White paper

Competing for
digital customers:
Why companies must embrace
digital transformation now
Contents Executive summary

Keep doing what you’re doing–or, how to get blindsided

Defining digital transformation and the digital enterprise

Say hello to your new boss: the digital customer

Why your company is not a digital enterprise (yet)

The secret sauce in every digital enterprise

Values: what do digital enterprises care most about?

Three pillars of digital transformation: people, business, and it

People: focus relentlessly on the customer

It: nurture the digital ecosystem

Business: align to a strategy for transformation

Okay, so what does a digital enterprise look like?

Dynamic pricing for auto insurance

Fee-for-outcome model in healthcare

A model for digital maturity

Digital transformation

Products aligned to phases of digital transformation

End notes

Competing for digital customers: Why companies must embrace digital transformation now 2/22
What you’ll take away from Executive summary
this paper is not just a As a business leader, you’re thinking about disruption. You’re talking about disruption.
Let’s be honest, you’re concerned about disruption. And if you’re not, you should be.
deeper understanding of
Of course, businesses have always disrupted and replaced other businesses. In the early
digital transformation–what
1800s in England, factories with mechanical looms threatened to replace traditional
it is, why it needs to be at shops making hand- woven cloth, which led to riots among weavers fighting to save a
way of life. These weavers were literally the first Luddites, named after the fictional Ned
the top of your strategic
Ludd, “general of the Army of Redressers.”1 You can probably guess how the Luddites’ war
imperatives–but also how against mechanization and progress turned out for the weavers.

to begin your journey of No, disruption isn’t new. What’s new is the pace of disruption. What may have taken
decades in the past seems now to happen overnight. Uber burst on to the scene just a
transformation (while you still
few years ago and already is taking down the taxi industry in New York City, destroying the
have time). value to this long-established business.2 Like the weavers, taxi drivers are fighting back
too, –suing NYC and blaming Uber for ruining their livelihood. In the end, they will probably
be no more successful than those early Luddites.

Transform or die. That’s the theme of this paper and the mantra of many a forward-
thinking business leader. Digital technology (or, as some refer to it, “infotech”) has
disrupted large swaths of the economy, from taxi drivers to travel agents, from book
sellers to movie vendors, and it will continue to upend entrenched businesses that are
slow to recognize and respond to the digital tsunami. To avoid being swept away like the
Borders and Blockbusters of the world, businesses must embrace digital transformation.

Digital transformation is how your business becomes a digital enterprise, and

transforming your organization into a digital enterprise is necessary to compete for
digital customers.4 As Gartner analyst Ken McGee suggests in “Six Key Steps to Build
a Successful Digital Business,” digital business leaders must think about technology in
fundamentally different ways. Digital business, he writes, “is not synonymous with IT. It is
about revenue, value, markets, and customers. It is outward focused.”5

The digital enterprise isn’t merely concerned with improving operational efficiency but
actively seeks its own “creative disruption” in the pursuit of digital customers.6 Its goal must
be to find innovative ways to engage this new breed of customers–and ultimately capture a
greater share of their digital wallet and growing purchasing power. Digital transformation is
how companies will create those new business models and revenue streams.

In this paper, we’ll explain what we mean by the digital enterprise, as well as related
concepts such as digital economy and digital platform. We’ll also talk about the rise of
customer experience and changing customer expectations and how digital customers
accelerate the need for digital transformation. We’ll provide examples of business and
industries undergoing transformation and what that looks like. We’ll explain the concept of
a digital platform and its characteristics and components. And finally, we’ll offer a model
that you can use to assess your own digital maturity and readiness for transformation.

Along the way, we’ll address questions that are surely on

the mind of every business leader today: How do we remain
successful in a business environment transformed by digital
innovation? And, perhaps more importantly, how do we avoid
becoming the next Blockbuster Video?

Competing for digital customers: Why companies must embrace digital transformation now 3/22
“The connected Keep doing what you’re doing–or, how to get blindsided
world creates a It’s easy to dismiss the idea of digital transformation as just another buzzword, the

digital imperative catch phrase du jour.

for companies.
Of course there’s disruption in the business community, you say. Businesses come and
go. Industries come and go. Plus, you say, we are evolving. We’re taking more and more
They must succeed of our business online. We’re using digital technology to operate more efficiently, reduce
costs, and go mobile. We’re transforming, right?
in creating This is different.
transformation Digital transformation isn’t about becoming more efficient. It’s not about digitizing your
through technology, processes so you can save money and increase the bottom line. Those are 20th-century

or they’ll face ideas. They are still valid goals, of course. Managing costs and increasing efficiency are
always good objectives. It’s just that they won’t prevent disruption, and they’re not what
destruction at digital transformation is about.

the hands of their Consider Kodak, for example. This industrial giant owned film photography in the 20th
century; it had a virtual lock on its industry. Thirty years ago, it employed 150,000 people.
competitors that do.” Today, it’s a tiny fraction of its former self, having crawled out of bankruptcy with just four
percent of its previous workforce. Despite having invented the technology used in digital
“Embracing Digital Technologies” (MIT)7
photography,8 Kodak failed to transition to the new world where digital photography
is ubiquitous and virtually free, and where single-purpose digital cameras have been
replaced by multi-purpose mobile devices that include digital photography. Replacing
Kodak are companies that cater to digital customers, companies like Instagram which,
when it sold for $1 billion to Facebook, had a mere 13 employees.9

Such is the power–and unpredictability–of digital disruption. Today, write the authors of
Big Bang Disruption, “startups with minimal experience and no capital can unravel your
strategy before you even begin to grasp what is happening.”10

Companies can’t avoid this disruption by simply becoming more efficient. That would not
have saved Kodak, just as it could not save travel agents, who have been all but wiped out
by the likes of Travelocity, Expedia, and Kayak. Other companies like Amazon, Uber, and
Netflix are disrupting markets and putting competitors out of business or forcing them
into highly defensive postures. Every successful 20th-century company must adapt,11 or
watch its market values stagnate,12 while tech startups command extraordinary valuations
before they see even $1 in net profit.

Competing for digital customers: Why companies must embrace digital transformation now 4/22
“Digital is now Looking forward, it’s not hard to discern who the future winners will be. They will be the
imposing a shift–and organizations that transform themselves from 20th-century entities operating according
an industrial age model, to 21st-century digital enterprises that use information and data
often a complete in innovative if not outright disruptive ways.

rethinking–in the Here’s how we think about digital transformation. We believe that digital transformation
(or DX) offers an opportunity for strong, long-term growth through new business models,
fundamental way we new revenue streams, and ultimately more satisfied and engaged customers. Companies
work in nearly every that truly transform themselves through digital technology will become the new leaders,
the “built to last” organizations of the future.
industry, including
By contrast, laggards in digital transformation will experience rapid market disruption and
our core business will have to become highly reactive just to survive. If they survive.

models. Unfortunately,
traditional organizations
have been built
around legacy 20th
century models of
business, in which
the majority of their
market momentum and
inherent know-how lies.”
Dion Hinchcliffe13

Defining digital transformation and the digital enterprise

Let’s dig a little deeper. What exactly do we mean by “digital transformation”?

