From disrupted to disruptor: Reinventing your business by transforming the core | McKinsey & Company

Companies must be open to radical reinvention to find new, significant, and sustainable sources of revenue.

When Madonna burst onto the scene in the early 1980s, there was little reason to suspect that she’d have more than her allotted 15 minutes of fame. But in the three decades since her debut album, she has managed to remain a media icon.Her secret? “Madonna is the perfect example of reinvention,” Janice Dickinson, renowned talent agent, has said. Fittingly, the name of Madonna’s sixth concert tour was “Reinvention.”

Madonna may seem like an unlikely touchstone for modern businesses, but her ability to adapt to new trends and set some others offers a lesson for companies struggling with their own digital revolutions.

That’s because the digital age rewards change and punishes stasis.

Companies must be open to radical reinvention to find new, significant, and sustainable sources of revenue. Incremental adjustments or building something new outside of the core business can provide real benefits and, in many cases, are a crucial first step for a digital transformation. But if these initiatives don’t lead to more profound changes to the core business and avoid the real work of rearchitecting how the business makes money, the benefits can be fleeting and too insignificant to avert a steady march to oblivion.

Simply taking an existing product line and putting it on an e-commerce site or digitizing a customer experience is not a digital reinvention.

Reinvention is a rethinking of the business itself. Companies need to ask fundamental questions, such as, “Are we a manufacturer, or are we a company that enables customers to perform tasks with our equipment wherever and whenever they need to?” If it’s the latter, then logistics and service operations may suddenly become more important than the factory line.

Netflix’s evolution from a company that rented DVDs to a company that streams entertainment for a monthly subscription to one that now creates its own content is a well-known example of continuous reinvention.

Reinvention, as the term implies, requires a significant commitment. From our Digital Quotient® research, we know that digital success requires not only that investment be aligned closely with strategy but also that it be at sufficient scale. And digital leaders have a high threshold for risk and are willing to make bold decisions.

But companies don’t have to wait far in the future to realize those benefits. We’ve found that 60 to 80 percent of total improvement targets can be achieved within about three years while also laying the foundation for future growth.

For all the fundamental change that digital reinvention demands, it’s worth emphasizing that it doesn’t call for a “throw it all out” approach. An engine-parts company, for example, will still likely make engine parts after a digital reinvention, but may do so in a way that’s much more agile and analytically driven, or the company may open up new lines of business by leveraging existing assets. Apple, with its move from computer manufacturer to music and lifestyle brand through its iPhone and iTunes ecosystem, reinvented itself—even as it continued to build computers. John Deere created a whole series of online services for farmers even as it continued to sell tractors and farm equipment.

Read all: From disrupted to disruptor: Reinventing your business by transforming the core | McKinsey & Company

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Key #CX charts from Adobe’s #Digital Trends 2017 Report

Last year, the Adobe Digital Trends report showed data-driven marketing to be the top priority for marketers, with 90% of survey respondents citing it as their number one choice. Fast forward to 2017 and the tables have turned. Read more…

Source: Four key CX charts from our Digital Trends 2017 Report

McKinsey & Company: The case for #digital reinvention

Digital technology, despite its seeming ubiquity, has only begun to penetrate industries. As it continues its advance, the implications for revenues, profits, and opportunities will be dramatic.

As new markets emerge, profit pools shift, and digital technologies pervade more of everyday life, it’s easy to assume that the economy’s digitization is already far advanced.

According to our latest research, however, the forces of digital have yet to become fully mainstream.

On average, industries are less than 40 percent digitized, despite the relatively deep penetration of these technologies in media, retail, and high tech.

As digitization penetrates more fully, it will dampen revenue and profit growth for some, particularly the bottom quartile of companies, according to our research, while the top quartile captures disproportionate gains.

Bold, tightly integrated digital strategies will be the biggest differentiator between companies that win and companies that don’t, and the biggest payouts will go to those that initiate digital disruptions. Fast-followers with operational excellence and superior organizational health won’t be far behind.

These findings emerged from a research effort to understand the nature, extent, and top-management implications of the progress of digitization. We tailored our efforts to examine its effects along multiple dimensions: products and services, marketing and distribution channels, business processes, supply chains, and new entrants at the ecosystem level.

We sought to understand how economic performance will change as digitization continues its advance along these different dimensions.

What are the best-performing companies doing in the face of rising pressure? Which approach is more important as digitization progresses: a great strategy with average execution or an average strategy with great execution?

The research-survey findings, taken together, amount to a clear mandate to act decisively, whether through the creation of new digital businesses or by reinventing the core of today’s strategic, operational, and organizational approaches.

More digitization—and performance pressure—ahead

According to our research, digitization has only begun to transform many industries. Its impact on the economic performance of companies, while already significant, is far from complete.

Read all: The case for digital reinvention | McKinsey & Company

Mark Raskino’s Ten Video Examples of #Digital Product Remastery

As we have said many times over the last few years: every industry will be digitally remastered. That means its products and services will become significantly digital.

The digital proportion of what customers buy from you will rise, not just how those customers were attracted to you (digital marketing) or how they transact (e-commerce).

This applies to physical products like cars as much as to information products like news.

Of the top buying features you choose your next car on, half might be digital (HUD, stay-in lane, media integration, wireless connectivity, self parking etc).  Think about that for a moment – more of what you really care about is made of data and code; less is made of glass, rubber and metal.

This remastery of products and services is what digital business is really about.

It is why we talk about taking digital to the core. However it can be hard for people to believe this is really happening without examples – especially when we assert that every industry will be impacted – in due course.

Often, I find the best way to bring this strategic reasoning to life, is to show videos that illustrate the trend at work. This can make the discussion more tangible and it helps to spark creative discussions.

Here are ten good examples.

They are links to short public videos you can access without a paywall. I have placed them in no particular order. I hope you find them as inspiring and thought provoking as I do.H

Source: Ten Video Examples of Digital Product Remastery – Mark Raskino

My point of view

These examples are all about industries. But take also into account what

How the Twittersphere Helped Donald Trump Win – YouTube

 

Did the Twittersphere help Donald Trump become the Republican nominee for president? A Wharton analysis of tweets sent before, during and after the 2016 Republican primary debates found an interesting correlation — as well as some sobering trends. Substantive tweets had less staying power than sensational tweets, which later shaped public opinion about the debates.

These and other findings are at the heart of the research paper “Make America Tweet Again: A Dynamic Analysis of Micro-blogging During the 2016 U.S. Republican Primary Debate.” The paper’s authors are Wharton marketing professors Ron Berman and Robert Meyer, Wharton doctoral candidate Colman Humphrey and Shiri Melumad, a doctoral candidate at Columbia University.

Berman and Humphrey spoke with Knowledge@Wharton recently about their research on the impact that micro-blogging sites have on voters’ opinions.

An edited transcript of the conversation follows.

Knowledge@Wharton: Can you tell me why you chose to analyze Twitter versus other types of communication?

Read all at http://knowledge.wharton.upenn.edu/article/sensational-tweets-and-the-rise-of-trump/