Barbara Casey Sr. Director, Healthcare Business ...nchica.org/wp-content/uploads/2016/08/Casey.pdf• A defensive strategy to maximize gains when a digital disruptor fundamentally

Digital Disruption: Will you be the disruptor or the disrupted? Barbara Casey Sr. Director, Healthcare Business Transformation

© 2015 Global Center for Digital Business Transformation. All rights reserved.

To Understand the State of Digital Disruption, We Conducted a Study

Assessed industries’ vulnerability to digital disruption:

Interviews with 941 business leaders across 12 industries and 13 countries

Analysis of market data, looking at investment, timing, means, and impact

Ranking of industries according to their proximity to the center of the “Digital Vortex”


Digital Technologies and Business Models Are Disrupting and Redefining Industries


Seismic Changes Will Displace Nearly 40% of Top Incumbents, and It Will Happen Soon

Source: Digital Vortex, Global Center for Digital Business Transformation 2015

Technology Products and Services

Telecommunications

Education

Pharmaceuticals

Oil and Gas

Utilities

Retail Media and Entertainment

Financial Services CPG and Manufacturing

Healthcare

Greater Risk

Less Risk

2.5

Hospitality/Travel 4.3

3.5

What’s surprising is that, while businesses see the threat

of digital disruption, most are not responding adequately.

Source: Global Center for Digital Business Transformation, 2015.

Say digital disruption is not

worthy of

board-level attention

55%

Are actively responding by

digitally disrupting their

own business

…Yet, only

25%

Acknowledge digital disruption

as a major business issue, but

are not responding to it

47%


Percentage of respondents who “somewhat” or “strongly” agree with each of the statements

Even with the Risk of Market Turbulence, Most See Digital Disruption as a Force for Good

66% empowers people

63% good for society

72% improves value for

customers

75% form of progress

63% improves quality of life

Into the Vortex: The Speed of Disruption


The Pace of Change is Happening at Incremental Speed

Time to reach 50 Million Users

Telephone Radio TV Internet Facebook Angry Birds Pokemon Go

35 Years

13 Years

4 Years 3.5 Years 35 Days

75 Million users

in less than

1 week

75 Years


Technology

Products &

Services

Pharmaceuticals

Oil & Gas

Utilities

CPG &

Manufacturing

Hospitality

& Travel

2 Media &

Entertainment

4 Financial Services

5 Telecommunications

Education

11

10

8

1

6

Healthcare is

among those

industries most

vulnerable

to disruption

7

12

9 Healthcare

3 Retail


For Many, Disruption Will Come from Incumbents Inside Their Industry …

… but those in already-disrupted industries also see major threats from start-ups

Start-ups

Incumbents

SURVEY QUESTION:

Who is most likely to disrupt your industry?


What advantages does

each type of company

have in its ability to

capitalize on digital

disruption? [941 respondents]

45% 37% 35% 24% 17% 14%

Innovation

Startup Incumbent vs.

In the Digital Vortex, Every Company Can Learn from Startups

Source: Digital Vortex: How Digital Disruption Is Redefining Industries, DBT Center, 2015

Survey

Agility Experimentation

& Risk

14% 16% 11% 33% 32% 29%

Capital Brand Customers


Cost Value

• Price transparency

• Consumption-based pricing

• Reverse auctions

• Buyer aggregation

• Rebates and rewards

Experience Value

• Customer choice

• Personalization

• Automation

• Lower latency

• Any device, anytime

Platform Value

• Marketplaces

• Crowdsourcing

• Peer-to-peer

• Sharing economy

• Data monetization

$

Splitting and Recombining the Three Elements of Value Creates Opportunity for Outside Disruptors


“Combinatorial Disruption” Is Already Blurring the Lines Between Healthcare and Other Industries

https://www.google.com/url?sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwjBz4vk-8nOAhXJLmMKHeMgDHoQjRwIBw&url=https://cimbura.com/2014/09/10/apple-september-9-announcements-filemaker/&psig=AFQjCNEtSIXj1vYHR2JFZ1ohnWigZxuOwg&ust=1471575239456701


Value

Digital scanning and 3D

printing of prosthetics

App brings urgent care to

homes within 2 hours

Start-ups Are Using Digital Capabilities To Bypass the Traditional Value Chain

Digital Disruptors

(and their shortcuts)

Smart wireless pill bottle that

simplifies Medication adherence



The Digital Disruption Playbook

Learn Learn

Occupy Retreat

Harvest Disrupt

Digital Business

Agility


• A defensive strategy to maximize gains when a digital disruptor fundamentally threatens a business

• Leverage incumbent advantage to block or slow disruption (legal, financial, counter marketing, etc.)

• At the same time, pursue significant organizational reconfiguration and digitization to optimize margin

• Not an easy decision, but it is a valid progression for a mature company pressured by disruption

The Harvest Play: Maximizing Value from Disrupted Business

Harvest


• A defense strategy when the opportunity costs of maintaining a business exceed the benefits

• Focus on a niche, profitable customer segment

• Exit market

• A valid option for when the market opportunity has been exhausted

The Retreat Play: Strategic Withdrawal

Retreat


• A digital business model creating cost, experience, and/or platform value for customers

• Pursued for value vacancies – build, buy, or partner”: all valid models

• Focus on customer outcomes and digital business agility are key

• Incumbents can be extremely unwilling to disrupt themselves, but in the digital vortex, growth

opportunities (value vacancies) do not wait

The Disrupt Play: Creating New Customer Value Through Digital Means

Disrupt


The Occupy Play: Prolonging Time in a Value Vacancy

Occupy

• Sustaining the competitive gains associated with disruption

• Value vacancies are highly contested and consumers are awash in choices; extending one’s

“stay” is as important to growth as “checking in”

• Complexity due to managing (competing) traditional and digital businesses simultaneously

• Ultimately, all Occupy plays evolve into Harvest as the market continues to evolve


As the costs of innovation plummet, competition in creating disruptive

offers and business models that deliver cost value, experience value,

and platform value are anyone’s game – including incumbents

Digitization’s impact on a healthcare organization comes down to how

effectively and efficiently it can create new value for customers

Digital business agility capabilities allow a company to create customer

value, and pivot to meet the best opportunities and avoid the worst

risks

Conclusions

The First Step May Be the Most Important

Define What It Takes to Win for Your Business

Lead from the Top Down

Create the Workforce of

the Future

Merge Business

Processes and Technology

Ideate and Innovate Fast

Cultivate a New Partner Ecosystem

Documents

Barbara Casey Sr. Director, Healthcare Business ...nchica.org/wp-content/uploads/2016/08/Casey.pdf• A defensive strategy to maximize gains when a digital disruptor fundamentally