TRANSFORM OR BE TRANSFORMED… That was the overarching message that emerged from a series of sessions on charting a course for your business in the digital age. “If information—any
kind of information—matters to your business in any way, you need to take out a clean sheet of paper and look at how you’re going to reinvent your value proposition,” Jay Walker, founder of
Priceline and chairman of Walker Innovation, told Summit attendees.
“You need to say, ‘Boy, I built my business in the pre-information age,’” Walker urged. “Now that the information age is here and all my customers are in it, how will I reinvent my value proposition to serve my customer above my long-term, risk-adjusted cost of capital? Because you’re not going make a steam locomotive operate on a U.S. interstate. I don’t care what the hell you do with it.”
At a time when more and more industries are disrupted by digital newcomers, the use of technology to fundamentally improve performance or extend the reach of enterprises will increasingly be the marker by which CEOs will be measured. Uber, Airbnb and other disruptors have demonstrated how quickly competitive landscapes can be upended. Today’s business leaders must adapt their strategies and business models or risk being overtaken by a new generation of bold, innovative enterprises entering traditional markets.
That’s no easy feat, admitted Stephen Hoover, CEO of PARC, the Palo Alto Research Center originally founded as a research division for Xerox. “Not everyone is big enough to have the cash flow to set up a PARC,” he said, acknowledging the challenge. Digitization can be applied to so many aspects of operations that it’s often difficult to know where to start—not to mention overwhelming from an investment point of view.
To make transformation more manageable, Hoover suggested thinking about the potential for digitization in each of five areas of your business: interaction with customers, communicating with employees, product design, back office operations and the business model itself. He also urged companies to dedicate staffers to the task. “If you want to make a fundamental change, then you really do need a separate team focused on that,” he noted. “Disrupting yourself, if that’s what you want to do, is not a part-time job. It’s hard to squeeze it in while you’re figuring out, ‘How do I get that next customer call made?’ I know not everyone is big enough to set up a PARC, but dedicating one or two people to even explore an area can be very powerful if you get the right kinds of people.”
Rethinking Your Business Model and Strategy for the Digital Economy: A Panel Discussion
Two panelists offer insights on how companies can overcome the challenge of finding new value across all parts of the value chain.
“We look at this sort of conversation around how you manage customers in the digital world as an investment-allocation conversation. If you have another dollar to spend, which customer do you spend it on? How would you want to do that? “It’s got to be aspirational. [You’ve] got to sort of look beyond the corner a little bit at what you want your business to look like, which is risky. There are no two ways about it unless you just want to sit there and wait for the disrupter to show up.”
—Andy Frawley, CEO, Epsilon
“If you’re thinking about digital strategy, you’re moving way too slow. You’re just not even in the game. Your disrupting competitors are not thinking about a digital strategy. They’re thinking about a strategy. They’re not thinking of digital value. They’re just thinking about value. “If you’re not feeling panic, you’re not feeling it. The war is being lost by the incumbent big players. So, if you’re not saying, ‘Gee, I hope this meeting is almost over so I can get back and flip this sucker upside down and figure out how to reinvent this business before I’m basically the captain on the HMS Titanic,’ you don’t get it. I often feel panicked, and I’m actually a disrupter in many businesses.”
—Jay Walker, founder of Priceline and chairman of Walker Innovation
Leveraging Technology to Better Understand and Serve Your Clients and Customers: A Panel Discussion
Two panelists discuss ways that both companies and geographic regions can foster innovation.
On the challenge of remodeling a company to be digitally transformative…
“As you contemplate transforming into a digitally complete enterprise, it’s important to understand that sometimes the greater the legacy, the greater the burden. Google is 16 years old. It doesn’t have much [in the way] of tradition. We have no culture. That allowed us to sort of adopt best practices without having to drag with it an enormous amount of legacy systems. These transformations are enriched profoundly by having a huge corpus of data that’s old and longitudinal and where the outcomes are known, but that also represents the hurdle that it takes to really make that transformation. We’ve learned that as we’ve encountered big pharma partners and big biotech partners that were grounded in technology.”
—Dr. Andy Conrad, CEO, Google Life Sciences
On devising ecosystems for innovation…
“There are really four characteristics that you need to form a great cluster for innovation. First, you need to have a location where people want to be. You can’t just set a cluster up in Sioux City, Iowa. Second, you need an abundant amount of risk capital. New York struggled—despite being the bedrock of the financial industry—because historically it hasn’t had a lot of early-stage investment risk capital. Third, you need a world-class science and clinical practice. And finally you need a depth of management talent—not just people who have held jobs in Fortune 500 companies but entrepreneurial people who know how to create and start up companies.”
—Joel Marcus, CEO, Alexandria Real Estate Equities
Overcoming the Real-World Challenges of Digital Transformation
Two panelists share their experiences and insights on managing security risks in their companies.
On steps to mitigate cyber threats…
“Do data-breach exercises on your firewall, your vulnerability every year. I recommend using a third-party firm that doesn’t sell products, so that they are unbiased. If Project X will be your product for the next 10 years, make sure you have a security package on it. Control who has access to it and keep it off the Internet. Keep a bubble around it.
“Train and certify your people. Remember back when we had to do sexual harassment training? Now, you need to do digital training; and part of that is making sure that you relate cybersecurity to the person by saying things like, ‘If you put a USB into a computer network [that causes a data breach], six months later, we will have to lay off 600 people.’ It’s about awareness.”
—Casey Fleming, Chairman and CEO, Blackops Partners
On guarding intellectual property…
“When you consider that each one our designers is a potential path to access our network, we had better be constantly reinventing ourselves, so that if someone gets information from us, it will be dated. We have to take the attitude that people will copy us. It happens all the time, so we take it as a matter of doing business. If we run our business on the basis of no one copying us, we better not get out of bed in the morning.”
—Farooq Kathwari, Chairman and CEO, Ethan Allen Interiors