Here are some definitions that provide a framework for understanding and discussing
this concept:

• Digital Transformation: The process of evolving from analog processes (often physical
or paper-based) to 100-percent digital processes in all aspects of the business,
positioning the organization to be more competitive, agile, and innovative. When
executed well, digital transformation enables companies to disrupt markets, as Uber
and Amazon have done.

• Digital Enterprise: A company that embraces information technology to support new

business models, enable more effective engagement with the digital customer, and
ultimately capture a share of the digital customer’s wallet.

• Digital Economy: Also known as the iinternet economy, which is quickly evolving
into the mobile economy. The digital economy is a product of, and is driven by, the
empowered digital customer. To thrive, companies in a digital economy must shift their
attention to these new customers.

• Digital Customer: A person who primarily or solely uses internet resources to research
and purchase products and services, increasingly on a mobile device.

• Digital Workplace: An organization that takes advantage of digital user productivity

tools to maximize employee efficiency and effectiveness.

• Digital Platform: A complete technology stack that provides the capabilities and
services necessary for digital transformation.

Competing for digital customers: Why companies must embrace digital transformation now 5/22
“82 percent of execs Say hello to your new boss: the digital customer

believe digital Today’s post-industrial economy is made possible by information technology, but

transformation is transformation is being driven by a new generation of buyers: the digital customer.
An MIT report contends that the “rise of the tech-savvy, connected consumer across
critical within a year. all facets of society changes the expectations consumers have of companies, regardless
of their business.”14
Most say NOW is
Who are these new customers? Millennials, primarily. Born between 1980 and 2000 and
the time.” now 17 to 37 years old (as of 2017), millennials comprise the first generation of native
digital consumers, having grown up in an age of ubiquitous cell phones and personal
Dion Hinchcliffe
computers. By 2015, this generation had become the largest workforce in the US
economy,15 and millennials will soon eclipse baby boomers in terms of spending power.16

In important ways, the millennials’ experience of shopping and interacting with companies
and brands is distinct from any generation that preceded them. They expect virtually
anything they buy to be available online and purchasable instantly–at any time, in any
location, from the convenience of a handheld device. This doesn’t meant they don’t
shop in stores or dine in restaurants. It does mean, though, that they begin nearly
all transactions on a computer or, more likely, a mobile device. Their experience of
transacting business online creates an expectation of availability and promptness, says
Mary Meeker, a digital expert, author, thought leader, and partner at KPCB.

Moreover, Meeker says, the digital customers’ expectation they can get what they want
with ease and speed will continue to rise.17 As a result, there is tremendous pressure on
consumer-oriented companies to meet these demands. When a sector of the market
is incapable of serving the digital customer on the customer’s terms–online, anytime,
anywhere, transparent, easy, and fast–an entirely new model may emerge, disrupt, and
wipe out the old model. Just ask travel agents. Or book sellers. Or taxi drivers.

Why your company is not a digital enterprise (yet)

The long-term challenge facing companies is how to remain relevant to digital customers,
and that is the point of digital transformation. In the end, it’s about building deeper
engagement with customers and owning a greater share of their digital wallet. Companies
can accomplish these objectives by creating new business models (see: Uber or Airbnb,18,
19
) or new revenue streams (see: Netflix).

Digital enterprises are companies that have thoroughly embraced information technology
and use it to engage customers in innovative ways. These companies are taking share of
wallet from traditional retailers and other consumer-oriented businesses. Think Google,
Zillow, or Zappos.

It’s probably safe to say that there are not many true digital enterprises that weren’t born
as digital enterprises. There are certainly industrial companies born before 1980 in the
process of transforming themselves, but few if any have completely crossed that chasm.

Becoming a digital enterprise requires a thorough reimagining of the business through a

digital lens–both in the workplace and in customer engagement. As companies undergo
the evolution from analog processes (often physical or paper- based) to 100-percent
digital processes, they position themselves to be more competitive, agile, and innovative.
As analyst IDC says, “enterprises will either become adept at digital transformation and
thrive–or fail to master the disciplines and struggle to survive.”20

Competing for digital customers: Why companies must embrace digital transformation now 6/22
Starbucks: Forging a digital path One company that has run with this idea is Starbucks. Following declining store sales and
a sharp drop in stock price in 2008, the company made a strategic decision to employ
One of the company’s first forays into digital technologies to engage customers in new ways. “Everything we are doing in digital
the digital arena was a mobile payment is about enhancing and strengthening those connections [with our customers] in only
feature built into its myStarbucks the way that digital can,” says Adam Brotman, executive vice president, Global Retail
mobile app. The app debuted in 2009, Operations and Partner Digital Engagement for Starbucks..21 Baristas will continue to be
and mobile payment was added vital to the in-store experience, but the company is relying on digital to spur growth in
in January 2011. This feature has innovative ways (see sidebar). According to Brotman, Starbuck’s digital transformation is
encouraged customer loyalty, but less now as essential to the company’s success as its coffee.22
well known is the financial impact of
going digital:

The Starbucks app has significantly “[Digital] has been an essential part of how we build our brand
reduced transaction fees on more
and connect with our customers… There’s been such a seismic
than three million mobile payments
per week. The company also leads the shift [in our interactions with customers] that we needed to pull
way with its social media and website
it all together and make it a priority.”
promotions and crowdsourcing site:

My Starbucks Idea. The company is

bridging online and offline customer Adam Brotman (Starbucks)23
experiences by providing free Wi-Fi
and, for customers who log on, free
access to premium content, including The secret sauce in every digital enterprise
news and music downloads. A defining characteristic of digital enterprises and companies in transition is a
Where will the company go from digital platform. The digital enterprise requires expertise in, and reliance on, a set of
here? We’re not privy to its plans, technologies that enable digital commerce, digital work, and digital interactions between
but we can speculate. Using the data companies and customers.
it collects on customers through its Gartner came to a similar conclusion in its 2016 CIO Agenda Report, “Building the
loyalty program, social media activity, Digital Platform.”
and in-store activities, the company
could push promotions via mobile A platform, says Gartner, “provides the business with a foundation where resources can
alerts to customers who are standing come together–sometimes quickly and temporarily, sometimes in a relatively fixed way–to
in line. An instant coupon could create value…The value comes largely from connecting the resources, and the network
encourage customers to upgrade effects between them.”24
from a Grande to a Venti, choose a Tech entrepreneur John Newton articulates this idea from a slightly different angle.
Frappuccino over a latte, or add a In a recently published article, the founder and CTO of Alfresco Software and former
pastry or sandwich. cofounder of Documentum writes that a “true digital enterprise will integrate information,
The company could take advantage processes, work and people so that the entire organization can collaborate more
of GPS and geofencing to push alerts efficiently and effectively, and therefore produce more valuable products and services.”25
to people who happen to be in the This ability to produce more valuable products and services is essentially the “network
vicinity of a Starbucks. Different effect” that Gartner defines.
messages could be sent to different For Newton, two of the most important “tools” available to organizations are Enterprise
people, distinguishing between Content Management solutions and process management platforms, which he says
loyal and occasional customers for “can play a significant role in this transformation” to a digital enterprise. Of course, the
example. By encouraging customers “toolbox” is much larger than ECM and BPM, and the transformation, as we’ve argued
to spend time in Starbucks, programs above, is about more than creating an efficient digital workplace.
like this not only create new revenue
but take spending from other stores– In our view, the digital platform includes social, mobile, analytics, and cloud, as well as
including retailers who are not content management and process tools. Connecting all of these tools in a comprehensive
Starbucks’ traditional competitors. way provides the digital enterprise with network effects internally and externally: allowing
it to become dramatically more efficient across the organization while creating radically
new ways to engage digital customers.

