From consumer financial services to media and transportation, digital disruption is altering the business landscape dramatically. In a recent survey of 2,000 C-level executives on the impact of digital technologies across 15 industries conducted by Russell Reynolds Associates, business executives cited media (72%), telecom (64%), consumer financial services (61%), retail and technology (57% respectively) as the industries that would be moderately or massively disrupted by digital over the next 12 months.
To date, leaders of long-standing companies have responded to digital disruption in one of three ways, according to PwC. The first option is taking a wait-and-see approach to determine the impact that disruptive companies are having on the market before responding in some way. The problem with this approach is that once disruptors are impacting an industry, it’s often too late for established players to respond. Consider Netflix and Blockbuster.
A second approach by incumbent companies is acquiring start-up disruptors to gain access to market-shifting technologies. However, one of the risks associated with this method is that some disruptive models survive and others don’t. For instance, while Microsoft’s 2011 acquisition of Skype continues to deliver value for the technology giant, there were a herd of Internet retailers that launched in the late 1990s but only a small percentage of these survived.
The third method is decidedly more aggressive: investing significant time and money in upgrading company’s own IT infrastructure which is often fragmented and complicated by an assortment of legacy systems that are difficult to upgrade, improve, and integrate with newer technologies.
One of the ways that CIOs can help their companies to respond to disruption is by sharing in clear business language to the C-suite the importance of investing in technologies such as cloud services that can enable the enterprise to become more agile and responsive to market shifts and changing customer behavior while being provisioned at a lower cost.
Meanwhile, thanks to their knowledge of and access to emerging technologies, CIOs can also identify surfacing technologies that can help the company to differentiate itself in the market. For instance, next-generation robotics technologies are shifting from the factory floor to other environments such as healthcare in providing mobility to patients. 4D printing is being tested for us in the manufacture of clothing that can be designed to respond to environmental changes such as heat and humidity.
CIOs and IT teams can also work closely with customer experience teams to better understand how customer behaviors are changing and to identify digital channels and technologies where new products or services can be delivered.
To help drive disruption in the enterprise, digital disruption needs to be an ongoing conversation that the CIO can help lead. “If companies don’t respond sufficiently with a sense of urgency (to digital disruption), their business models can get completely disrupted,” says Steve Phillips, SVP & CIO at Avnet, Inc. in an HMG Strategy video.
- Companies are generally taking one of three approaches to respond to digital disruption: taking a wait-and-see approach; acquiring disruptive companies to gain access to dynamic technologies; or investing time and capital into upgrading the company’s technology infrastructure.
- One way that CIOs can help their companies respond to disruption is by clearly stating the business case for investing in technologies that can make the enterprise more agile and responsive.
- CIOs can also draw upon their knowledge of the technology market to pinpoint technologies that may help their companies gain a competitive edge.