Despite the fact that digital processes and products are becoming more and more the way business is done rather than simply an innovative development in technology news, digital disruption continues to be an issue for companies and sectors alike. Twenty-three percent of the 300 largest global companies have a digital director, which indicates both the growing power of digital and how far many companies still have to go.
In the next 12 months, many industries will be undergoing digital disruption. The Harvard Business Review recently reported C-suite views of how likely “moderate or massive” digital disruption in their industries is.
The Most Likely and the Least Likely
The results show that business executives in the business-to-consumer sectors of media, telecom, and financial services saw the most potential for digital disruption in their industries. Seventy-nine percent of media business heads thought their sector would see large disruption, while 64% of telecom executives and 61% of financial services heads did.
On the other end of the spectrum, executives in the industrial sector saw the least chance of disruption, at 39%. Asset wealth managers and healthcare leaders saw the second and third least chance at 43% and 47%, respectively.
Two points should be made about these results. First, companies in the “most likely to be disrupted” sectors face several potential obstacles in managing disruption effectively. The first is that they may have low barriers to entry. As a result, they may face stiffer competition than businesses with higher barriers. Second, many companies in disrupted sectors must also contend with revenue generators that are firmly in their company histories, on their books, and in the non-digital world.
Meeting the Challenges
The HBR article suggests three ways of meeting the challenges of digital disruption: 1) catalysts; 2) culture; and 3) commitment.
Catalysts to drive digital transformation need to have sufficient scope and authority to make their changes forceful and accepted. A digital director may be a solution for many companies. However, the respondents also thought a skills gap existed in disrupted industries. Ninety percent of the C-suites note that their companies possess a digital strategy, but only 20% of companies thought their HR departments brought them the right people.
The culture also needs to be made more data-responsive. The article suggests that access to data can help digital managers effectively make their cases, versus older methods of response.
Finally, companies need to embed digital in their processes, systems, and operation. The commitment can’t be piecemeal.
Test the Digital Winds
Business leaders concerned about disruption need to frequently test the digital winds as part of their business strategy. While the disruption of companies like Kodak, by their own products (digital photography), is a business legend, it should be noted that Kodak had the innovative skill to develop a digital form and plenty of time to see it coming. They just didn’t respond positively to the possibilities, preferring to rely on existing product lines.
Digital disruptions, like photography, don’t come at the speed of light or out of nowhere. They are developed and discussed for years in advance. One key piece of advice to management? Pay attention and note potential impacts on your firm.
Digital disruption has various effects on companies and products, but awareness is ultimately the key to implementing successful strategies.