The typical strategy cascade begins by asking the questions about ‘where to play’ and ‘how to win’ — enabled by new business models and relentless customer focus — while the next question of ‘how to configure’ is answered with infrastructure and organisational changes.
First, companies must reimagine their business for the digital age. Already, big tech companies are reimagining themselves as healthcare businesses. The traditional healthcare companies must do the same with respect to technology, adopting a tailored digital vision, strategy and implementation plan. For example, companies from pharma and medtech heritages are building virtual clinics via telemedicine, while established service businesses are establishing a ‘digital twin’ of their business by creating a software duplicate of their operating model. This can help them expand globally without requiring physical infrastructure, much like Uber creates a global service experience with the drivers and vehicles always being local.
Amazon has embarked on a healthcare-focused expansion strategy. One key element is entry into the online pharmacy space by offering drug deliveries, a natural extension of their mail order model. To implement this strategy, they acquired PillPack for US$750 million, breaking into the US$500 billion prescription medicine market.
Companies must reorganize their business. They need new capabilities to drive innovation, digital and culture change, and to offer better customer experiences. This often involves creating new leadership roles such as a chief digital officer and/or a chief experience officer and implementing new ways of working: continuous innovation, design thinking, agile development, and the close coordination of development and operations (devops). Studies3 show that these approaches, taken together, can double productivity, shorten time to market, significantly increase quality and customer satisfaction, and greatly improve return on investment.
Polpharma created a new chief digital officer role and launched a ‘digital community’ and supporting collaboration tools to enable new ways of working throughout the company. Cleveland Clinic, one of the top hospital systems in the United States, has embarked on an agile transformation, with new working practices. For example, they have gathered together teams of clinicians to create social contracts, take part in biweekly retrospectives, and plan their work and deliverables as a group, supporting them with mobile apps and wireless internet of things4 (IoT) applications.
Companies must rebuild their operations and infrastructure to maximize the benefits of digital technology. This includes looking at ways to harness digital to further standardize, automate, and enhance front- and back-office core operations. In parallel, companies must support these new paradigms with appropriate digital infrastructure and enablers. This could include building data repositories to train AI, partnering with digital agencies, and selecting developer and cloud platforms (e.g. Apple, Amazon, Google, Microsoft, IBM).
Novant Health, a US-based multistate hospital and outpatient network with more than 600 locations and five million patients, recently announced the migration of its Epic electronic medical record system to an enterprise cloud infrastructure. The move is designed to enhance business agility while reducing costs.
Companies must refocus their business on an optimal customer experience and digital services, and continuously seek to eliminate pain points, whether they are operating in the B2C or B2B world. This requires digital go-to-market mechanisms and data insights. A key differentiator is being able to offer a better customer experience at an equivalent, or ideally lower, price point. Creating data analytics capabilities, partnering with digital agencies and creating in-house design centres are just some of the approaches that many companies are currently implementing.
The Royal Children’s Hospital in Melbourne, one of Australia’s top medical centres, has created an award-winning mobile app (Okee in Medical Imaging) designed to help children overcome their fear of undergoing an MRI scan. The result is a superior customer experience for both children and their parents.
Companies must reinvent themselves with new partnerships that allow them to build and participate in emerging digital ecosystems — loose networks of companies, suppliers and other stakeholders. New business models and markets need to be evaluated. These might include leveraging the crowd economy (e.g. linking patients to one another or with healthcare professionals), the free data economy (i.e., providing free services to one customer group that are paid for by third parties), the smartness economy (e.g. AI as a service) or the subscription economy (i.e., paying for a digital service on a monthly or annual basis).
Memorial Sloan Kettering Cancer Center, the largest and oldest private cancer hospital in the world (founded in 1884), partnered with IBM to create a digital twin that uses AI to duplicate its cancer practices. That software is now in use in more than 200 hospitals across Asia, significantly expanding the hospital’s business footprint and data capture. Qantas, Australia’s flagship airline, collaborated with insurance provider NIB to create a health insurance company that uses a well-being app and allows customers to earn frequent flier points for activities such as walking, running and cycling.
Tencent, the maker of WeChat — a platform with 1.2 billion monthly active users — has made investments and alliances across the digital health spectrum with Chinese and international businesses such as DXY, Babylon, Medlinker and ZhongAn insurance amongst others.
Roche has publicly announced partnerships with Flatiron, Syapse, GNS Healthcare and Owkin in AI alone.
Taking the temperature of companies’ digital health
The first questions for businesses beginning a digital transformation are always “How ready are we?” and “What should we do next?” L.E.K.’s DEX framework provides business leaders with a way of evaluating their organizations’ capabilities — and those of their rivals. So, how does this model work in practice?
To conduct an assessment, we survey clients and assign them to one of five categories based on their responses across a range of success factors, such as digital strategy, ecosystem development, and organisation (see Figures 5 and 6):
- Traditionalists are the least digitally evolved. Important digital features are either missing or underdeveloped, while digital activities are ad hoc and uncoordinated and lack any overall digital strategy.
- Novices possess basic digital capabilities.
- Intermediates have functioning digital capabilities in specific areas, but they are not resident across the entire enterprise.
- Advanced organizations possess digital functionality that stretches across most of the company.
- Champions are the most digitally evolved group. Their digital capabilities are fully functional across the company, they are guided by an overall digital strategy, and they make optimal use of their digital products and services.