In the digital age, disruption seems to arise minute by minute. And 10 years’ worth of change feels like it’s crammed into two.
This was highlighted by an updated study, Life in the Digital Vortex, exploring perceptions of digital disruption across 14 industries.
In short, no industry is completely safe in 2017, but responses to digital disruption still lag.
Two years ago, the Global Center for Digital Business Transformation, an IMD and Cisco initiative, released its groundbreaking report, Digital Vortex: How Digital Disruption Is Redefining Industries. It likened disruption to a swirling vortex, relentlessly pulling products, companies, and entire industries toward a fully digitized center.
To gain an updated picture of the state of disruption in 2017 — and which industries are most at risk — the center surveyed 636 business leaders in 44 countries, revisiting key questions from the earlier study.
What changed in two short years? Awareness, if not action.
Today, roughly half of surveyed executives report that digital disruption is happening in their industries, compared with only 15 percent in 2015.
And while only 27 percent expected either major or transformational impact on their industries in 2015, in 2017 that percentage leapt to 75 percent.
Moreover, in 2015 digital disruption was not deemed worthy of board-level attention in about 45 percent of companies; in 2017, only 17 percent felt this way.
So, the threat is real. But what’s being done about it?
Barely enough, apparently.
In 2015, only 25 percent of executives felt their organizations were actively responding. In 2017, that number nudged up to 31 percent.
Hardly an overwhelming change.
Another 40 percent feel their leaders are not adequately responding, only a slight improvement from 2015’s 43 percent.
That is bad news in a Vortex pulling all industries closer to the center – threatening to displace nearly 40 percent of the top 10 market leaders in the next five years.
Journey to the Center of the Vortex
In 2015, technology was the industry most likely to be disrupted. Today, media and entertainment is closest to the center of the Vortex.
That’s no surprise.
In the Digital Vortex, everything that can be digitized is digitized — or swept aside. All kinds of media and entertainment content — from print and television to music and movies — are now sold, streamed, or shared in bits and bytes. And in effect, being swept to the center.
Once there, time speeds up, and disruption abounds.
Along with opportunity.Today, roughly half of surveyed executives report that digital disruption is happening in their industries, compared with only 15 percent in 2015.The barriers for entry in media and entertainment are lower than ever, and highly digitized new entrants use fast innovation, rapid scaling, and accelerated capitalization to mount sudden challenges. In such a volatile environment, even recently established disruptors like Apple, Amazon, and Netflix may not be completely safe — especially as agile business models and new technologies like virtual reality proliferate.
That goes for other industries near the center of the Vortex. Tech products and services, retail, financial services, and telecommunications share products and services that are easily digitized. That leaves them vulnerable to digitized competitors — everything from WeChat to WealthFront — that wield agility and rapid innovation cycles.
At the Outer Edges, No Hiding from DisruptionJust outside the center, industries are starting to feel the full impact of digital disruption. The professional services industry, for example, faces increased pressure from advanced analytics, intelligent bots, and gig-economy platforms such as UpWork and Freelancer.
Even at the far edges of the Vortex, life isn’t exactly calm. These asset-heavy business-to-business industries have been relatively safe. But new technologies, platforms, and business models are changing all that.
Transportation and logistics, for example, is under pressure from self-driving cars and electric vehicles, while new entrants like Uber and Amazon Logistics pose a rising threat.
Energy and utilities might have felt protected a few years ago, but cheaper batteries and solar panels — along with blockchain innovations that could enable micropayments on a smart grid — promise disruption to come.
In the end, all industries have moved closer to the center of the Vortex since the 2015 study. And the fringes of the Vortex are no place to be complacent.
No matter the industry, or its position in the Vortex, no business leader can afford to be among the 40 percent who are not responding to digital disruption.