40 percent of industry incumbents will be displaced in the next five years due to digital disruption, according to a new report.
The research from the Global Center for Digital Business Transformation, a joint initiative between Cisco and the International Institute of Management Development, found that despite the disruptive potential of digital transformation, 45 percent of companies do not believe digital disruption merits board level attention.
The report, entitled ‘Digital Vortex: How Digital Disruption is Redefining Industries’, also showed that 43 percent do not see digital disruption as a risk and only 25 percent believe they have a pro-active approach to it.
Generally digitisation was seen as a positive force, with 75 percent of executives believing that digital disruption was a form of progress, 72 percent saying it improves value for customers and 66 percent arguing it empowers individuals.
"Digital disruption has the potential to overturn incumbents and reshape markets faster than perhaps any force in history," the report claims.
It adds that "firms can evaluate the speed at which their industry will experience disruption. They then can choose to "disrupt themselves" or potentially be displaced by a new business model. This does not mean discarding what has made them successful or emulating in-vogue digital tactics.
"Rather, they must challenge the assumptions that have underpinned prior success, and stress-test the ways in which they deliver value to customers. It means changing the organisation itself, including its operations, culture, revenue model, and more — in fundamental ways, and perpetually."
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"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, senior vice president, 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 organisations."
"It’s not just business models that are changing, it’s value chains and product offerings as well. Digitisation 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.
Wade added: "As industries move toward the centre 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 report surveyed 941 business leaders in 12 industries and in 13 countries including the UK.
