Business

Digital Disruption

Digital Disruption is one of those buzz phrases that you hear a lot at the moment at events and seminars. The phrase means different things to different people and an air of mystique around it.

McQuivery (2013) describes Clayton Christensen of Harvard Business School as the ‘father’ of the digital disruption. Christensen described it as, ‘the process of using innovation to add market value, whilst disrupting and replacing said market’.

In their paper ‘Digital Vortex How Digital Disruption is Redefining Industries’, the Global Center for Digital Business Transformation (GCDBT 2015) defines digital disruption as,

“the effect of digital technologies and business models on a company’s current value proposition, and it’s resulting market position.”

 

Digital Disruption And Market Value

 

Innovation within an existing market through technology is exactly how McQuivey (2013:p7) describes digital disruption.

“how digital tools allow digital disruptors to come at you from all directions – and from all ages, backgrounds, and nationalities. Your competitors probably won’t come from within your industry – they could come from any industry, or from one that doesn’t exist yet. This isn’t just competitive innovation, it’s a fundamentally new type and scale and speed of competitive innovation.”

Innovators are not looking to enhance your market, they mean to totally disrupt it!

Digital disruption looks for a better way to meet a fundamental need whether that need is for a business or a consumer. Working with legacy code is a good example of where disruption within our industry at Magma Digital, can add massive value for our customers. Through a process of re-view and re-framing, we can help energise or re-create existing systems at their core. Get it right, and there are possibilities to disrupt a whole market! Moving from the saturated blood bath of the ‘red ocean’ into the expanse of the ‘blue ocean’ is a real opportunity for those who are willing to disrupt.

Naively, some businesses may assume that they cannot be touched by digital disruption. Sadly, they fail to see how innovation through technology could possibly reach their products or services. McQuivey (2013:pg 9) is quick to dispel this myth for business owners.

“the power of digital disruption is such, that it can disrupt any aspect of any product or service, including processes deep within companies focused on physical things, processes that govern partnerships, data collection, pricing and the management of labour or capital resources. In fact, digital disruption’s power multiplies precisely because it can apply to industries that are not even digital. In this way, digital disruption happens to and through digital things, which then accelerate the disruption of physical things.”

Maybe a good example of this is Uber. Uber Technologies Inc (2016) explain their story below.

“What started as an app to request premium black cars in a few metropolitan areas, is now changing the logistical fabric of cities around the world. Whether it’s a ride, a sandwich, or a package, we use technology to give people what they want, when they want it.”

 

Digital Disruption and Power

Digital disruption not only removes barriers to entry for customers, it can totally obliterate the barriers. McQuivey (2013) agrees with the sentiment of Uber above. He says that potential and actual customers can reach your business instantly 24/7 and your product is selling itself whilst you sleep, literally!

The digital consumer is now a powerful animal. Online consumers have a multitude of options from which to purchase their goods and services. Knowing this and building this into your customer experience, is, therefore, crucial to winning custom and gaining loyalty.

Forces driving the digital disruption mantra, include consumer desire for more value for less outlay, public services needing to increase efficiency, ingenious ideas, and innovations. There is also a general desire for improved products, services, and lives says McQuivey (2013).

(DBT:2013) give their view on what the winners will look like in the market-place when digital disruption has been added into the mix.

“Winners will be organisations agile enough to innovate rapidly and unbridle their capacity to create cost value, experience value or platform value for their customers.”

Digital Disruption as a Threat

 

With every good news story, there is always a threat or some risk. Threats come in the form of increased competition and the race to “bag” the customer. Digital disruption will speed everything up within the marketplace. Ideas will come to the fore more quickly, innovation will disrupt more deeply and penetrate businesses as deep as their internal processes and could reach all of their products and services.