Competing for digital customers: Why companies must embrace digital transformation now 7/22
 More and more companies recognize the necessity of building a digital platform, and it’s
why companies like Starbucks have added a new position to the executive suite: chief
digital officer. This was Adam Brotman’s former role, and he was , responsible for web,
mobile, social media, digital marketing, Starbucks Card and loyalty, e-commerce, Wi-Fi,
Starbucks Digital Network, and emerging in-store technologies26–combining all of these
initiatives into a digital platform that is at once unique to the organization and closely
aligned with the strategy of other forward-thinking companies.

Values: What do digital enterprises care most about?

Chief digital officers understand that building the digital platform is essential. But these
executives are also adamant about a set of core values that are just as important to
their success:

• Customer obsession: Digital enterprises make the customer relationship priority No.
1. They center the business around customer needs and customer experiences. They
leverage technology to enable collaboration in cross-functional, cross-organizational
teams, always in the service of the customer relationship.

• Fast, data-driven decisions: Digital enterprises invest in analytics and big data to make
rapid, informed decisions about all aspects of the business. Big data is transformative
for developing a deeper understanding of each customer individually and optimizing
the customer experience.27

• Transparency: Digital enterprises take advantage of mobile, social, and cloud

technologies to operate as transparently as possible. They manage and share
information within and across organizational boundaries while ensuring compliance and
providing safeguards to protect content that is confidential or sensitive.

• Technology leadership: Digital enterprises think differently about technology. They hire
digital natives and provide a digital workplace that offers these employees the flexibility
to work as needed.

By 2020, nearly half of all employees will be millennials, a group of “tech-savvy, mobile-
centric, socially networked workers.”28 Within a decade, they will make up 75 percent of
the workforce.29 Research shows that workers across all ages want to work for digital
leaders,30 a fact that hasn’t escaped digital leaders.

Three pillars of digital transformation: People, business, and IT

To this point, we’ve defined digital transformation and the digital enterprise; exam-
ined the historical, economic, and commercial factors leading to the emergence of
digital enterprises (and consequent disruption of older, industrial-era companies);
and offered our thoughts on what makes digital enterprises unique.

In this section we’ll take a somewhat different perspective and look at how digital
transformation affects people, business strategy, and IT. You must address all three areas
for digital transformation to be complete and successful.

Competing for digital customers: Why companies must embrace digital transformation now 8/22
“The strength People: Focus relentlessly on the customer

of digital A running theme in this paper, as you’ve no doubt noticed, is the importance of customers

technologies– for the digital enterprise.

social, mobile,
It’s the digital customer that’s driving digital transformation. Digital enterprises use
information and technology to optimize the customer relationship. Facebook is the
analytics, and ultimate expression of optimizing relationships and, one could argue, the most successful
digital enterprise in the world. The company, whose mission31 is “to give people the power
cloud–doesn’t lie to share and make the world more open and connected,” counts an extraordinary 15

in the technologies percent of the global population as active “customers.” The company’s product is entirely
digital, and it makes almost unprecedented use of data to grow, evolve, serve customers,
individually. Instead, and generate revenue.

it stems from As opposed to 20th–century “analog” businesses that optimize operations and use

how companies
analytics to improve efficiency, digital enterprises like Facebook optimize operations
and leverage data and analytics for the purposes of acquiring customers, continuously
integrate them to improving the customer experience, and driving innovation around new products and
services. Through their ability to analyze data such as usage and adoption rates, digital
transform their enterprises inherently understand better than their competitors which products and

businesses and services add value.

how they work.” So digital enterprises can provide superior customer service and build more customer-
centric (and therefore superior) products.
MIT Sloan Management Review 33
Above all else, the digital enterprise is optimized around the customer. As Dion Hinchcliffe
contends, it’s not that customers are a digital enterprise’s most important asset for a
digital enterprise. Rather, he reminds us, “Customers are the business.”32

Business: Align to a strategy for transformation

Yes, technology is critical, but it should be clear by this point that the path to becoming
a digital enterprise is not simply “more technology.” While technology is certainly the
enabler, digital transformation is as much about a strategic and cultural shift within the
organization. Indeed, the entire organization must adopt a digital mindset.

This is not to suggest that a digital transformation is a simple or easy change. Quite the
opposite, says Hinchcliffe: “The hardest part of the whole challenge facing the enterprise
is likely adopting a ‘digital-first’ mindset. As in, how do I rethink my business in terms
of digital possibility in today’s fast-changing and complex technology landscape.”34 He
contends that in most organizations IT is considered “overhead,” whereas for a digital
enterprise IT is critical to profit and loss.

Of course, the IT department would have to be critical to the revenue strategy of a

business if the organization’s mindset is truly a digital one. Nevertheless, a report from the
MIT Sloan Management Review draws the following conclusion:

Competing for digital customers: Why companies must embrace digital transformation now 9/22
 What separates digital leaders from the rest is a clear digital
strategy combined with a culture and leadership poised to drive
the transformation. The history of technological advance in
business is littered with examples of companies focusing on
technologies without investing in organizational capabilities
that ensure their impact. In many companies, the failed
implementation of enterprise resource planning and previous
generations of knowledge management systems are classic
examples of expectations falling short because organizations
didn’t change mindsets and processes or build cultures that
fostered change.35

Intriguingly, the report from MIT Sloan surveyed companies with a wide range of digital
maturity and noted that while the researchers did find some differences in technology use
between different levels of maturity, they discovered that the greatest differences were
not related to the technology. Digitally maturing companies, the researchers found, “are
more than five times more likely to have a clear digital strategy than are companies
in early stages.” Moreover, research discovered that companies in the early stages
of digital maturity tend to “fall into the trap of focusing on technology over strategy.”
They tend to focus on technology as an end in itself, rather than seeing technology as
a strategic means to the end. Lacking a strategy, they digitize without transforming.36 In
digitally maturing companies, on the other hand, digital

technologies are more clearly being used to achieve strategic ends. Nearly 90 percent of
respondents say that business transformation is a directive of their digital strategies.”37

An earlier report from Capgemini Consulting and MIT Sloan Management38 offered a
similar conclusion:

“Successful digital transformation comes not from implementing new technologies

but from transforming your organization to take advantage of the possibilities that
new technologies provide.”

