Leading in an Era of Digital Disruption
Last week, I attended the “Road to Reinvention: Leadership in the Digital Age” put on by the UCI Center for Digital Transformation. To be honest from the first presentation, I was amazed how three ideas explained everything that would follow. First is that businesses need to reimagine their product offerings. How can digital capabilities/software be added, especially to physical products, in order to change their value proposition? Second is that businesses must look for opportunities to redesign their existing business models and revenue sources. And third is that business leaders need to build adaptive organizations that can respond to change faster. Lots of amazing examples were given of each of these.
Vijay Gurbaxani, the Center’s Director, said that “companies that win going forward need to be software companies too–the move for all companies is to compete on software capabilities”. He went on to say that we now live in an ideas generated world where more value is generated by software than physical devices. Software has become the driver of revenue.
Transforming the value of industrial equipment
Bill Ruh from GE said that as a 124 year old company, GE has recently transformed 60% of where its revenue comes from. I don’t know about you, but I find this number amazing. GE is now an industrial company, but in the future, it will be a digital industrial company. Bill asserted that, with analytics and data, the value from their offerings is transferred from the things they build to the services (software) that surrounds the things we build. For this reason, the center point for all of their businesses is becoming their digital services business. Today, “the game is about creating the most efficiency around an asset–a machine, a factory, etc.” Bill said to continue to have value and not get eclipsed, GE has needed to own the software that surrounds its products. Software becomes how value is derived for an asset. For GE, he believes their killer app is predictive maintenance. This lets them manage something bigger–to change their business operating model. Klaus Schwab of the World Economic Forum finds the same thing when he says “data powered business operating models create new revenue sources” (The Fourth Industrial Revolution, Klaus Schwab, pg. 59).
Transforming where the customer receives value
GE was followed by Roxanne Austin. Roxanne is on Target’s Board. They have likewise seen the importance of data and analytics. She said that they had determined that Target “would not grow if they weren’t relevant to our customers”. Before they hired Brian Cornell, they realized that they had to catch up digitally. Brian Cornell had led business transformation and change management as well as the digital revolution forward at multiple retailers. Roxanne said that a skill at analytics was needed and the ability to make this how the business was run daily–this meant they needed not only data and analytics but to behavior change. Today, they look multiple times a day at things that need response. As part of this, she said that they are starting to view the mobile phone as storefront. At the same time, they are turning stores into fulfillment centers. Roxanne said one more thing. Brian knows that data is not alone the synthesis for a decision. He wrappers data with qualitative analysis and focus groups. He even spends time doing what is called immersion research at customer’s homes. For this reason, Roxanne agreed when asked that today’s CEO needs to have analytic skills and a data orientation.
Transform healthcare outcomes
Julie Hill, Anthem Board, said disruption is coming their way too. We have been pretty stayed for a long time. Historically, we viewed Ford Motor for example as their only customer. The Affordable Care Act, however, has changed everything. It no longer works to have 7 platforms to collect metrics around performance. The opportunity for us today is to “mine the metadata for healthcare outcomes”. This is a huge cultural shift, but it is a moral imperative and increasingly, an economic imperative
Transforming guest experience
Finally, attendees heard from Vivek Sharma, SVP, Digital Guest Experience for Disney Parks and Resorts. Disney is using digital to transform their business advantage around their customer experience. They are using digital to make a “customer’s experience more magical”. They are doing this by using “magic bands” to allow guests to reserve what they want. Bands can be used for access to the park, to personalize your experience, to open your room door, to buy dinner, and to even buy and store merchandise. And more interesting thing is Vivek sees digital guest experience taking the anxiety out of a Disney Vacation. Simply put Vivek see digital as a way to enhancing what is delivered from the physical experience.
Vivek Sharma in closing said that Disney uses technology to enhance “the core value proposition of their organization”. In their case, this is to enhance customer experience. But as we have seen in each of the four case studies, digital/software is changing how business is done forever. In each of these cases, we see how existing businesses are perpetuating to have the right to win by doing one thing. That thing is putting data at their core and using it to gain business advantage. Clearly, business should continue to focus using data, analytics, and applications to enhance the core value proposition of their organizations. The question you should be asking is are you ready and do you need to learn more about creating business disruption in your industry. If the answer is yes, then I would like to invite you to a summit that will help you answer this question for your business. The Data Disruption Summit is about enabling all types of businesses to reconsider their competitive advantage and the role of data in their business. To learn more, please click this Web Link.