Having an idea that can disrupt an existing market through the use of digital, is somewhat of a holy grail especially to the to budding entrepreneur out there. Having that ‘killer idea’ that no-one else has thought of yet. But the reality is they are fairly rare. More likely it will be existing business people who will maximise digital disruption. Most exciting is the fact that digital disruption is now within the reach of most businesses if they have a mind to it. What is interesting, is that of companies surveyed in one study by the Global Centre for Digital Business Transformation (DBT:2013) alarmingly,

“43 percent of companies either do not acknowledge the risk of digital disruption or have not addressed it sufficiently.” It is not quite a daily occurrence but we certainly are seeing more high street names disappearing it would seem.”

 

It would seem that companies are not yet aware or taking advantage of digital disruption or fail to see its benefits. To be fair and understand the whole picture, we have to point out that some digital disruptions also fail. Some simply do not create the huge market change hoped for. Saying that, digital disruption within a business can have a significant positive impact on the bottom line. Having a “mind to it” is exactly the issue with digital disruption. As we know,is most plans will fail if the commitment and planning is not put in from the beginning. Being prepared to have a default perspective where the answer to business problems is “yes” and an attitude to then work out how to do it, seems to be one of the hardest parts of the battle to win in digital disruption.

Digital disruptors are dangerous. They pose threats to traditional markets where business processes can and arguably should be updated and improved through technology. Not surprisingly, it is anticipated that the most disruption between now and 2020, will be within the technology sector itself (DBT:2013).

Digital Disruption Thinking & behaving

 

McQuivey (2013) describes how digital disruption is partly formed through thinking and behaviour. He speaks of the digital disruptor’s mindset and behaviour. He says that disruptors are individuals with an unending optimism to find the right solution. They believe answers are out there to be discovered or created. These are the people watching and observing your company and market.

He mentions a technique called ‘innovating the adjacent possible’, this is a technique where a product or service is initially released and then shortly after, it is enhanced with improvements and adjacent benefits that increase consumers engagement and love for it. Companies he says, need to get to grips with a benefit-based mindset, that is always looking to satisfy what customers want or need.

Digital Disruption & platforms

Much of current digital disruption is in the ‘Internet of Everything’ (IoE). The connectivity of people, places, process, data and other things. McQivey (2013:p46) writes that “thanks to digital platforms, digital relationships become simultaneously more important and more frictionless, a combination that is ideal for rapid innovation. Not only rapid innovation but it opens up the global market place like never before.”

“thanks to digital platforms, digital relationships become simultaneously more important and more frictionless, a combination that is ideal for rapid innovation. Not only rapid innovation but it opens up the global marketplace like never before.”

He continues by identifying that digital disruptors exploit platforms, they don’t have to create them. There are many big names out there such as Apple, Amazon and Google who are in fact in McQivey’s opinion ‘digital disruption enablers’. They make it possible for digital disruption to occur, but no it’s more than that, they actually openly embrace it he argues and they need disrupters to use and exploit their platforms without having to be disruptors themselves.

McQuivey lists three key elements for digital disruption to work on platforms and be truly effective, making it possible for potentially any business to disrupt without having to necessarily scale as once thought to maximise the opportunities of accessing more customers.

  1. build digital bridges to your customers
  2. measure early and often
  3. iterate quickly based on feedback

Digital Disruption Key Insights:

  • Digital disruption has the potential to overturn and reshape markets faster than perhaps any force in history
  • 40% of today’s leading companies will be displaced from their market position in the next five years
  • Your competitors probably won’t come from within your industry – they could come from any industry, or from one that doesn’t exist yet.
  • 43% of companies surveyed either did not acknowledge the risk of digital disruption or have not addressed it sufficiently. Nearly one third are taking a ‘watch and see’ approach

 

References:

Chawla, Anil, (2016), Digital Disruption Compelling Companies to become Digital Enterprises, online, (May 2016), available from: computer.financialexpress.com/news/digital-disruption-compelling-companies-to-become-digital-enterprises/17311/

McQuivey, J, (2013), Digital Disruption Unleashing the Next wave of Innovation, Las Vegas, Amazon Publishing

Bradley, J, et al (2015) Digital Vortex How Digital Disruption is Redefining Industries, Global Center for Digital Business Transformation, An IMD and Cisco Initiative,