Embracing Digital Technologies in Traditional Worlds

Businesses that are succeeding in the digital world are questioning key managerial assumptions. Case in point: PagesJaunes, the French Yellow Pages company.

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In a world where digital technology is radically shifting the business landscape, one of the biggest challenges for companies is rethinking what parts of their business will continue to be valuable.

To find out how companies are adapting to changes brought on by digital technology, George Westerman, a research scientist with the MIT Sloan School of Management’s Initiative on the Digital Economy, and Didier Bonnet, a senior vice president at Capgemini Consulting and the executive sponsor for Capgemini’s digital transformation program, studied more than 400 large companies around the world in industries including manufacturing, hospitality and mining. (They left out the software, media and technology industries because, although they “get a disproportionate share of the attention, those industries account for less than 10% of the U.S. economy.”)

Some companies stood out as what Westerman and Bonnet term “digital masters” — companies that “see digital not as a technology challenge but as a transformation opportunity.” This mindset does not always come easy for many managers. But it’s critical for moving forward. “Many assumptions about what is possible and impossible, based on experience with last century’s technologies, are no longer valid in the digital world,” Westerman and Bonnet write.

In their article “Revamping Your Business Through Digital Transformation,” in the Spring 2015 issue of MIT Sloan Management Review, Westerman and Bonnet cite the example of PagesJaunes, the French Yellow Pages company.

PagesJaunes “realized a few years ago that selling ads in thick, yellow print directories would not remain viable for long in an age of Google and Yelp,” Westerman and Bonnet write. PagesJaunes used the challenge to change its business model. Here are three steps it took, as highlighted by Westerman and Bonnet:

Question assumptions about what is valuable about your strategic assets.

PagesJaunes did not assume that the strategic assets that brought it success in the physical world would continue to be valuable in the digital environment. “The company’s CEO saw an opportunity to redirect the business toward digital services,” the authors write. Instead of selling ads in books, the company could sell online advertising.

Look to leverage assets that you have (and that fast-moving digital startups do not).

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