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9/28/2018

Commercial

Understanding Digital Disruption & What to Do About It

Digital disruption is a term with different definitions depending on the industry context that a business operates in. For example, Gartner has defined digital disruption as an “effect that changes the fundamental expectations and behaviours in a culture, market, industry or process that is caused by, or expressed through, digital capabilities, channels or assets.” TechTarget, on the other hand, calls it a “change that occurs when new digital technologies and business models affect the value proposition of existing goods and services. “Fundamentally, the essence of digital disruption is change due to the evolution of technology – change in how consumers interact with brands; change in how businesses operate; and change in how people communicate with each other.

Digital disruption is different from disruptive technology. The term “disruptive technology” was first coined and defined in 1997 by a Harvard Business School professor, Clayton M. Christensen, in his book “The Innovator's Dilemma”.. For example, the smartphone is a disruptive technology that has displaced the use of traditional mobile phones, PDAs, small cameras, calculators, MP3 players, GPS devices and more. Social networking is another disruptive technology having revolutionised the way we communicate. Adoption of these disruptive technologies by the masses caused a behavioural shift in society, specific to their preferences in interacting with businesses and brands. This, in turn, caused a digital disruption in the existing business models within several industries, such as retail, travel, and telecom and changed the way these businesses operated and interacted with their customers. Disruptive technology is technological innovation that replaces established technologies to create an environment that becomes a conduit for digital disruption.

Digital disruption is the new normal - a current and future state of business as more and more disruptive technology is adopted by mainstream audiences. A whitepaper released by the World Economic Forum, in 2016, acknowledged that “Hundreds of start-ups are now attacking traditional markets, thanks to the democratisation of technology, increased access to funds and a rising entrepreneurial culture.” Deloitte’s whitepaper titled “Digital disruption: Short fuse, big bang?” laid out how the impact of the digital disruption trend could lead to digital innovation that could potentially:

  • Help establish the building blocks that create future value for some businesses
  • Present a volatile experience that results in a complete overhaul of the foundational business model
  • Offer a more subtle, slower and progressive change for industries less vulnerable to digital trends

Two key questions that CIOs should be asking are:

  • How will digital disruption change the way my organisation does business?
  • How can we the opportunities created by this change?

Gartner identifies three simple steps to asses how digital disruption might change the way an organisation does business in their article “Recognise and Respond to Digital Disruption”. Here’s a simplified interpretation of some of the steps:

In a Gartner report titled “Leading Through Digital Disruption”, David Mitchell Smith, Vice President and Gartner Fellow, states that innovators that want to impact change, don’t just innovate, but disrupt. These innovators usually find themselves in a situation and change the fundamental dynamics of their environment to use it to their advantage. He further adds that “When the average organisation is no longer surprised by disruption, but instead uses it as a tool of normal competition, it changes organisational dynamics, the nature of strategic planning, investment priorities and the technologies used to drive the future of business.”

Disruptive technology leading to digital disruption within the business environment is and should be expected by most businesses. One of the biggest steps that most businesses are taking to meet this challenge is analysing their current state of digital transformation. It is important to understand where your business stands in today’s digital landscape before taking steps to transform your business model to meet your customer’s expectations and needs.

Take a quick Ricoh survey to assess where your organisation currently stands in its digital transformation journey.