has ever been. In addition, digital natives appear to be playing by different rules—and winning.
What does my industry look like in 5, 10, 20 years?
Imagining the future is not straightforward. Customers can’t tell you what they want when the technology hasn’t been invented yet. Global footprints create vastly different starting points and trajectories. Can there be one industry direction when part of the business is in a Western market with near universal high-speed Internet access and another part is in a developing market with daily power outages? Further, digital natives tend to disregard traditional business boundaries, making it extraordinarily hard to know who your future competitors will be and what will be required to win. Today Amazon, for example, has extended from dozens of retail markets to media, cloud storage and business-to-business services.
Yet, after discussion, the group agreed that the future is more knowable than it might seem. A general sense of direction is discernible if you ask the right questions. For example:
- If you had a movie of your customers purchasing and interacting with your products and services in 10 years, what would you see?
- What are the most hated parts of your industry, and how could they be disrupted?
- Who are your partners today, and which of them could be competitors in the future?
- How could someone take out 50% of the costs in your industry using digital technologies?
How should I play and win in a digital future?
Even when you know where your industry is heading, it’s not always easy to decide what role your company should play in that future. During the November workshop, this was the source of a number of tough questions that the group wrestled with in their discussions. Among them: Will the capabilities and assets that differentiate my company today be the same ones that differentiate it in the future? Will I need new skills and expertise to be successful in the future? Is it better to be a first mover or a fast follower?
On that final question, there was robust debate. Executives asked, if we sit still, will we be left behind? If we move too fast, will we get too far ahead of customers? One executive said, “My customers don’t want to hear the words ‘disruption’ and ‘transformative.’ They want to hear ‘stability,’ ‘reliability’ and ‘proven.’” Another countered, “If you don’t move first, you’re ceding the market.”
Though such a complex evaluation can’t be concluded in the course of a workshop, the group did come to one right answer: Everyone must have a perspective on how urgently to act, and start moving now even if just testing the waters.
Bain Partner Mário Conde describes three questions that companies should ask themselves when imagining their future in the digital marketplace.
How do I make real progress without being certain where I am headed?
About half the group felt they had a good grasp on industry direction and how to develop a clear vision. Where most in the group struggled, it became evident, was in developing the path forward.
The group found that traditional roadmaps don’t apply—they’re too linear, too static and not always ambitious enough. Instead, we spoke about the importance of having an aspirational view of the future, and at the same time starting to make progress today. One participant likened this to his personal goal of climbing Mt. Fuji. He knows he wants to tackle this, but doesn’t know exactly when it will fit into his schedule. In the meantime, he’s started an exercise program—a good first step under any circumstance but one that will also move him toward his longer-term aspiration.
In the corporate context, it is necessary to convey a sense of long-term direction to employees and other stakeholders, articulate the concrete steps the organization needs to take in the near term, and at the same time allow for flexibility to evolve along the way. The group articulated this concept as waves and stepping-stones. Waves described the successive evolutions the business must go through to move toward the future it envisions. Stepping-stones described the tactical, near-term actions that start to move the organization in the right direction.
Deploying this approach is challenging but not impossible, as our experience at Kaiser Permanente has shown.
At Kaiser Permanente we have undergone several waves of digital transformation, and adjusted course along the way. Our initial wave focused on the creation of a multibillion-dollar digital enterprise platform, including electronic health records for all individual customers.
We implemented critical stepping-stones, such as identifying and then collecting the patient information needed. We set challenging goals, like significantly reducing the length of stay in hospitals.
Those advances helped point the way to our next wave, still underway. Again, we have articulated broad goals—changing the experience of individuals as they interact with healthcare providers—and identified near-term actions, such as deploying specific mobile patient apps. Of course there are challenges, but we are seeing signs of success: In 2016, more than 50% of our ambulatory patient visits were conducted through virtual digital channels, as patients changed how and where they got their medical care.
The journey is ongoing, and the next wave will need to address bold moves. In the United States, patient expectations continue to shift, costs are exploding and regulation is uncertain. Data-informed medical decision making will have profound impact on the field, but how that will take shape is not yet fully understood.
None of us claimed to have all the answers to what a good digital strategy looks like or how to define one. But we all believed that knowing where our industry is headed, developing a long-term view on how our company will play and win in that digital future, and putting in place a plan defined by waves and stepping-stones, which sets a direction toward that vision while providing some flexibility, seemed like a helpful construct to use as we move toward our digital futures.
Jamie Ferguson is a fellow at the Institute for Health Policy and vice president, Health Information Technology Strategy and Policy, at Kaiser Permanente. Nate Anderson is a partner with Bain & Company in Chicago.