The Digital Transformation Playbook

As customers behave less like isolated individuals and more like tightly connected networks, every business must learn to harness the power and potential of those customer networks.

As Andy Grove warned years ago, in the digital age, “only the paranoid survive.”

Digital technologies change how we connect and create value with our customers.

digital technologies enable continuous testing and experimentation, processes that were inconceivable in the past

The biggest challenge today is turning the enormous amount of data we have into valuable information.

powerful new digital technologies drive dramatic changes in customer behavior. Once started, the digitization of a product, interaction, or medium becomes irresistible. The old business model is invalidated. Inflexible and unable to adapt, the “dinosaur” business gets wiped out. The future belongs to the new digital pioneers and start-ups.

Our first priority is creating value for customers

To develop true organizational agility, your business needs to focus on three areas:

• Allocating resources: How will you decide what to invest in? Are you able to disengage from initiatives and lines of business that lack future potential? Can you apply resources from older business lines to support new ventures?
• Changing what you measure: What outcomes are being measured by senior decision makers? Do they simply relate to existing business practices, or can they support new directions? What should you be measuring at different stages of a transition to a new business model?
• Aligning incentives: What kind of behavior is enabled, supported, and rewarded in your organization? What are managers held accountable for? How are they assigned to new positions? Do compensation and recognition support or hinder the necessary changes in your strategy

In planning to exit a market, you should assess all your firm’s assets, especially intangible assets (patents, brand names, etc.) that can be sold. You may also choose to spin off the indefensible part of your business from other divisions that can survive on their own rather than letting the vulnerable part bring down your entire enterprise

The next way that incumbents can mitigate the disruption of their core business is by diversifying their portfolio of products, services, and business units. They can accomplish this by repurposing the firm’s unique skills and assets in new areas and by acquiring smaller firms in the areas into which they want to extend