How to turbocharge digital transformation

The story of how H. D. Smith, a pharmaceutical distributor since 1954, transformed its business to the digital world and expanded to providing innovative services and solutions is remarkable. Progress in strategic business transformations always takes place outside of people’s comfort zone, so it requires excellence in leadership to drive extensive change. The firm’s leadership team understood several years ago that the pharmaceutical business would go digital; but as I described in part one of this story, the firm had underinvested in its IT environment and wasn’t positioned to succeed in a digital world. 

In my blog on part two of this story, I shared how the company leaders invested heavily in technology and people who would be able to help the firm get to its vision for the future. This involved changing mindsets, business models, philosophies about people, going through a painful process of paying down a huge amount of technical debt, investing heavily in SAP and people, and putting building blocks in place to pave the way to the vision.

Bimodal strategy

The firm’s transformation vision had two components:

• Maximize the existing core business of wholesale and manufacturers’ solutions business.
• Become an innovative provider of integrated and transparent products, solutions and services.

With new CIO David Guzmán, the leadership team developed a bimodal strategy so that both components would occur simultaneously instead of in phases.

As I’ve often blogged, speed is the new currency in creating IT value, and the bimodal strategy was designed to enable quickly capturing the opportunities in a fast-moving digital world. “We had to do both at the same time because the opportunities were not going to wait until we were ready,” says Guzmán. That necessitated turbo-charging the transformation.

The firm’s pharmaceutical business is in a highly regulated industry, which makes change even more complex. But today, after just five years, H. D. Smith’s business is moving at the pace of digital and the firm even has the ability to accelerate its vision. How did it do that? In this blog, I’ll discuss three key tips for successfully driving change.

Tip 1: Make sure top leadership is committed and the right talent is in place

Guzmán says a key aspect of success was changing the roles of Chris and Dale Smith, sons of the firm’s founder. Chris became CEO and was responsible for maximizing the core business to increase sales. In my previous blog, I described the firm’s migration to as-a-service models, implementing new processes for excellence and moving to a partner ecosystem.

A new role was created for Dale, who spends 100 percent of his time focusing on the second component of the bimodal strategy — creating a complementary digital solutions business.

They then took the best talent in the company (both IT and business talent including an analyst) and put them into a full-time development team reporting to Dale and focusing on innovation for the new business.

The firm innovated several new solutions for customers while maximizing the core business. Examples include:

• Securing approval from the Drug Enforcement Administration for migrating to the cloud digital certificates for pharmacists’ orders of controlled substances. It was a revolutionary move in the industry, and the firm received two awards for the level of innovation.
• Partnering with DocuSign to reduce cycle time for onboarding new pharmacies as customers. The highly regulated FDA environment required 81 forms done by hand in triplicate. The firm’s innovative solution cut the onboarding process down from three weeks to 20 minutes – a huge customer satisfaction success.
• Developing a mobile application for sales reps, which helped transform the firm’s sales force from just bringing in new pharmacies to being consultants and business partners — a value-add to pharmacy customers.

Where the firm lacked the necessary talent for innovating, it acquired the talent. For example, it acquired Triplefin, a provider of manufacturer solutions, and then built a software system to manage a suite of services including reimbursement solutions, patient assistance programs for drug affordability, a specialty pharmacy nursing network and call centers for patients to ask about adverse drug reactions. And it hired key talent, such as Sandy Piscitello, to lead this part of the transformation. 

Tip 2: Ensure a mobility mindset

Guzmán says a key to turbocharging the transformation was adopting the mindset that everyone is a mobile worker today. The firm stopped thinking of mobile as a wireless network, devices and apps and, instead, adopted a mindset that everyone should be able to do their work no matter where they are.

For example, it implemented Cisco’s TelePresence solution, which allows the chairman, CEO, CIO and others to routinely attend meetings electronically. To fund the expense of implementing the solution, the firm reduced its travel budget.

Tip 3: Leverage partners and advisors

In my previous blog post, I discussed a critical element of the transformation: the partner ecosystem. Companies such as AT&T, Cisco, CSC, Microsoft and Seeburger were an integral part of the first component of the bimodal strategy.

As part of the second component, Guzmán says the firm wants to bring its partners up to a more strategic level, participating in the strategy in a more meaningful way. It also brought in a consulting partner to help define this institutional strategy. In addition, the firm is establishing important alliances with healthcare innovators.

A big problem for healthcare systems is patients’ adherence and not following the regimen for prescriptions. So the firm is talking with its partners to jointly deliver an innovative hub of services — Pharmacy as a Service.

“Just as we moved up the scale in the as-a-service model for our IT environment, we want to help our pharmacy clients provide services for their customers,” says Guzmán. “In the not-too-distant future, medical services reimbursement may be tied to patient adherence. So community pharmacies need to embrace the change that’s already well underway in facilitating patients in taking charge of their own care. But pharmacies don’t have the time or resources to focus on technology.”

The hub services, network services and pharmacy services under development demonstrate the firm is well on its way to achieving the strategic intent in its vision: to be the leader in controlling healthcare costs while maximizing patient outcomes.

While still in the midst of transformation, and though there are chapters of this emerging story still to be written, their strategy for transformation is beginning to bear fruit.