The report also made this observation, which some might find encouraging:

“Despite the hype around innovative digital technologies, most companies still have a
long way to go in their digital transformation journeys.”

In that journey, leadership is “essential,” says the Capgemini report. “Whether using new
or traditional technologies, the key to digital transformation is re-envisioning and driving
change in how the company operates. That’s a management and people challenge, not
just a technology one.” George Westerman, a research scientist at the MIT Initiative on the
Digital Economy, agrees with the importance of leadership. All transformations, he says,
are driven from the top:

Competing for digital customers: Why companies must embrace digital transformation now 10/22
“The big difference IT: Nurture the digital ecosystem

between the In its “MaturityScape” on digital transformation, technology analyst IDC draws this conclusion

companies that about the increasing “connectedness” between organizations and their customers:

are just doing

“We’re entering an era where the technologies and processes that businesses deploy
are so tightly linked to their customers and markets that the boundary between the
technology internal operations of the enterprise and its external ecosystem (e.g., customers,
markets, competitors, partners, regulators) is rapidly disappearing.”40
initiatives and This is very different from the traditional supply chain model in which products flow in a
the companies relatively straight line from raw material through manufacturing, logistics, and retail. In

that are leading a the digital ecosystem, input into products and services is provided by actors who are
both buyers and sellers, partners and competitors, suppliers and customers, colleagues
technology-based and friends. Crowdsourcing, communities, and networks facilitate input into product

transformation is
and marketing design from a wide range of interested parties, including customers
themselves. Information flows through this ecosystem, enabled by cloud and mobile
how they’re putting technology and the consumerization of IT.

the leadership Thus, the digital ecosystem is clearly not optimized for the convenience of individual
business, which would profit more from controlling and possessing the customer
frameworks relationship and data about that relationship. Instead, the ecosystem is optimized for the

in place.”39 convenience of customers, so says MWD Advisors. Digital enterprises operating within
digital ecosystems use data and technology “to minimize the distances (in geographical,
George Westerman, Research Scientist at the MIT organizational, cultural, and temporal terms) between resources (people, materials,
Initiative on the Digital Economy
information, money, facilities and so on) and the delivery of customer value.”41

From a technology perspective, operating within a digital ecosystem places greater

emphasis on capabilities such as cloud, mobile, and social for managing and sharing
information across organizational boundaries, as well as processes, compliance, security,
and content management to ensure information can be protected, tracked, and audited
as needed.

Okay, so what does a digital enterprise look like?

Up to this point, we’ve talked generally and theoretically about digital transformation
and the digital enterprise. In this section, we describe a couple use cases to provide
realistic examples of digital transformation.

Dynamic pricing for auto insurance

AAA, the large US automobile insurer, began running a series of ads in 2015 that asks the
question, “What does your insurance do when it’s not insuring your car?” That AAA would
pose such a question indicates that its customers may be thinking along the same lines,
which in the end could lead to an outcome that might catch AAA and other companies in
this industry completely by surprise.

Competing for digital customers: Why companies must embrace digital transformation now 11/22
 After all, what is your car insurance doing while your car sits idle in the garage? What is the
value of car insurance when you’re not driving? What if it were possible, in a sense, to turn
insurance on and off when you turn the engine on and off? What if you could select your
insurance on a per-trip or per-day basis, not unlike what happens when you rent a car.
And furthermore, what if you could choose among competing insurers when you made
that decision?

These are some of the questions that suggest a digital business model for car insurance
built around a pay-as-you-go model with market-style dynamic pricing. Here’s how it
would work.

There would be two components to car insurance:

Base-rate insurance and trip-rate insurance

The base-rate insurance would be required for every vehicle and would cover things
like theft or damage to the car when it’s parked. This would be a relatively small monthly
charge because of course most damage happens while a car is moving.

The trip-rate insurance would be purchased whenever the car’s owner (or other driver)
decides to drive that vehicle somewhere. An app on the driver’s mobile device would
enable instant purchase of insurance required for that trip, and the app could be
synchronized with the car’s onboard GPS sensor to validate the trip taken. The price of a
given trip would be calculated based on a number of factors, such as:

• Distance travelled

• Road conditions

• Amount of traffic along the route

• Time of day

• The driver’s history

• The cost of vehicle

• The current mileage of the vehicle

Various insurance companies would compete for that trip by offering their own calculated
price. The driver could see these different prices on the mobile device and select the
best option.

This model also opens an opportunity for drivers to choose trips based on insurance
rates. For example, it would quickly become apparent that driving in rush hour traffic
means higher insurance rates, whereas leaving an hour earlier or an hour later could
significantly drop the price. Also, drivers may decide to postpone trips or take alternate
forms of transportation depending on the insurance rate for a given trip at a given time.

A model like this could completely disrupt auto insurance as it’s currently sold and create new
types of digital insurance agencies that could price and sell their products more efficiently.

Fee-for-outcome model in healthcare

In 2008, the Wall Street Journal reported on a trend that had been developing for some
time: medical tourism. WSJ wrote about hospitals in countries like India, Israel, and Ireland
“aggressively wooing older patients by offering joint-replacement surgeries and non-
emergency cardiac procedures at 40 to 80 percent less than in the US.”42 This practice
continues today, and for expensive procedures could include other incentives, such as
first class air fare and hotel accommodations for the patient.

Competing for digital customers: Why companies must embrace digital transformation now 12/22
 What this trend reflects is a growing awareness that while outcomes are relatively similar
in different regions or countries, prices can vary dramatically. Healthcare in the US is
significantly more expensive than almost anywhere else in the world. That situation is the
result of a wide range of factors, including the way medical services are billed through
healthcare insurance plans. One proposed solution is a fee-for-outcome approach, which
could encourage healthcare providers to compete on services provided.

Before we discuss how the fee-for-outcome model could work, let’s consider how
healthcare works in the US (recognizing that we are simplifying the process for the
purpose of this discussion). When you go to the doctor for a procedure, your insurance
is billed for every single item that can possibly be included, from the anesthetic used to
the latex gloves on the surgeon’s hands. Those items may appear on an explanation of
benefits form or on a bill for which you pay some predetermined deductible, but your
connection to cost is minimal at best. Therein lies the problem with this model: Customers
never make decisions on price, and thus there’s virtually no incentive for providers to
compete on that criteria.

In the fee-for-outcome model, procedures are priced according to the “outcome” (for
example, a knee surgery or an annual cancer screening), and patients are incentivized to
select a provider based on price (or a combination of price and other factors not currently
considered). The incentive for the patient could take various forms, such as rebates,
credits against future insurance payments, or other rewards such as airline miles. Several
implications follow:

1. Providers would start competing on price. They would also become responsible for
profitably managing all internal costs, rather than simply tallying those costs on an
insurance invoice.

2. Procedures would become standardized to a much greater degree–rather than being

individualized, which encourages price inflation.

3. Customers (i.e., patients) would become price-conscious shoppers in a competitive

healthcare marketplace. Restoring competition would drive down prices.

