Reimagine Your Company’s Place in the World
In the world where being digital is not enough, you need to take the stand on what position your company is going to take. According to BCG survey, the emphasis is clearly shifting from digital reengineering to innovation. Simply implementing digital initiatives and adapting to customer and competitors’ moves is no longer sufficient to effectively compete in the beyond digital world. Digital initiatives will make you more efficient, but it will not make you relevant. In the beyond digital world, the focus of strategy shifts from optimizing internal processes to facilitating external interactions, and from increasing customer value to maximizing ecosystem value. Reimagining your place in the world has become a prerequisite to securing your relevance in the future. Paul Leinwand and Mahadeva Matt Mani in their book “Beyond Digital” offer three steps to help reimagine your company’s place in the world and create value in a differentiated way.
Envision ideas for potential ways to create value
Be bold and focus on the customer, not your products or competitors. The value you are creating, in many cases, will be significantly more ambitious than what companies could have imagined just five or ten years ago. With the rise of platforms, it has become much easier to collaborate and tap into other organization’s capabilities to create the unique value. Looking at the trends and asking what customers want is no longer enough. Consider the multinational Phillips with sprawling portfolio of businesses that ranged from audio to video, consumer electronics to lightning and medical equipment. While in 2011 it was one of the largest companies by revenue and headcount, it posted $1.6 billion loss that year. It was time to re-imagine its place in the world. Considering it had leading position in medical device technology and unmet need for people to manage their healthcare and wellbeing in a more integrated way. It pivoted from being conglomerate with diverse set of businesses to solely focus on value-based healthcare to improve outcomes and lower overall costs for billions of people around the world. Phillips recognized what it did uniquely well (medical device technology) and how it can leverage those strengths to create unique value that is rooted in the customer needs. The result, Phillips stock grew 82% in the five years ending 2020.
Integrate those ideas into a few options for your place in the world
The goal here is to come up with the value proposition that resonates with where you think the market is headed and that leverages your unique strengths. Relevant options will not be straightforward, it will require mixing several business archetypes into powerful value proposition that is truly differentiated. Consider Phillips case, while it started as medical device provider it has now transformed into healthcare platform focused on health outcomes for the patients. To achieve such transformation, it leveraged its core capabilities (medical device technology) combined with cloud platform capabilities (the likes of Microsoft Healthcare Cloud) and opening up its platform to partners and development community to invent new healthcare solutions to help achieve its new mission. Relevant options don’t just address a customer problem (outcomes-based healthcare) – they also allow you to tap into sizable profit pools (digital health market worth $295 billion by 2028).
Make your bold choice
Ask an executive if they would like to build competitive advantage and you will most certainly hear strong commitment to the task. Ask them to make bold decisions and you will often encounter hesitation and doubt. However, if you choose strategic identity that is rooted in how you create unique value for customers, many of the choices you make are going to wind up being right no matter how the world shifts. They key here is not to be constrained by the decisions your business has made in the past, but instead focus on value proposition, differentiated capabilities, and portfolio of products and services that work together to give you the best shot at obtaining the right to win.
The future requires extreme clarity both in the boldness of the challenges you seek to solve and in the specificity of how you will deliver the promises you make. Flexibility and operational efficiency on its own are not strategies that work in today’s environment. The basis of competitive advantage has shifted to a world where you must be better than your competitors not just in the current set of products and services, but in what you are able to do. If you are an auto manufacturer today, your competitive advantage is not just making reliable cars, but how you are able to tap into the future of mobility. If you are a healthcare provider, your competitive advantage is not only treating the disease but how you able to improve health outcomes for your patients.