Digital Disruption

Digital disruption is a phenomenon that changes and challenges the conventional ways of value creation, social interactions, business models and thinking, and is caused by digital technologies, channels (i.e. ways of delivering information/products from one end to another end) or assets. In most organizations, IT managers are charged with management of technology-enabled change. It is therefore important that IT managers understand the opportunities and challenges posed by digital disruption to aid the organization’s response. Digital disruption is not a marginal and temporary change, digital disruption leads to a fundamental change that changes the core of value creation and has a long-term impact on business processes, technology, the industry and/or society.

General Purpose Technologies (GPT) are technological innovations that interrupt and accelerate the normal march of economic progress and established ways of doing business, example Computers, Internet, Cell phone, ML, AI, DL, Block-chain, etc. There has been an exponential growth in performance and capacity of GPTs for nearly half a decade, resulting in improvements in application, use, and functionality of digital technologies. The ensuing rapid digital innovation and resultant impact are what is referred to as digital disruption. General Purpose Technologies create niches and opportunities and favorable tail winds for digital disruption. Social media giants, E-commerce, online news sites, ride-sharing apps, and GPS systems known by more familiar names such as Facebook, Amazon, Google, Uber, Airbnb, Byjus, etc. So, which GPT or GPTs can your organisation exploit for the next disruption ?

Digital disruption is a complex phenomenon and its impact is often difficult to identify and comprehend. It is therefore critical that individuals in decision making positions within Information Technology (IT) departments are aware of and better understand the potential challenges and opportunities presented by this rapidly advancing phenomenon. Digital disruption is a result of the rapid digitization of businesses and the combination and recombination of advancing digital technologies. These are breaking down traditional industry barriers and destroying long-established business models. 

Digital disruption is perceived both as technological disruption, and making sense of recent and ongoing changes. From a comprehension and projection perspective digital disruption is seen to offer multiple opportunities and changes in providing new ways of working, new sources of competition and a renewed talent challenge. Responding to digital disruption is risky and unpredictable and requires businesses to focus on the effective use of, and investment in, technology and finding new and more efficient ways of working and organizing to create a culture, capabilities and products that they do not of at the beginning of process.

We will later look at an overview of the level of awareness and preparedness of IT managers to provide an appropriate response to digital disruption. It is hoped that these insights will enable organizations to take full advantage of the opportunities, whilst avoiding the challenges posed by digital disruption.

New ways of doing business - More and more companies are building on existing information systems, along with new technologies such as social media to get to know their customers better. Beyond the statistics, real-time data affords companies the opportunity to refine and approve what they are offering. Customer feedback also gives companies an additional opportunity to be more flexible in approaching product design through creating prototypes and adjusting to suit actual customer needs. 

From a business operations perspective, the combination of big data and machine learning algorithms is opening up a wide range of more sophisticated processes that can be automated.  These algorithms aid the computerization of non-routine tasks or find patterns in data that are simply not possible for a human being to do.

Finally, new business models are emerging as companies find ways to either augment physical products with digital offerings, create new businesses around digital offerings or create digital or services wrappers around existing physical products.

New sources of competition-For existing companies, the threat of disruption looms greater. In the past, there might have been a few new entrants where now there may be dozens. Digitization of information reduces the barriers that new entrants would otherwise have had into an existing market. “Big-bang” disrupters who may not even have been seen as competition, but when they arrive, they completely rewrite the rules of entire industries. An example of such big-bang disruption is the impact the smartphone has had on portable navigation equipment companies.

Rapid advances in three-dimensional (3D) printing, big data, cloud technologies and robotics all have the potential to impact on the world of work. At the same time, companies are struggling to find the right talent in areas that cannot be automated. Problem-solving, intuition, creativity and persuasion abilities have proven difficult to automate. Such tasks often require high level of skills, including a university degree or specialist technical skills and in particular fusion skills, which require a mix of creative, digital and entrepreneurial skills. The ability to be able to quickly adapt to a rapidly changing environment has also been identified as critically important.

Responding to Digital Disruptions - Companies cannot explore all potential disruption plans, or their prospective opportunities equally, and so need to create a prioritized investment plan for responding to digital disruption that best suits their business. A key point is establishing a team of individuals tasked with staying current and identifying possible disruptions, and allocating funds towards ventures that may arise from disruptions. Companies should establish digital disruption as a critical part of the innovation initiative and develop a culture where creating disruptive innovation plans is achieved in addition to the reactive management of disruption.

Responding to digital disruption is risky and unpredictable. In unpredictable times companies need to adapt quickly to take advantage of rapidly evolving opportunities. Through the effective and strategic use of digital technologies, companies can develop dynamic capabilities to respond to the opportunities and challenges of digital disruption. An analysis of how resources, processes and values have been changed, extended or adopted by companies in the reviewed literature as a response to digital disruption follows.

Brick and Mortar Companies must react to the threat of disruption, but importantly they must not overreact, by dismantling established profitable ways of doing business. Responding to digital disruption, in most cases, requires a deviation from current business and product strategies that serve existing customers.

Investments in Technology - Companies that have responded well in the face of digital disruption have made a comparatively higher digital investment than their peers, focusing on customer experience, social media, mobile, process digitization and internal communication. In addition, the human aspect also determines success or failure during these disruptive times. To be responsive and adaptive, organizations need to tap into the collective knowledge, skills and resources of all staff.

Processes form the building blocks of organizational capability and competitive advantage. Process changes and organizational shifts are, in most, cases what enable companies to harvest the opportunities of disruption. 

Autonomous business units - It has been found that the establishment of autonomous business units, along with the staged allocation of resources to innovative projects, is essential to create new processes in responding to digital disruption. And it is recommended that companies look at cross functional teams to spearhead digital initiatives and tackle the complexity of change. These teams should ideally comprise of a diverse mix of technical and business stakeholders, who could be described as enthusiastic and possess characteristics such as “start-up” ingenuity.

Values are the primary building blocks of organizational culture. Digitally maturing companies share a culture that is conducive to digital transformation.  Prior to making decisions about resource allocations and process changes, company management needs to start with developing a vision for the future and, in particular, the impact digital technologies will have on its customers over the next decade. Executives will be faced with tough questions starting with: ‘Why do we exist’ and ‘Are we in the right business to start with? 

Change in mindset - Both business leaders and employees will then require a change in mindset to accept failure as part of success. Finally, executives and company leaders must build digital strategies into the core strategy of the business. For those industries that anticipate digital disruption, it is critical that there is a full commitment to becoming a more digitally adept organization.