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”
© 2015 Global Center for Digital Business Transformation. All rights reserved.
Digital Technologies and Business Models Are Disrupting and Redefining Industries
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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%
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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?
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
“Combinatorial Disruption” Is Already Blurring the Lines Between Healthcare and Other Industries
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
© 2015 Global Center for Digital Business Transformation. All rights reserved.
The Digital Disruption Playbook
Learn Learn
Occupy Retreat
Harvest Disrupt
Digital Business
Agility
© 2015 Global Center for Digital Business Transformation. All rights reserved.
• 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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
• 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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
• 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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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
© 2015 Global Center for Digital Business Transformation. All rights reserved.
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