The effect of digital disruption on business has the potential to overturn incumbents and reshape markets faster than perhaps any force in history, according to a new report released today by the Global Center for Digital Business Transformation (DBT Center), an initiative between Cisco and the International Institute of Management Development (IMD) in Lausanne, Switzerland.
The report, entitled Digital Vortex: How Digital Disruption is Redefining Industries, shows that digital disruption will displace approximately 40 percent of incumbent companies in each of the 12 industries studied for the report within the next five years. Among the 12 industries highlighted in the report, Technology Products & Services has the highest potential for disruption over the next five years. However, the report also shows data-driven industries in general top the disruption potential list, including Media & Entertainment, Telecommunications, Financial Services and Retail. According to the report, these are industries that rely on technology-enabled networks to exchange digital value, including data and transactions.
Despite digital disruption's potential to overturn incumbents and reshape markets, the survey indicated 45 percent of companies do not believe digital disruption merits board-level attention.
"Every country, every city and every business will be required to become digital in order to thrive and survive in the new digital economy," said Martin McPhee, SVP, Cisco Consulting Services. "The Global Center for Digital Business Transformation, which brings together digital disruption and education, will serve as a platform for executives to be educated on the why, what and how required for their digitization journey and the ultimate sustainability of their organizations."
Most executives surveyed see digitization as a positive for business and society. In fact, 75 percent of executives surveyed believe that digital disruption is a form of progress, 72 percent said it improves value to customers and 66 percent feel it empowers individuals. At the same time, 43 percent either do not acknowledge the risk of digital disruption, or have not addressed it sufficiently. Only 25 percent describe their approach to digital disruption as proactive.
The disruption is being driven by well-funded start-ups, digitally proactive competitors and, increasingly, the merging of industries as digitization frees businesses to expand their value in new markets.
On average, executives from incumbent companies in all 12 industries revealed that they expect substantial change due to digital disruption, including shifts in market share within five years. Yet, the survey indicates that nearly a third of incumbent companies are taking a "wait and see" approach, in the hopes of emulating successful competitors.
"It's not just business models that are changing, it's value chains and product offerings as well. Digitization is not just changing industries, it is increasingly blurring the lines between them," said Michael Wade, Director of the DBT Center and Professor of Innovation and Strategy at IMD. "As industries move toward the center of the Digital Vortex, physical components - to the extent that they inhibit competitive advantage - are shed. The most successful disruptors employ what we refer to as ‘combinatorial disruption,' in which multiple sources of value—cost, experience, and platform–are fused to create disruptive new business models and exponential gains."
The term "Digital Vortex" describes the driving force created by digitization across all industries and how companies are being inevitably pulled toward the center of the phenomenon. The Digital Vortex research into the challenges and opportunities posed by digital disruption is an important first step for the DBT Center in what will be a five-year journey for IMD, Cisco, and an ecosystem of other partner organizations.
The report, Digital Vortex: How Digital Disruption is Redefining Industries, investigated the state of digital disruption and the outlook for industries through a survey of 941 business leaders in 12 industries and 13 countries including Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russia, United Kingdom, and the United States.
The Latest
If you were lucky, you found out about the massive CrowdStrike/Microsoft outage last July by reading about it over coffee. Those less fortunate were awoken hours earlier by frantic calls from work ... Whether you were directly affected or not, there's an important lesson: all organizations should be conducting in-depth reviews of testing and change management ...
In MEAN TIME TO INSIGHT Episode 11, Shamus McGillicuddy, VP of Research, Network Infrastructure and Operations, at EMA discusses Secure Access Service Edge (SASE) ...
On average, only 48% of digital initiatives enterprise-wide meet or exceed their business outcome targets according to Gartner's annual global survey of CIOs and technology executives ...
Artificial intelligence (AI) is rapidly reshaping industries around the world. From optimizing business processes to unlocking new levels of innovation, AI is a critical driver of success for modern enterprises. As a result, business leaders — from DevOps engineers to CTOs — are under pressure to incorporate AI into their workflows to stay competitive. But the question isn't whether AI should be adopted — it's how ...
The mobile app industry continues to grow in size, complexity, and competition. Also not slowing down? Consumer expectations are rising exponentially along with the use of mobile apps. To meet these expectations, mobile teams need to take a comprehensive, holistic approach to their app experience ...
Users have become digital hoarders, saving everything they handle, including outdated reports, duplicate files and irrelevant documents that make it difficult to find critical information, slowing down systems and productivity. In digital terms, they have simply shoved the mess off their desks and into the virtual storage bins ...
Today we could be witnessing the dawn of a new age in software development, transformed by Artificial Intelligence (AI). But is AI a gateway or a precipice? Is AI in software development transformative, just the latest helpful tool, or a bunch of hype? To help with this assessment, DEVOPSdigest invited experts across the industry to comment on how AI can support the SDLC. In this epic multi-part series to be posted over the next several weeks, DEVOPSdigest will explore the advantages and disadvantages; the current state of maturity and adoption; and how AI will impact the processes, the developers, and the future of software development ...
Half of all employees are using Shadow AI (i.e. non-company issued AI tools), according to a new report by Software AG ...
On their digital transformation journey, companies are migrating more workloads to the cloud, which can incur higher costs during the process due to the higher volume of cloud resources needed ... Here are four critical components of a cloud governance framework that can help keep cloud costs under control ...
Operational resilience is an organization's ability to predict, respond to, and prevent unplanned work to drive reliable customer experiences and protect revenue. This doesn't just apply to downtime; it also covers service degradation due to latency or other factors. But make no mistake — when things go sideways, the bottom line and the customer are impacted ...