To gain advantage, IT leaders should turn competitors into collaborators

Business leaders 10 years ago mostly focused on automation since the main objective of technology investment then was to drive down costs, decrease risk, and boost efficiency.

It’s a different world today. Of course, technology should still boost cost efficiencies, but it also needs to drive revenue at the same time. For CIOs and other tech leaders, this means a shift in mindset to not only keep tech costs in check, but adopt a more entrepreneurial approach to explore how to drive business revenue and competitiveness.

Map out a tech-driven strategy

Nothing happens without a plan, and for a company’s IT organization with growth on its mind, this means developing an effective tech-driven growth strategy. Since technology affects every part of the business, a good strategy should spark a chain reaction to alter the company’s value proposition, and from there, its business model, operating model, and enterprise architecture. When building such a strategy for a business, I encourage tech leaders to first examine their competitive landscape, and then ask what the drivers of change are in their markets, and what dynamics are influencing the environment in which they compete. A rigorous analysis will invariably reveal that technology has fundamentally altered how they should think about their competition.

State of healthcare

By way of illustration, let’s focus on the healthcare space, where technology has changed the rules of engagement. This industry is often generally categorized into providers — hospitals and centers that employ doctors and treat patients — and payers — companies that sell health insurance or ancillary services. In the US, the 2020 pandemic was a catalyst for both payers and providers to reinvent themselves, and they began to offer digital health products such as virtual health, remote patient monitoring, mental-health services, virtual clinical trials, and much more.

These tech-based products and services are offered through apps as part of existing services, or new add-on subscription services, available to patients or members. They also have a direct impact on pleasing patients and members, either as new sources of revenue from services they hadn’t sold in the past, or as key differentiators in existing revenue.

As barriers got torn down, companies began to target ambitious revenue growth in these emerging areas, and similar trends emerged in other industries. In financial services, retail banks moved more services online, but also expanded their scope, becoming financial advisors to their clients, and helping them with financial wellness. In communications and media, the speed of convergence is dizzying, with tech companies becoming creators, media companies selling their own TV sets, and mobile phone providers sharing network space and capital costs.

A new landscape

For the companies involved specifically to healthcare, though, this new tech-driven strategy involves much more than a change in processes or services — it profoundly changes the competitive landscape. Suddenly healthcare providers, much like their media counterparts, find themselves competing not just with their familiar fellow providers but with major technology companies, which are now in the digital health space, such as Amazon and Apple.

So healthcare companies are now faced with having to get to grips with a new industry, new business models, and potentially new threats to their emerging business. It also means they have to consider talent in a new way and ask if they have to hire engineering talent in order to deliver a service that can compete with a tech-native company. Plus, there’s the question of how to quickly build up the institutional tech knowledge needed to keep innovating. The context of this, of course, is an industry dealing with its own chronic talent shortages.

Rethinking competitors as partners

Faced with these sorts of demands, companies might prematurely abandon a promising area. The key to a more considered approach and a better strategy is to stop thinking about these companies as competitors and start thinking about them as potential partners.

Healthcare providers have the sort of deep industry and medical knowledge that technology companies may lack. Together, healthcare and technology companies are in a stronger position to create new, valuable partnerships that could be greater than the sum of their parts. Healthcare companies have ample opportunities to create go-to-market opportunities with technology companies by viewing technology companies not as vendors, but partners that share in the risks, rewards, and IP.

There are numerous examples of this in action. Healthcare organizations such as Mayo Clinic are running accelerator programs with assistance from tech giants like Google and Epic to bring companies to market faster; virtual care company Hims & Hers is collaborating across in-person care via partnerships with Hartford HealthCare, Mount Sinai Health System, and Privia Health, among others; and new partnerships are emerging all the time across the industry. Care in the community, R&D, new mental-health services, genetics, and biopharmaceuticals — pick any area of healthcare and you’ll find strategic digital health partnerships responding with new services and offers.

Across these types of partnerships, we can trace a few core considerations for companies, regardless of industry, to form a solid basis to develop a new tech-driven growth strategy:

• Tech companies will limit the number of partners they work with, so it’s essential for companies to bring the right value proposition to the table.
• Businesses need to bring complementary capabilities in terms of expertise, resources, and talent. Build cross-functional teams across multiple companies to maximize the potential of each organization’s skillset. Ensure that incentives across these organizations are linked to mutually beneficial outcomes.
• There will need to be a shared vision of what you and your partners want to achieve, along with a mutual environment of trust and respect. A tech-driven growth strategy can help define the parameters of this and build alignment.  
• Every strategy needs to prioritize the customer: aim to transform a rote customer interaction into a customized intelligent journey that will enhance the customer experience.
• Build capabilities focused on connecting the companies that provide technology services with the consumers of those services. These capabilities will need to be able to react to changing outcomes with predictable risk/reward scenarios.
• When it comes to governance, focus on risk/reward agreements that balance each company’s investment against who is accountable for any penalties for missed targets.

All of these should be linked to specific business outcomes, ideally those directly driving revenue and growth. This tech-driven growth strategy will be your best guide to uncovering the most valuable collaborators in this new competitive landscape.