Digitizing Isn’t the Same as Digital Transformation
Covid-19 accelerated the pace of many companies’ digital initiatives — and yet many executives are expressing concern that they’re actually falling behind on making the important choices that lead to differentiation. To win in the post-Covid world, leaders must re-imagine not just how your company works, but also what you do to create value in the digital era. The authors, who have studied more than a dozen companies that have truly transformed themselves, recommend three actions for leaders looking to secure their companies’ future: 1) Reimagine your place in the world, instead of focusing on digitizing what you already do; 2) Create value through ecosystems, rather than trying to do it all alone; and 3) Re-imagine your organization to enable a new model of value creation, rather than asking people to work in new ways within the confines of the old organizational model.
If your organization is busier than ever “digitizing,” you’re not alone. Digital efforts have been proliferating for years as companies strive to catch up with technological innovation. Covid-19 massively accelerated the pace, as many of our most basic activities, from grocery shopping to “going to work” moved online.
However, this accelerated wave of digital initiatives must not be confused with the real business transformation needed for success in the digital age. The former is mostly about enabling business as usual and “staying in the game,” while the latter is about building real, long-term competitive advantage to succeed.
Despite so much energy and investment in digitization, we are hearing many executives express concern that they are actually falling behind on making the important choices that lead to differentiation. They’re right to worry, because winning in the post-Covid world will require re-imagining not just how you work, but also what you do to create value in the digital era. No matter how many digital initiatives you implement, you can’t expect to win by being the same as your competitors — and they’re are all doing similar things, albeit at different speeds.
Instead, companies need to step back and fundamentally reconceive how they create value. They need to reimagine their place in the world, rethink how they create value through ecosystems, and transform their organizations to enable new models of value creation. The bottom line is companies need to shape their own future, recognizing that the world has fundamentally shifted, and that they must find their purpose in it. If you can’t answer the questions “Why are we here?” or “What unique value do we add for our customers?” then you are likely at best just staying in the game.
We’ve researched more than a dozen companies who have been hard at work to transform in this way since well before the pandemic struck. These companies have kept the momentum up amidst the worst recession and public health crisis of our lifetime, and their collective experiences contrast starkly with those focused on merely digitizing what they already do.
Exhibit one is Philips, which pre-Covid had looked at the future and decided to transform from a multi-industry, manufacturing-centric conglomerate to a company focused on health technology services and solutions. It shed its foundational business (lighting) and evolved from manufacturing and distributing products at scale, to bringing together hardware, software, data, clinical expertise and AI-enabled insights to support the delivery of better quality and lower cost health care.
When Covid-19 hit, Philips not only quickly designed and mass produced a new ventilator, it complemented it with biosensors that fed patient information into a remote monitoring platform to enable the safe care of highly contagious Covid-19 patients. Philips also deployed an online portal to help physicians in Dutch hospitals share related patient data.
