Perspectives

Beware: Digital Disruptors may be Lurking around the Corner

Smart industry is a concept where a highly interconnected ecosystem of companies and other stakeholders, enabled by technology, provide a unique set of products and services. It really puts the customer in the middle and provides her with a seamless experience. Banking may be the closest to be termed as a smart industry, where at the click of a button, a customer can do so many things.

The arrival of SMAC+ has really been a game changer. The stack of new technologies can be deployed to create an intelligence driven seamless experience across multiple form factors a consumer may have. I believe an industry evolves through three intermittent phases to evolve from being a pure physical value chain to becoming a digital value chain. These phases correspond to where is the focus of digitization- internal automation, extended enterprise integration or ecosystem interconnections (figure 1).

Digital DisruptorsWhile this progression is underway, at different stages of the industry evolution, digital disruptors may emerge and challenge the relative power of the incumbents. Digital Disruptors are digitally driven business models, which bring a unique perspective to the existing value chain thereby creating a disruption in the relevance of the strategic standing of the incumbents and challenge their relative powers. They may impact the cost and price structures or their ability to charge a premium, in other words their topline and bottomline performance.

The publishing, book distribution, banking, aviation, travel are some of the industries, which are fairly advanced in their evolution. Others like insurance, retail, education etc are evolving fast. Still others like healthcare, manufacturing, government etc. may take some time to evolve.

However, each of these industries faces the threat of digital disruptors, in one way or the other. E.g. tyre manufacturers may be challenged by marketplace for tyres, which allows the customer to compare prices, look at reviews, simulate it online and order from their mobile phones. Not participating in such marketplaces may not be an option for the manufacturer, yet it passes the power in the hands of the consumer.

Some of the pertinent questions every organization, small or large, in all industries must ask themselves.

1. Are you aware where from the digital disruptors may emerge? Are their voices within the organization or amongst the supply chain partners about the threat?

2. Is the challenge manifesting itself explicitly by impacting your business performance or is it still implicit?

3. Are you prepared to deal with such digital disruptors?

4. How do you deal with them- by aligning with them, by developing newer capabilities, by shifting your strategic thrust, by creating a competitive model or by doing all of these?

5. Are you prepared to develop new leadership orientation & competencies, structural mechanisms, cultural readiness and technological infrastructure?

It is important to reflect and debate upon these important questions, design an appropriate response and an implementation roadmap. Though it may require focus on the technological platform, it also needs commensurate development of the other aspects of the organization i.e. leadership, structures and culture.

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