By Barry Libert, Megan Beck & Yoram Wind
DIGITAL native upstarts are gutting traditional industries one at a time, leveraging scalable technologies and participative networks. That’s why legacy organizations are tackling digital transformation.
But shifting a firm’s asset portfolio is a lengthy and uncertain process. Although the transformation will look a little different in every company, we recommend a five-step process:
• Pinpoint your starting place. Identify your current mix of assets and the business model that your asset portfolio creates. This will enable you not only to understand your strengths and weakness but also to identify the long-term habits that you’ll need to shift to transform your business.
• Itemize your organization’s assets. Begin with the easy things that you’ve always tracked—and physical assets such as plants, property and equipment. Then delve into your lesser-known intangible assets, such as your work force, your intellectual property and the networks of people and organizations that exist outside the firm. These assets are typically overlooked, undervalued and undermanaged.
• Visualize a new future in partnership with an external network. Customers and suppliers are common choices. The goal is to identify how you and your network can create value together, using your assets and theirs.
• Operate a pilot of your network business by shifting small amounts of capital (including time, talent and money) to the new initiative. This will require building out a team, funding it and giving the group space to learn and change quickly with little bureaucratic oversight.
• Finally, track the progress of your network initiative. This will require reporting on new metrics, such as the number of interactions on your digital platform (sales or other). Standard financial metrics, like revenue and profitability, are important, but as with any new initiative, it will take time for this model to prove itself and begin creating value.
Barry Libert is the CEO of Open Matters, a digital consultancy. Megan Beck is a researcher at the SEI Center for Advanced Studies in Management at the University of Pennsylvania’s Wharton School. Yoram “Jerry” Wind is a professor at Wharton. They are the co-authors of The Network Imperative: How to Survive and Grow in the Age of Digital Business Models.