For this model to work, a real-time, online marketplace would need to be created where
patients could compare providers and prices. Insurance policies would need to be
factored in so patients could see actual costs, their costs, and any incentives provided
to the patient by the insurance company for selecting one provider over another. The
online marketplace would function much like Expedia, and would show how factors such
scheduling, location, and the provider’s rating affect the price. For example, a patient may
decide to postpone a procedure, choose a different time of day for the appointment, or
select a provider that’s a few miles further away in order to reduce the price. Healthcare
providers would need to become more efficient at service delivery in order to compete
in this market. They would also need to provide dynamic pricing the way airlines do to
maximize usage of their facility and drive down costs.

Could an idea like this work? Perhaps you think there are too many hurdles or regulatory
challenges. Or maybe you think that the healthcare problem is much too complex to
be addressed by this approach. Consider this: a similar system is c being operated–
profitably–on a limited scale in New Hampshire.43 If a well-funded startup came along
with the technology and capital to scale it, this online marketplace could transform the
healthcare industry.

Competing for digital customers: Why companies must embrace digital transformation now 13/22
 A model for digital maturity
To help companies assess their level of digital maturity in a concrete and tangible
way, we’ve developed the following model. Use this digital maturity model to
benchmark your company’s readiness for digital transformation.

The criteria are explained below.

Laggards Transitional Innovators

Digital progression Arrested Siloed Integrated

Business model Analog Digitally aware Digitally visionary

Innovation agenda Stunted Incremental Continuous

Content management Fragmented Implemented ECMs Implemented a digital platform

Process automation Manual Automated Implemented a digital platform

Customer experience Disappoints Caters Embraces

Customer engagement Generic Personalized Real time

Back office integration Fragmented Integrated Optimized

Platform model On-Premises Virtualized/Private Hybrid/converged

Analytics capability Logs data Measures Delivers insight

Organizational readiness Digitally challenged Digital novices Digital native

Laggards, Transitional, and Innovators

It’s common to segment maturity processes into five levels. That approach originated
with the Capability Maturity Model developed by the US Department of Defense, and
it makes sense in many instances. Here, we’ve simplified the progression to three
levels which we believe sufficiently summarizes the state of organizations today: You’re
currently a digital leader, you’re working on digital initiatives, or you haven’t started on the
path to digital transformation.

Companies in this last group are the Laggards. These companies are far behind the curve.
They don’t understand the revolution that’s taking place or how it affects them, and they
are likely to struggle in the coming years or disappear completely.

Most companies fit in the middle (the Transitional phase). They are taking steps to digitize
their business processes and some aspire to become digital enterprises.

A small set of organizations are true digital enterprises, and these we’ve labeled
Innovators. We think it’s fair to say this group is comprised primarily, if not entirely, of
companies that were born digital enterprises, as opposed to companies that have
undergone digital transformation.

Competing for digital customers: Why companies must embrace digital transformation now 14/22
 Digital progression
Defines a company’s journey from digital awareness to digital enterprise.

• Laggards: These companies are investing little in digital transformation, either

because they do not see the value or because they’ve become defensive in the face of
competition and are essentially circling the wagons around familiar business processes.

• Transitional: Most companies have invested in digital initiatives but they’re still
fragmented and siloed. Departments are not fully aligned. Marketing campaigns are not
integrated across all channels. The company lacks a 360-degree view of customers
that would ensure consistent engagement between the company and customers.
Some digital capabilities have been deployed but the company lacks a comprehensive,
enterprise-wide digital platform.

• Innovators: The company is digital to its core–in its personal interactions, as well as its
interactions with other organizations. It has a digital workplace, a digital value chain,
and it operates with a digital mindset.

Business model

Defines the degree to which a company has oriented its business toward digital customers.

• Laggards: We call these companies “analog” (that is, pre-digital). They operate
according to 20th-century business rules. To the extent that they are digitizing
processes, they’re focused on efficiency and cost savings, as opposed to using digital
technologies to offer customers new ways to engage and transact.

• Transitional: If you’re reading this paper, you probably work for a company in this
camp. You see disruption in hotels, video rental, and the taxi industry, and you’re trying
to understand both how the digital economy will affect your industry and how your
company can use digital technology to its advantage. You are digitally aware and on a
digital journey, but you’re not digitally integrated.

• Innovators: The company’s products and services are fundamentally digital in a

way that wasn’t possible 20 years ago. The company’s strategy is centered around
delivering a unique customer experience, making purchasing easy, transparent, fast,
and incredibly convenient. The company is likely disrupting markets or opening new
markets that haven’t existed.

Innovation agenda

Defines the extent to which a company prioritizes innovation as a core business strategy.

• Laggards: When it comes to digital transformation, Laggards arew companies that have
stopped innovating, that are battening down the hatches and taking a defensive stance.
This strategy is ultimately untenable.

• Transitional: Most companies are innovating in an incremental way. This strategy may
be sustainable for a time, provided they are not blindsided by a new digital enterprise
that disrupts their industry.

• Innovators: The nature of digital enterprises is continuous innovation. Companies with

a digital mindset constantly seek better ways to improve customer engagement. But it’s
a moving target: Digital technology is rapidly evolving, and the digital enterprise must
respond rapidly as well. A company that exemplifies this strategy is Google, for whom
continuous technological innovation seems to be a core philosophy. Netflix is another
company is continuously innovating and adapting to new delivery models,
even becoming a content producer.

Competing for digital customers: Why companies must embrace digital transformation now 15/22
 Content management and process automation

Defines the degree to which a company has digitized and automated workflows and
document-centric processes.

• Laggards: These companies are stuck in paper-based processes. To the extent they
manage information digitally, it’s highly fragmented and inefficient. They’re likely to use
file shares or rely on email as a collaboration and content management tool. They may
use an application like Microsoft® SharePoint® on an ad hoc basis. Processes are often
tedious and manual–and “that’s how we’ve always done it.”

• Transitional: Although most large companies have implemented some form of process
automation and content management, the efficiencies gained with these technologies
have begun to level off. And yet there remains a large opportunity. Some 230 million
knowledge workers around the world spend 60 percent of their time searching,
exchanging, emailing, and collaborating on content.44 Making these processes just
25 percent more efficient could yield $1.35 trillion in savings per year worldwide.45
Where will these gains come from? We believe gains in knowledge worker productivity
will come from a new generation of smaller, lighter, ECM and business process apps
that are optimized for mobile and cloud, easily deployed, and designed around a user
experience that requires little or no training.

• Innovators: For the Innovators, ECM and BPM are components of an overall digital
platform that includes integrated social, data analytics, mobile, and cloud capabilities.
The new generation of ECM productivity apps are deployed and are allowing
organizations to more quickly deliver new products and services to their customers.

Customer experience and customer engagement

Defines the degree to which a company uses digital technology to optimize the
customer relationship.

• Laggards: From the perspective of millennials and other digital natives, customer
experience with these companies is disappointing. Products and services are not easy
to order online. The process is slow and cumbersome. Interactions are fragmented
so that multiple calls and contacts with the company result in repeating information
multiple times. There’s little confidence that the company can easily identify an
individual customer. The message to the customer always feels generic, impersonal.

