Digital Transformation
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Digital Transformation: A Readiness Exercise

This exercise will serve as the jumping off point for a series of articles on the topic of digital transformation within healthcare.  We will revisit this case study from time to time.

Case Study

It’s January of 2016 and you’ve been selected by the Barnes & Noble board of directors to become the CEO. Here’s the catch, they have a time machine and they want to send you back to the past to be CEO then. They can only send you back 6 years to January of 2010. Here is a press clipping from December of 2015 to give you an idea of what you want to avoid.

Should Barnes & Noble just rename itself Amazon’s Showroom?

The book and music retailer said sales fell again in its most recent quarter. It also reported a bigger loss than last year — and more red ink than what analysts were expecting.

Perhaps most alarmingly, Barnes & Noble’s long-term debt tripled from a year ago to $192 million. The company has only $13.4 million in cash — down from $32 million a year ago.

Shares of Barnes & Noble plunged more than 20% on the news and are now down nearly 40% this year.

You can also take a look at the 2010 B&N Annual Report to see what they did.

There’s your scenario. You strap in and after whatever special effect you want, you are now in the B&N boardroom in January of 2010 as the new CEO.

You are our leader, where are we going? If it’s easier you can give the answer from the CIO or Chief Digital Officer perspective as many of my followers are from the technology side of the house.

You have to turn this company around, change their future. My 16-year-old daughter’s suggestion was to take the $32M and invest it in Amazon stock. (196/share to 964/share today) See if you can do better than her.

Here are some questions to consider.

  • Do you acquire Borders to expand your retail footprint? They won’t file for Chapter 11 until February of 2011.
  • Do you upgrade the ERP which will integrate your business more, provide a better point of sale experience and generally make your backend operation better? The project will take 2 years to complete, it’s a heavy lift operationally and will require the focus of your best people for the duration, your operating cost will increase when complete and you will have to take on long-term debt. You’re in charge, do we have the approval to begin?
  • What is the role of the CIO, Chief Digital Officer, VP of Innovation? For that matter where does the Chief Operating Officer and Chief Strategy Officer participate? B&N launched the Nook, is Digital Transformation a technology strategy or a business strategy?
  • Do you believe the culture will support innovation?

If you want to start a public dialog you can visit the original post on LinkedIn.

Our Digital Transformation Consensus

I believe, as many of you do, that technology innovation is key to the future of healthcare, but we still have more questions than answers.  In a recent Avia / American Hospital Association study they shared the following graphic which reinforces our shared belief in digital transformation.

 

Innovation Need
Source Avia / American Medical Association Digital Innovation Survey

 

417 respondents, 44 CEOs and 273 innovation leaders within healthcare and there appears to be a consensus that innovation is important to meeting the long-term goals for the health system.  We recognize the need and the value, the question remains for many, where do we start and where do we want to go?

I find that the exercise provides a good foundation for a conversation.  Conversations are low-risk ways of exploring what a digital future might mean for healthcare.  The retail book business is far less complex than healthcare which makes it a perfect case study.  Whatever we glean from this exercise will be much more difficult to implement in healthcare given the regulatory framework, incentives, financial models, culture and existing business models.

Regardless of the complexity of healthcare, digital will have an impact.  Consider that with two developers and a data scientist with an open source framework we were able to create an application that had an 80% success rate in reading radiology images.  This was one of those Google type side projects that the developers wanted to try out.  What if this type of system could retroactively review every image in the PACS system and look for overlooked conditions like lung cancer?  What if the success rate on these reads suddenly went to 99.999%, well above humans, what impact might that have?  This is the tip of the iceberg.  Digital will impact healthcare.

Our Digital Transformation Intentions

Our intention is to facilitate a conversation.  We have a point of view, disruption in healthcare is coming and in some ways has already started.  This isn’t an alarm, it’s a starting point.  Our hope is to provide you material that can help first to identify the right questions and then explore what place you want to stake out in the digital future.  From there we will explore what is required to own that digital future by exploring other industries and circling back to what is working within healthcare.  We will explore questions around culture, skills, roles, capabilities, and technology.

One of the more interesting questions we will explore is “who are you innovating for?”  A common answer is “the customer”.  Who is the customer of the health system?  Medicare, Payers, bondholders, employers, brokers, physicians, patients or consumers.  Each of these call for a different set of strategies, operational changes, and technologies.  We will explore each.

I look forward to engaging in this dialog with you.  As always you can reach me at [email protected] and follow me on Twitter @thePatientsCIO.