Digital Product Talks #34: Digital Transformation in Traditional Industries

But what almost nobody writes about is what happens the following week when the project team has done its job and the product gets handed over to the rest of the organisation. That handover is where most digital products in regulated industries fail.

We sat down with Dr. Frederike Escher-Brecht for the latest episode of Digital Product Talks to talk about exactly this. Frederike is the CPO & Business Owner at Barmer, one of Germany's largest statutory health insurers, and she has a beautifully precise German word for the moment I'm describing: Sollbruchstelle. It's an engineering term: a predetermined breaking point, the point at which a structure is designed to fail first under stress. In her version, it's the point at which a successful MVP is handed back to the wider organisation and stops working.

Why digital MVPs fail at the handover

"We built good services. We measured them, they worked. And then we couldn't get them properly handed over. They didn't last on the market, they didn't keep iterating." Dr. Frederike Escher-Brecht, CPO & Business Owner, Barmer

When Frederike joined Barmer, the innovation unit sat outside the core organisation, kind of like a satellite orbiting the main business. The MVPs worked, the first numbers were good, but the products struggled to take root inside the wider company. The receiving departments worked in different rhythms, with different governance, different KPIs, and a healthy suspicion of anything they hadn't built themselves.

The satellite model gives a new team room to move fast, test cheaply, and ship without dragging the whole organisation through every decision, but the moment a product needs to scale, the satellite is going to run into resistance. If you haven't planned for that from day one, the Sollbruchstelle does its job: things break exactly where they were designed to.

You can usually spot the problem long before it happens. The innovation unit's slides talk about agile and customer-centric. The receiving department's slides talk about rollout planning and compliance review. And technically, nobody is wrong, but they're speaking different languages about the same product.

Why hiring a digital team isn't enough

The instinctive fix is to buy your way out: hire a digital team, give them autonomy, and let them run. Based on Frederike’s experience, this is necessary but nowhere near sufficient. Her current unit started small and deliberately under the radar. The hard part was pulling parts of the wider organisation closer, one team at a time, into what she calls a "mini matrix." Not the whole company, just what was needed to keep the product alive.

It worked. Two things stand out about how she did it.

The first is that every team was built 50/50: half digital experts, half domain experts from inside the insurance business. Not as a diplomatic gesture, but because, while it may sound obvious, you cannot ship a viable health insurance product without people who know how German social insurance law actually works. But you also cannot ship a viable digital product without people who have built digital products before. Frederike calls these mixed roles Adapter: the digital experts translate for the external agencies coming in, and the domain experts translate the language of the wider organisation.

The second is sequencing. She started with the parts of the organisation most open to working differently, let the success become visible, which led to the rest of the company to come to her.

Frameworks don't drive digital transformation

"When I tried to explain agile and customer-centricity in the abstract, half the room was scared and the other half thought it sounded fine. Neither group actually changed how they worked. What changed minds was a working product they could point at." Dr. Frederike Escher-Brecht, CPO & Business Owner, Barmer

In traditional industries, companies often try to explain transformation through methodology first. Theory now, product later.

In practice, it works the other way around. People change their minds faster when they see something concrete – a working product, real users, real numbers. Suddenly "agile" isn't a buzzword from a workshop anymore. Now the conversation stops being theoretical.

It also reframes what "buy-in" actually means. You don't get buy-in by expounding theory, you get it by giving them something concrete to react to. Frederike's whole approach is built around that insight: small lighthouse projects first, then the harder conversations, then the structural changes, and in that order. Never the other way around.

How to scale digital products inside traditional companies

A few things worth taking from this conversation, whether you're in insurance, automotive, banking, or any other established industry.

• Plan the handover before you plan the MVP. The interesting question isn't "can we build this thing?" It's "what does the receiving end need to keep it alive when we're done?" If you can't answer that on day one, you're building a Sollbruchstelle.
• Build mixed teams, not parallel ones. A digital unit without domain experts produces products the core business cannot operate. A core business team without digital expertise creates slow, safe products nobody uses.
• Start with the path of least resistance first. That means those most open to change and wanting to do things differently. Once you succeed, those early wins can do the arguing for you.

Digital products in traditional industries rarely fail in design, or in build. They fail in that space between the team that made them and the organisation that has to live with them.

The companies that take that gap seriously are the ones whose digital products are still alive two years after launch. The ones who don't end up with a dusty list of MVPs they once shipped.

Sounds familiar? We’re happy to keep the conversation going.

Want to hear the full conversation with Dr. Frederike Escher-Brecht? Listen to the episode on the Digital Product Talks podcast on Spotify or Apple Podcasts.