• Transitional: Most successful companies have done a lot to improve customer

experience for individual customers. They have begun to use marketing techniques
that deliver personalized messages through various channels–from telesales to email
marketing. We say that these companies are catering to customers, which is good, but
it’s not the same as real-time engagement.

• Innovators: These companies build their business models around the customer
experience. That is, they start by understanding a need or problem from the perspective
of the customer (for example, why is it so hard to get a taxi?) and then ask, what would
the ideal experience look like for the ideal product or service that solves that problem?
These companies focus on real-time engagement with customers and prospects
across channels, from social media to online chat. We say that these companies do
more than cater to customers; they embrace them.

Competing for digital customers: Why companies must embrace digital transformation now 16/22
 Back-office integration

Defines the level of integration across applications such as ERP, CRM, and ECM.

• Laggards: One sign that an organization is not ready for digital transformation is a
lack of back-office integration. Laggards have not made this step a priority; as a result,
sharing information between digital systems and departments involves slow rekeying
of information. This acts as a drag on the company, reduces collaboration, and
slows innovation.

• Transitional: Of course, integrating systems is a process that just takes time. Most
companies are somewhere on the path from fragmented to fully integrated within a
digital platform. And many have discovered that an ECM platform can play an important
role in tying together disparate digital systems.

• Innovators: These companies have invested time and resources integrating their
essential systems in a complete digital platform. They further optimize back-office
systems for capturing, analyzing, and acting on customer data.

Platform model

Defines the extent to which a company takes advantage of capabilities such as cloud and
mobile to empower its workforce outside the corporate walls.

• Laggards: Data and enterprise applications for these companies are locked down
behind the corporate firewall. Access by employees and partners, much less
customers, is difficult at best. Email may be available on employee phones, but tools
needed to collaborate with others while away from the desk are not permitted or have
not been implemented.

• Transitional: These companies have deployed VPNs for external access to data and
applications. They have begun to implement cloud applications for some data and
they have accepted a BYOD policy. Nevertheless, most applications and data remain
securely protected in the corporate data center.

• Innovators: These organizations begin with the premise that employee work can
take place any time, any place, and that data can be easily and securely shared with
customers, partners, and any trusted person outside the company. They leverage
hybrid cloud models to enable this environment. They also employ a converged
infrastructure that combines storage, networking, and compute functions for maximum
flexibility and efficiency.

Analytical capability

Defines a company’s ability to process and analyze data, especially customer data, to
make strategic decisions.

• Laggards: These companies may capture data regarding customer relationships,

although they have not yet begun to effectively use that data to become more agile,
more customer-centric. To the extent that they use data within the organization, their
efforts are directed toward operational efficiency and cost control.

• Transitional: Most large organizations have begun to capture data to measure

effectiveness of their sales and marketing programs. They are at the level of
measurement but have not yet evolved to the next phase in data analytics.

• Innovators: Digital enterprises live and breathe customer data. They use this data
to achieve a high degree of insight, decision-making, responsiveness, and customer
engagement–in real time.

Competing for digital customers: Why companies must embrace digital transformation now 17/22
How OpenText can help Organizational readiness
Defines how prepared from an organizational perspective a company is for digital innovation.
Fundamentally, this first step
• Laggards: Change does not happen without leaders to lead the way. Laggards, who do
in digital transformation is
not see the change upon them, have not taken steps to consolidate responsibility for
about bringing order to your digital initiatives or charter a team with the mandate to lead digital transformation. These
companies will have a difficult time getting started without the right executive leadership.
existing information and
• Transitional: After stumbling along for a while, perhaps with ad hoc, departmental
data so you can focus on
initiatives intended to make the company more “digitally aware,” many organizations
moving forward. conclude that delegating responsibility to a chief digital officer, as Starbucks did, is an
important first step. And just as Adam Brotman did at Starbucks, a strong CDO can then
OpenText™ InfoArchive and OpenText™ spearhead transformation throughout the enterprise.
Captiva™ help you achieve that goal
• Innovators: The fully mature digital enterprise, with a leader of digital strategy and a
and lay the foundation for the next
team qualified to execute against that strategy, is ready to launch new business models
phase of your digital transformation.
and reinvent the way consumers buy or engage. By investing in digital and pivoting the
OpenText offers InfoArchive as organization, even companies like Target and Coca Cola,46 mainstays in the business
a unified enterprise archiving world, may soon by the innovators and disruptors of the future.
platform that allows organizations
to consolidate data and content Digital transformation
from legacy systems, eliminate
tape storage, and manage data We’re deeply involved in the digital enterprise. We are on a journey ourselves to
and content in a single repository. achieve the goals set forth in this paper.
Captiva complements InfoArchive
And we are evolving our products to provide our customers with hardware and software
with document capture technology,
systems designed for a digital enterprise.
which enables organizations to capture
valuable information currently “stored” We’re also deeply interested in assisting our customers on their digital journey, providing
in paper documents and make it vision, advice, and technology to help them become world-class digital enterprises. This
accessible to digital processes. section outlines, in broad terms, the steps organizations must go through to become
digital enterprises. We have peppered this section with case studies of companies that
have deployed OpenText products as part of their journey of digital transformation. We
certainly don’t mean to suggest that OpenText is the only technology vendor enabling
digital transformation; our products fit within a digital platform that includes products sold
by other software and hardware providers. Nevertheless, the following stories illustrate
ways to advance your digital journey with some of the components of a digital platform.

Step One: Get your house in order and recover money for innovation

Inertia is often the hardest force to overcome. Organizations with legacy systems spend
significant time and budget maintaining them. They won’t replace them with newer,
more powerful, more efficient systems because they fear losing years of valuable and
irreplaceable data. Moreover, organizations will justify the decision to preserve legacy
systems by citing the investment they’ve made in their hardware and software systems.
Economists refer to this idea as the sunk cost fallacy.

The truth is, there’s no time like the present to get started on a digital journey–and getting
started will be both easier and more rewarding than many organizations realize. Here’s
why. As systems age, they can become a financial drag on the business, not only draining
valuable resources, but acting as a disincentive to progress. They no longer provide the
productivity gains they once did or the levels of productivity that newer systems can
create. They also require more maintenance time, especially compared with cloud-based
solutions. More crucially, legacy systems anchor you to the technological past and make
innovation difficult in a digital world.47

Competing for digital customers: Why companies must embrace digital transformation now 18/22
How OpenText can help Replacing legacy systems will eliminate the cost of licensing and maintaining older systems
and free up money for investing in new systems, applications, technology, and innovation.
Step two is about building This is one way to justify an investment in digital transformation. People in a leadership
position, with the vision and knowledge of what needs to be done to transform the
the digital platform, and
business, may find success persuading executives to decommission legacy systems and
OpenText™ Documentum™ reinvest the recovered costs in systems that support digital transformation and innovation.

and OpenText™ Documentum™

Case study: BMO Harris Bank
xCP can play a critical
BMO Harris Bank, a large bank in the US and Canada serving personal, commercial,
role here. and affluent customers, realized that it was spending too much on legacy systems.

