Nowadays, technology is changing with an unprecedented velocity, which has been heavily affecting business operations. While we used to consider that it is digital innovation that nurtures the reshaping of established procedures, digital disruption has emerged at the forefront recently.
Industries and businesses feel a dramatic impact of this phenomenon. Uber, Facebook and Netflix have once disrupted their specific domains, which has led to revolutionary changes across their industries.
How Digital Disrupts Business
While it seems that digital innovation cannot but contribute to the success of society and business, digital disruption in business can certainly threaten a great number of market players.
What is digital disruption? Usually, the definition of digital disruption describes the phenomenon of when individual companies introduce brand-new technologies, which endangers other companies’ commercial operations. Such a disruption of existing business patterns lays the foundation for fundamentally different ones.
The emergence of brand-new solutions and ways of business thinking makes companies struggle to adapt to the new environment and conditions, which some of them fail to do. Statistically, almost half of the Fortune 500 companies have been disappeared in the last 17 years. That is why 74% of CEOs are peeved about new entrants that may disrupt existing models. Sixty-six percent doubt whether their companies are capable of becoming business disruptors. At the same time, keeping pace with new technologies is a major concern.
However, while carrying a negative connotation, digital disruption is a major asset for many in terms of business efficiency, let alone technological progress and digitalization. This phenomenon is and will be a game-changer for numerous enterprises, as it provides a challenging opportunity to reconsider and improve their business strategies. In tranquil markets, companies have slim thoughts for the business model enhancement, while digital disruptors urge them to design a better version of themselves.
In the context of digital disruption, mature organizations fall in the same state as startups: they are forced to discover new opportunities for business success. That is why 86% of them have already entered a new market or are contemplating this possibility.
Digital Disruption and Digital Transformation Strategy
Recently, digital disruption has been going hand-in-hand with digital transformation. Recent research revealed that the relationship between the two will only strengthen, as 48% of companies consider digital business transformation to be the most disruptive phenomenon.
Productivity (83%), innovation (82%) and cost efficiencies (82%) are the advantages that technology transformation is predicted to deliver. At the same time, they are the benefits that disruptors bring forth, which makes the consideration and the preparation for digital disruption a prerequisite when elaborating on a digital transformation strategy.
IT transformation strategy is, technically, just an organizational change that fuels the disruption of existing models and offers new ones to add value to commercial operations. As the disruption ushers financial performance improvement, multiple companies invest heavily in the development of efficient transformation technologies and techniques.
With the pressure of being the first in redefining existing business models, enterprises invent new solutions that compel other market players to re-evaluate their existing strategies.
Efficient Strategies to Succeed in Digital Disruption
To survive in the era of digital disruption and add value to the business, companies need to discover their competitive advantages as soon as possible, before their competitors do the same. There are two strategies, or rather vectors, that we recommend companies keep to while elaborating competitive business advantages. They will suit established enterprises, regardless of the domain, in which they operate:
- Banking and finance
- Manufacturing industry
Engaging as many customers as possible is of concern to every business. However, in the context of the disruption, companies should choose a completely different strategy to boost customer engagement. Indeed, it should not be just the customer base increase, but quality changes in the base generation. As companies can expect that one day a competitor may try to steal their customers’ loyalty, they need to make sure that they have something to retaliate against it.
A valuable example of such a redirecting strategy is that of Nordstrom, an American chain of department stores. After Amazon, an online retailer, disrupted it, the company managed to revive itself, armed with an elaborate strategy of the personalized shopping experience. Together with it, they offered an efficient and convenient supply system based on predictive analysis of their customers’ requirements.
Also, businesses should take into consideration that conditions and needs change at the speed of light in modern turbulent markets, which requires flexible tuning of the customer experience they provide.
In the digital era, companies can mastermind customer demand by suggesting what they may want to them. This requires businesses to come up with new offerings, which necessitates the reshaping of existing strategies and models.
For example, General Electric, a multinational manufacturer of a wide variety of devices and machines, has shifted its focus from asset producing to software-based asset management. This case exemplifies an efficient strategy of prioritizing software over physical assets.
A switch to another business line may become a sensitive issue, which is why companies may take up GE’s lead again: it has addressed a purpose-built startup. To streamline workflow and get the most of the use of robotics, the manufacturer has invested in Airware. The startup specializes in cloud service platforms, software and hardware for drones, and their solutions now help GE inspect oil pipelines and wind turbines.
Companies need to remember that a competitive advantage cannot be limited to one business capability. The more you can provide, the more serious the possibility is that customers will find your offering a perfect fit. Also, this will help mature companies perform better than startups, as the latter are usually good at single business activity.
Create Your Competitive Edge ASAP
In the era of digital disruption, businesses need to focus on staying alert, as being the first to adopt a new technology or method is half the battle. That is why SaM Solutions recommends investing in R&D and market research. Also, enterprises should support their business offerings with several unique solutions, which will significantly raise their prospects of success.
At the same time, it is important to keep in mind that software over assets should be a new business priority. That is why companies that lack proper solutions need to turn to reliable software providers, such as SaM Solutions, for consulting and development services. Only the fulfillment of these conditions may help a company become a true digital disruptor when such an opportunity emerges.