Planning Ahead with Dr. Jeanne Ross

March 25, 2020

Dr. Jeanne Ross of the MIT Center for Information Systems Research discusses how to lead an organization’s digital transformation for the pursuit of new revenue models.

In this installment of the Harvard Business School Healthcare Alumni Association (HBSHAA) Q&A series, providing executive insights for readers to shape their own career paths, Dr. Jeanne Ross of the MIT Center for Information Systems Research speaks to HBSHAA Emeritus Board Member Michael Wong about how to lead an organization’s digital transformation for the pursuit of new revenue models.  

Michael Wong: From Fortune 500s to startups, nearly every business seems to have raised the digital transformation flag as a panacea to address COVID-19’s attack on their revenue. Yet with your research pointing out that even some large companies are securing only 5% of their revenues from new digital value propositions[1], what is today’s reality for business leaders, regardless if they’re a big pharma c-suite executive or the local Mom & Pop store owner? 

Dr. Jeanne Ross: If past performance was a predictor for future success, frankly the odds for businesses to secure successful digital transformation is low. But perhaps one silver lining of this recent pandemic is that all organizations are being forced to recalibrate their mindsets when it comes to change. Even industries, which have had relatively high profit margins, pharmcos and investment banking to name a few, should now realize that their historical playbooks of success should no longer be barriers to needed change.  

It takes a long time for established companies to become digital because transformational change needs to occur on two fronts.[2] First, the organization needs to become digitized for operational excellence.  Digitization requires a disciplined execution of standardized processes to build reliability, predictability, security, and visibility of client engagement. To ensure standard processes are consistently implemented across the enterprise, senior executives need to dictate process and data standards as well as inspect that implementation is taking place.[3] Second, senior executives need to design their organization such that their teams are encouraged and empowered to quickly identify digital-infused solutions which clients are willing to purchase.  

To lead and drive this digital transformation journey, what’s the future look like for my pharma colleagues who didn’t graduate from MIT, Caltech or one of the Indian Institutes of Technology?

First, while one does not need to have a Ph.D. from MIT, a critical success factor is executive engagement since the digitization process requires a top-down approach. It may not be a popular approach but with my 20+ years at MIT’s CISR group, organizational resistance to change and especially standardization can jeopardize the table-stakes digitized transformation.  Of equal importance, senior executives set the tone for an organization to experiment with digital offerings. To do so, teams need to be empowered to quickly pivot to new digital-infused solutions which may not align with the C-Suite’s current strategy. Just imagine if Airbnb had stuck with its original vision of renting air-mattresses in peoples’ homes. Executives’ willingness to question if their current strategy is still valid given the speed of change in the marketplace is crucial for long-term viability. 

Second, be willing to create new paradigms during this time of stress and uncertainty. Leaders should be inspired by the capabilities of digital technologies. Consider how digital technologies-and massive amounts of data allowed Uber and Lyft to upend the hired ride industry. Philips, the Dutch conglomerate, has refocused its vision to become an innovative health-tech company-consistently enriching the value proposition of products like Xray machines, breathing support devices, and baby nursing products to provide insights and integrated solutions.

Find ways to make your customers’ lives better. For instance, consider the historical experience of buying a used car. CarMax came into business to transform that experience. Now it is taking advantage of digital technologies-and a constantly expanding view of what’s possible-to provide a seamless omni-channel experience from shopping for a car online, making a purchase, securing an auto loan, and taking delivery of the car. 

Remember that digital technologies allow you to become better at what you’ve always done (digitize) and to introduce new customer value propositions (digital). Use the current crisis to introduce transformational change.

Dr. Jeanne Ross is Principal Research Scientist of the MIT Center for Information Systems Research. Michael Wong is an Emeritus Board Member of the Harvard Business School Healthcare Alumni Association.

[1] High, Peter, MIT’s Jeanne Ross On Why Companies Are Only Getting Five Percent Of Revenues From Digital, Forbes, Jan 20, 2020.

[2] Digitized versus digital:  https://cisr.mit.edu/publication/d4d-video1   

[3] Designing a Responsive Organization: https://cisr.mit.edu/publication/d4d-video6