As a financial institution with a history of acquisitions, each one of which brings more data
Documentum provides Enterprise
into the enterprise, BMO Harris Bank wanted to pull data from its acquisitions into one
Content Management capabilities
repository, sunset legacy applications, reduce costs, and make it simpler for employees
such as collaboration, mobility,
to access data.
security, and compliance.
Documentum xCP automates complex, By deploying InfoArchive, BMO Harris was able to combine its data management systems,
information-intensive processes to consolidate data from acquisitions, and provide an easy-to-use interface for employees.
drive better business decisions. The company calculated that it saved approximately $5 million per year from reduced
licensing, infrastructure costs, and support.

Case study: City University of Hong Kong

Many organizations operate in a paper-based paradigm. For them, digital transforma-
tion must begin with the conversion of paper documents to digital formats.

This was the case with City University of Hong Kong, which embarked on a paperless
office project that won awards, reduced costs, and achieved sustainability goals. The
project also saved $500,000 per year.

With Captiva, the University converted its physical archive of personnel records and
payroll folders into digital records for automatic recognition, categorization, and
extraction of PDF documents. The implementation created a secure digital archive,
enabled the HR and finance departments to make faster decisions, and saved natural
resources, eliminating 95 tons of CO2 emissions.

Step two: Build a solid foundation and prepare for transformation

As we suggested above, most companies are in the transitional phase. They have
invested in digital initiatives but those initiatives tend to be fragmented and usually
implemented at a departmental level. Applications are siloed. Lack of integration across
the organization limits innovation. And opportunities remain elusive for creating greater
engagement with customers.

To bring order to their information assets, companies must focus on building the
foundation of a comprehensive, enterprise-wide digital platform. This platform will contain
many pieces, including CRM, ERP, and a complete content strategy that is consistent and
coherent across the entire organization. A content strategy will necessarily include the
key components of ECM and BPM. Together, these components enable you to control
your information assets, eliminate fragmentation and data silos, and automate business
processes for better, faster decision-making.

Competing for digital customers: Why companies must embrace digital transformation now 19/22
“Thanks to Case study: Centre Hospitalier Universitaire de Nancy
Documentum The Centre Hospitalier Universitaire de Nancy (CHU Nancy) was the first radiology

solutions, all teams center in France to become “100-percent filmless” when it switched in 2006 to an
electronic image reading system.
can instantly In 2010, the hospital deployed Documentum and began transferring nearly 200 TB of
access all imaging data on 500 magnetic tapes to a new SAN disk archive system. Managing this data in
Documentum means that physicians–particularly those who work in oncology, pediatrics,
examinations, and geriatrics–can access images far faster, a requirement for emergencies and other

whether they were unscheduled patient visits.

created in the last Furthermore, practitioners can now access their patients’ imaging files from home or
another health facility, in a completely secure environment. These changes allow doctors
few days or over 10 to provide immediate care when decisions are critical and time is of the essence.

years ago.” Case study: Eaton Vance

Dr. Frédéric Lefèvre, a radiologist at CHU Nancy. For Eaton Vance, one of the largest and most respected wealth management firms in the
United States, modernizing its customer onboarding process was vital for the company to
remain competitive.

Its existing process was resource intensive and inefficient, typically requiring 1,000
pages of documents per account. To expedite the process, the company deployed
Documentum, Documentum xCP, and Captiva. The new system links seamlessly with all
entry points for electronic and paper documents.

Investment specialists, administrators, and auditors can now access more than five
million documents stored and managed in Documentum. By virtue of the new process,
Eaton Vance has cut onboarding time by 26 percent while increasing the number of new
account openings by 24 percent.

Competing for digital customers: Why companies must embrace digital transformation now 20/22
How OpenText can help Step three: Enable rapid innovation

With the core components of a digital platform in place, organizations are well positioned
OpenText™ Document
for digital transformation. The goal, as we’ve discussed above, is to capture a greater
Sciences can play share of the digital customer’s wallet. You achieve that by creating new products and
business models, focusing intently on the customer experience, and building deeper
an important part
customer engagement. Simply put, the digital customer is–and should be–the primary
here by enabling you focus of the digital enterprise.

to generate highly
Case study: Santander Private Banking
customized, multichannel
Grupo Santander, the largest bank in the Euro Zone by market capitalization, includes a
communications to support wealth management division that offers investment products to clients in Latin America.

a more personalized Santander Private Banking selected Document Sciences to overhaul the way it creates
and distributes client statements. This was a strategic decision designed to deepen client
customer experience.
relationships and stay ahead of the competition.

Also from OpenText is OpenText™ The system allows SPB to provide clients with more relevant data and expand the breadth
LEAP, which re-imagines ECM as a and depth of information with dynamic charts, categorization of transactions, tabular
set of discrete, function-specific summaries, and other features. Document Sciences xPression™ also provides on-demand
apps. Developers can launch new generation of custom statements and client reports, supporting more personalized
apps quickly to support internal communication and customer engagement.
productivity and collaboration, for
example. Or they can rapidly design OpenText products aligned to phases of digital transformation
innovative and engaging products and
How OpenText can help
services built on the LEAP platform.
How OpenText can help

InfoArchive Captiva Laggards

Documentum Documentum xCP Transitional

LEAP Document Sciences Innovators

About OpenText
OpenText, The Information Company™, enables organizations to gain insight through
market leading information management solutions, on-premises or in the cloud. For more
information about OpenText (NASDAQ: OTEX, TSX: OTEX) visit: opentext.com.

Connect with us:

