The digital transformation has fundamentally changed clients’ needs and expectations, requiring brands to rethink their purpose and reinvent themselves. A look at the health care industry shows how these challenges can be turned into opportunities.
In a recent NZZ am Sonntag article, Cisco CEO John Chambers stated that 40% of companies will not survive the next ten years. This prediction is to concern brands across industries, even strong and established ones. While industries in saturated markets will have an especially hard time, the health care industry is offered a promising silver lining. It looks at an expected market growth of 50% in the next five years, expecting to total USD 502 billion.
Markets are changing with accelerating pace. The digital transformation in particular has changed consumers’ needs and expectations and shifted boundaries. To understand the magnitude of change and grasp what will be possible in five years, it helps to look ten years back at products, services and technologies we then cheered but that today have become obsolete.
Alternatively, we can look to established brands such as UBS and how they are already embracing the new reality of collaboration and the leveling of powers within the market. Commenting on a recently launched innovation initiative, UBS CEO Sergio Ermotti stated:
“The financial services industry is undergoing a massive evolution as banks and other providers have to rethink their entire operating models in order to adapt to shifting client needs. [...] Financial services firms today must possess an intellectual desire to understand how technology can help them adapt to changing economic forces and new client and employee behaviours. They also need to be open to finding some of those answers outside their own walls. The companies that fully recognise and embrace these beliefs will be leaders in shaping the future of the industry.”
If there is anything that should be taken away from this quote, it is the insight that there is no more business as usual. Survival in the digital world hinges on a fundamental change in perspective. It requires us to see things differently.
Take Facebook, for example. It is already the biggest country on the planet with 1.4 billion inhabitants. Perhaps that really is the right way to look at it. Even WhatsApp with its 800 million users is bigger than the US, Indonesia and Brazil combined. These are new markets with huge potential.
In this new digital reality, boundaries are shifting. Companies need to reevaluate their purpose (why), their offering (what) and the ways they engage with their clients (how). While Apple still benefits from its exemplary purpose of “seeing things differently,” Swisscom has had to reinvent itself in recent years. Today, the company generates 80% of its income with services that did not exist five years ago.
The health-care industry in particular will have to brace itself, as more and more consumer brands are going after a share of their market. The digital world is characterised by two trends: democratisation and collaboration. Rather than thinking “what can others do for me?” we need to think “how can others benefit from what we do?”
A good example of the success that can be achieved with this approach is Fujifilm. It is a little-known fact that oxidation – the leading cause of freckles and skin aging – is responsible for color fading in photographs. Fujifilm used its advanced understanding of antioxidation technology to create Astalift’s award-winning antiaging products.
Reinventing your purpose alone is not enough. The digitally enabled crowd requires you to live it, too. Big data analytics not only gives companies insights into what customers wish to experience, it also gives customers the ability to become experts on any given subject, compare offerings and recommend their favourites to peers. This is why companies will have to walk the walk if they want to succeed. And that means they will have to collaborate and democratise.
The room-letting network Airbnb imagines “a world where one can belong anywhere.” Enabling anyone with a house or apartment to join in their site enabled the company to overtake major hotel brands in terms of its valuation by investors and to outpace them in terms of numbers of guest bookings.
Coca-Cola also shows how collaboration across industries bears fruit. In 2012, Coca-Cola entered a 50/50 joint venture with Sanofi, the French pharmaceutical company, to manufacture and sell “beauty drinks” at French pharmacies.
However, it is not only established consumer brands that are entering into cooperations with established pharmaceutical brands. New players are gaining leverage as well. In 2014, Google Ventures invested 38% of its capital in promising life-science and health-care companies that cater to the new needs of a digitally enabled and collaborative world.
Living your purpose means operating by different standards as well. Apple, for example, uses Net Promoter Score (NPS) as a KPI for its store managers. The method measures customers’ overall brand experience by asking them just one single question: “How likely is it that you would recommend your brand to a friend or colleague?”
While Kodak is only a major brand for those born before the mid-nineties, the brand GoPro managed to advance from a no-name start-up to the largest seller of modern camera equipment. GoPro exemplifies the right attitude to engaging with clients: it allows its customers to use the company logo in the videos they make and post online and consequently enables them to play an active role in their marketing strategy. Delivering your purpose means engaging with your customers and getting them involved – even in marketing your product or service.