On top of being one of the most hyped terms of the last few years (as is digital transformation as such), digital disruption is mainly used in the sense that an industry, way of doing business or ecosystem (e.g. societal) is significantly challenged by existing (mostly tech) companies, newcomers or incumbents who have mastered digital business skillsets and came up with solutions, business models and approaches that cause a significant shift in customer behaviour and market context, requiring existing players (which can include ‘digital businesses’) to change their strategies as well.
However, disruption is certainly not only about those initiatives by newcomers or incumbents with disruptive approaches. Disruption in the end is about people, customers.
Disruption in the end is a shift in power in relationships. Disruption, as a human phenomenon, is caused by shifts in, among others, the way people use technologies and about changes in their behaviour and expectations. These changes can be induced by new technologies and how they are adopted or leveraged by disruptive newcomers. However, the change can also have a broader context that has nothing to do with technologies. Is that still ‘digital disruption’? No. Yet, in some cases digital technologies could be leveraged to address those changes in behaviour or expectations/needs and so forth.
Disruption often happens in the last mile (of the customer experience). We would say that, in general, disruption often happens at the various edges of the business; those same edges we just mentioned: the last mile, the customer, the broader ecosystem, etc. In the scope of the broader ecosystem it’s essential to look at the disruptive effect changing economic realities and regulations, for example, can have, again emphasising the need to put digital transformation advice in perspective.
The fact that digital transformation often focuses on the edges as we mentioned seems obvious when you look at the disruptions and growing expectations at the edges (customer expectations, the knowledge worker at the end of a business process, etc.) who then drive digital transformation.
Causes of disruption and transformation
“Disruptions” and digital (business) transformation can be caused by numerous factors:
- Technological innovations (technology-induced), which are more impactful than ever before. However, again, it’s not the technology that drives the disruption or transformation. It’s how it is used and adopted by customers, partners, competitors and various stakeholders. Technologies with clear disruption potential include IoT, artificial intelligence, edge computing, virtual and augmented reality and blockchain. However, the most disruptive potential occurs when they get combined and enable new applications as we see in the convergence of AI, IoT and big data analytics. In industrial transformation the convergence of IT and OT is also a game changer.
- Customer behaviour and demands. This so-called customer-induced transformation and disruption is not necessarily related to technology. Technology often enables or, as just mentioned, causes it, when adopted and turned into business challenges. An example of a force that drives digital transformation and is not caused by technology but merely strengthened by it in combination with other factors: the demand of customers for ease of use and simplicity in dealing with businesses is far older than today. It goes back to times when even the Internet didn’t exist. In that sense, digital transformation can be simply catching up too because businesses don’t have another option anymore (it’s not as if they didn’t know the importance of making interactions and support for customers easy and frictionless decades ago). Customer behaviour and needs can also be impacted by disruptions on a societal level.
- Innovation- and invention-induced. Entirely novel approaches to human and business challenges, as well as innovations and inventions that create a new reality, whether it’s in science, business, technology or even a non-technological context of true innovation can be disruptive. The invention of medicines that change healthcare and society (as has happened several times in the past), the printing press, the train, what can be next? Your best bet is probably in life sciences and the application of technology within the human body and mind.
- Ecosystem-induced. Organisations are part of broader ecosystems. Economical changes, demands from partners who want you to adapt, evolutions towards collaborations in transformational business ecosystems, regulatory changes (consider the transformational impact of the General Data Protection Regulation or GDPR for example), geo-political changes, societal shifts, unexpected events, they all can impact and drive the need for digital transformation.
And this ecosystem aspect brings us again to this essential aspect of digital transformation: the interdependency and interconnectedness of everything – and according need to think holistically, across industries and with present and future shifts in mind as mentioned before.
Everything overlaps and is connected; from disruption, business processes and models to business activities and each single activity of the organisation and the broader ecosystem in which it operates. It’s the butterfly effect in action. Think about how virtually all business processes de facto are linked, the interconnectedness of business activities from the customer perspective, the way information runs across all digital transformations, the impact events can have on an economy, and much more. Scenario planning is important here.
Who owns the audience, owns the last mile Closest to customer, closest to disruption.
Shane, COO and Co-Founder at StackStudio