• OpenText CEO Mark Barrenechea’s blog
• Twitter | LinkedIn | Facebook

Competing for digital customers: Why companies must embrace digital transformation now 21/22
End notes
1. “When Luddites attack,” Planet Money, http://www.npr.org/templates/transcript/ 23. Ibid. VentureBeat.
transcript. php?storyId=404701816
24. “Building the Digital Platform: Insights From the 2016 Gartner CIO Agenda Report,”
2. “This chart shows how Uber is devastating New York’s taxi business,” Vox, Gartner, September 2015.
December 26, 2015. http://www.vox.com/2015/12/26/10647418/uber-new-york-
taxi-medallions 25. “What is a true digital enterprise?” Information Age, February 16, 2015. http://www.
information- age.com/it-management/strategy-and-innovation/123459026/what-
3. NYC taxi medallions, which recently have sold for as much as $1 million each, are true-digital-enterprise
plummeting in value. See: “Cab medallion owners sue NYC, blame Uber for ruining
business,” Joe Mullin, Ars Technica, http://arstechnica.com/tech-policy/2015/11/ 26. Ibid. VentureBeat.
cab-medallion-owners-sue-nyc-blame- uber-for-ruining-business/
27. Ibid. MWD Advisors.
4. A 2013 survey from MIT’s Center for Digital Business and Capgemini Consulting
found the business leaders “overwhelmingly believe that failure to effectively 28. “The new digital workplace: How enterprises are preparing for the future of work,”
conduct digital transformation will harm their company’s ability to compete.” Dion Hinchcliffe, ZDNet, October 7, 2014. http://www.zdnet.com/article/the-new-
From “Embracing Digital Technologies,” Michael Fitzgerald, et al, Massachusetts digital-workplace- how-enterprises-are-preparing-for-the-future-of-work/
Institute of Technology in collaboration with Capgemini Consulting, 2013. https://
www.capgemini.com/resource-file-access/resource/ pdf/embracing_digital_ 29. "Millennials to take over by 2025,” Hartford Business, August 18, 2014. http://www.
technology_a_new_strategic_imperative.pdf hartfordbusiness.com/article/20140818/PRINTEDITION/140819969/millennials-
to-take-over- by-2025
5. “Six Key Steps to Build a Successful Digital Business,” Gartner, April 30, 2014.
https://www. gartner.com/doc/2725917 30. “Strategy, Not Technology, Drives Digital Transformation,” G. C. Kane, et al, MIT
Sloan Management Review and Deloitte University Press, July 2015.
6. “Gartner identifies six key steps to build a successful digital business,” Information
Age, May 21, 2014. http://www.information-age.com/it-management/strategy-and- 31. https://www.facebook.com/facebook/info?tab=page_info. Accessed November
innovation/123458018/ gartner-identifies-six-key-steps-build-successful-digital- 4, 2015.
business
32. “Essential CIO Priorities for Digital Business in 2014,” Dion Hinchcliffe, ebizQ, May
7. Ibid, Massachusetts Institute of Technology and Capgemini Consulting. 13, 2014. Emphasis added. http://www.ebizq.net/blogs/enterprise/2014/05/what_
cios_should_focus_ on_in_2.php.
8. “Kodak’s long fade to black,” LA Times, http://articles.latimes.com/2011/dec/04/
business/la-fi- hiltzik-20111204 33. Ibid. Kane et al.

9. Ibid, Planet Money. 34. Ibid. Hinchcliffe.

10. Big Bang Disruption, Larry Downes and Paul Nunes, Portfolio, January 7, 2014. 35. Ibid. Kane, et al. Emphasis added.

11. The average lifetime of a company’s presence on the S&P 500 has fallen from 36. “Businesses have digitized, but not transformed,” Dion Hincliffe, ZDNet, March
around 75 years in the 1920s, to around 15 years today. “The Digital Enterprise shift: 29, 2014. http:/ www.zdnet.com/article/businesses-have-digitized-but-not-
Why it matters, and how you can avoid being sidelined,” Neil Ward-Dutton et al, transformed/
MWD Advisors, October 2013.
37. Ibid. Kane, et al.
12. “No one really knows why the rate of turnover [on the S&P 500] is speeding up,
but technological disruption could be one big reason.” “Technology Is Wiping Out 38. “Digital Transformation: A Roadmap for Billion-Dollar Organizations,” Capgemini
Companies Faster than Ever,” MIT Technology Review, September 10, 2013. http:// Consulting and MIT Center for Digital Business, 2011.
www.technologyreview.com/view/519226/ technology-is-wiping-out-companies-
faster-than-ever/ 39. Ibid, Massachusetts Institute of Technology and Capgemini Consulting.

13. “The new digital workplace: How enterprises are preparing for the future of work,” 40. Ibid. IDC.
Don Hinchcliffe, ZDNet, October 7, 2014. http://www.zdnet.com/article/the-new-
digital-workplace- how-enterprises-are-preparing-for-the-future-of-work/ 41. Ibid. MWD Advisors.

14. Ibid, Massachusetts Institute of Technology and Capgemini Consulting. 42. “Health Matters: The next wave of medical tourists might include you,”
Laurie McGinley, February 16, 2008. http://www.wsj.com/articles/
15. Source: Bureau of Labor Statistics. Cited by Mary Meeker in “Internet Trends 2015 SB120283288380762505
– Code Conference.”
43. A small company in New Hampshire pays patients to choose a lower-cost provider,
16. “Millennials Are About to Outspend the Baby Boomer, Catching the Retail Industry passes the savings to the insurer, and makes a small cut on the transaction. As this
Off Guard,” Business Wire, October 24, 2013. According to this article, “The Planet Money podcast makes clear, the price for the same procedure at different
Millennial generation is expected to outspend Baby Boomers by 2017.” http://www. providers can vary wildly. The reporters cite an example of an MRI priced $800 at
businesswire.com/news/ home/20131024006116/en/Millennials-Outspend-Baby- one location and $450 at another location, just a half- mile away. In this case, the
Boomer-Catching-Retail-Industry lower-cost provider also used newer, better quality equipment. See “Episode 655:
Pay Patients, Save Money,” Planet Money, October 5, 2015. http://www.npr.org/
17. “Internet Trends 2015 – Code Conference,” Mary Meeker, May 27, 2015. http://www. sections/money/2015/10/02/445371930/episode-655-pay-patients-save-money.
kpcb.com/ internet-trends
44. See “Ten IT-enabled business trends for the decade ahead,” McKinsey Quarterly,
18. See Thomas Friedman’s article on Airbnb in the New York Times: “Welcome to the May 2013. http://www.mckinsey.com/insights/high_tech_telecoms_internet/
‘Sharing Economy,’” July 13, 2013. http://www.nytimes.com/2013/07/21/opinion/ ten_it-enabled_business_ trends_for_the_decade_ahead
sunday/friedman- welcome-to-the-sharing-economy.html
45. Based on $9 trillion in annual employment costs for 230 million knowledge workers.
19. “As a clear shot across the bow of the hospitality industry, Airbnb will provide on a
peak day placements for up to 200,000 people per night. In comparison, the global 46. “Why Target and Coke are setting up tech incubators in India,” Quartz, November
hotel megachain Hilton has only 600,000 rooms… Thus the size of some of these 27, 2013. http://qz.com/151832/why-target-and-coke-are-setting-up-tech-
new startups is now starting to challenge traditional market leaders.” “While most incubators-in-india/
companies weren’t looking, social business remade the economy,” Dion Hinchcliffe,
ZDNet, July 29, 2013. http://www.zdnet.com/article/ while-most-companies- 47. “…problems arising from older systems are a legitimate issue. For one, such
werent-looking-social-business-remade-the-economy/ systems can be complex to update, especially when connecting to new kinds
of technology. Limitations of IT systems ranked third on the list of significant
20. “IDC MaturityScape: Digital Transformation,” IDC, March 2015. organizational barriers to Digital Transformation.” From “Embracing Digital
Technologies.” Ibid, Massachusetts Institute of Technology and Capgemini
21. “Starbucks: taking the ‘Starbucks experience’ digital,” Capgemini Consulting, 2013. Consulting.
http:// ebooks.capgemini-consulting.com/dm/Starbucks.pdf

22. “How Starbucks is turning itself into a tech company,” VentureBeat, June 12, 2012.
http:// venturebeat.com/2012/06/12/starbucks-digital-strategy/

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