Digital Value Creation

Why do some companies seem to completely digital transformations effortlessly while others struggle? I believe organizations can achieve the same flow state as people when faced with challenges. If the majority of the people working are in flow sate then their organizations are too. And that is what happens when new innovation projects including digital transformations just seem to click.

I’m clearly not in the studio this week. In fact, I  am in Las Vegas at HIMSS, the largest healthcare tech conference. We had around 20,000 executives here live and thousands more online. This was the largest post-pandemic business conference focused on digital transformation.  This was also one of the first times so many businesses came together to share how they dealt with the crisis, what they learned from it, and what technologies helped them succeed. More importantly, what they will do differently going forward. While the primary topic was healthcare, there were great insights that any industry can use. Here are a few that stood out for me.

If you ask someone how to create more value in business, you’re likely to hear the obvious - drive revenue growth and cut costs. That is of course the physics of any business. But every executive knows that it is not that simple. To increase revenues, you likely have to spend more and if you cut costs, revenue tends to suffer. Either way, revenues, and costs are just indicators, they are not specific actions you can take. In the last few years, business strategists redefined what value creation means. It is all about the steps you take to improve customer experience and increase the customer’s willingness to buy. Let’s see how that may change your digital value creation strategy.

My latest post is on the massive post-pandemic digital expansion due to labor shortage and massive economic growth.

While businesses focused on cost and lean operations last year - now it is all about growth, and major digital expansion.
Companies are moving from tactical to the strategic use of automation, analytics, and customer experience like never before.

We are living in an unprecedented labor market. Over 10 million jobs were unfilled in May 2021 and millions of people quit their companies last month. While there are many reasons this is happening, one thing is clear. The expectations of your workforce have fundamentally changed in the last year. I believe digital technologies can help stop the exodus and attract new talent.
Here is how

I went back on the road this week. I was having real meetings with real people in real offices in New York. Returning to normal business? Hopefully. The recurring topic of the discussion was this. How will hybrid work change how we work together and the technologies we use going forward?

Every few months I take a look at recent research studies and surveys on the state of digital transformation. Normally there are a dozen such surveys in 6 months. This time I found over 100 reports. This is a testament to the fact that digital transformation is now a top 5 strategy goal at most companies.  So let’s take a look at what the data shows

In the last few months, I noticed a remarkable shift in businesses from cost to growth. In 2020 digital transformation mainly focused on cost efficiencies and labor arbitrage. This year it is all about growth, digital customer experience, and better employee experience. Economic expansion and labor shortage create great opportunities for companies with a digital-first mindset.

One thing that sets private equity apart is its relentless focus on value creation. That's why we have this channel. We want to bring  PE value discipline to any digital transformation program.

A value creation plan, or VCP, is an enterprise-wide view of all initiatives that will improve the company. Above and beyond business as usual. These can be both digital and non-digital projects.
There are some best practices that make this value creation plans particularly effective. There are 3 great things private equity firms do when they create value creation plans.

1) Have very few but high impact initiatives
2) Have the right executive own the results
3) Treat value delivery as important as deadlines and budgets

When talking to digital-first companies I noticed 5 big differences in their way of thinking. 

1) Digital is a business model
2) Digitizing core functions
3) Scaling digital capability
4) Measuring business impact
5) The C-Team's ownership of digital