The growing risk of irrelevance in the digital age
The fourth industrial revolution is upon us! As technology continuous to occupy almost every aspect of our lives, we are entering the digital age fully willing and aware. Previous industrial revolutions have been significantly ground breaking for human kind, accelerating progress through the use of steam engines, electric power and subsequently, electronics and information technology. However, this time, the industrial revolution is set to change the way we live and work beyond our wildest imaginations. Characterised by a fusion of technology that is blurring the lines between the physical, digital and biological spheres, the fourth industrial revolution will mean the end of business, and life, as usual.
Disruptive technologies such as autonomous cars, drones, 3D printing, blockchain, internet of things, wearables, robotics and many more are gaining momentum as an increasing number of real world use cases start to emerge. Traditional business models are struggling to survive under the demands of the digital economy and incumbent companies are facing the risk of extinction.
Why digital disruption matters now?
Technology based disruptions are not new to the business world. Since the 1980s, several instances of new technologies, such as email and the Internet, have completely changed the way we do business. Conversely, there have also been technology based hypes that did not live up to their promise. For those who remember, the entire dotcom era comes screaming back to memory!
Experienced business leaders who have lived through the hypes will probably feel sceptical about the impact of digital disruption. Nevertheless, several factors clearly distinguish the current era of digital disruption and compel us to seriously consider its impact on the global business landscape. Three top factors that catalyse digital disruption are described below:
- Unprecedented pace of technology development
Over the last decade, technology development has accelerated at a dizzying pace. The relentless drop in prices of components, hardware and software have contributed to rapid manufacturing advancements. Additionally, each phase of technology development builds on the previous phase at an exponential rate, moving ideation and discovery forward leaps and bounds.
Today, we have open access to unparalleled processing power, unlimited storage capacity and cost effective cloud computing, which have all come together to create an ideal bedrock of technological development. With this, literally anyone can design, develop and test new technologies at a whim, limited only by their imagination.
- Evolving consumer behaviour and preferences
There is a common misconception that millennials (born between 1980s-2000s) are the definitive digital natives. However, if we take a closer look at the consumer segments adopting new technologies, we will find that they span across all age groups. Statistically, 50% of the global population are active on the Internet, while just over 37% are active social media users. As technology becomes increasingly affordable and easy to use, consumers globally are getting connected, mobile and digital-savvy.
I find that the most interesting outcome in this scenario is the fact that digital technologies are modifying consumer behaviour, permanently. For example, in just a few short years of using platforms such as Facebook and Instagram, consumers have become accustomed to new behaviour patterns. Now, when interacting with any business or brand, many consumers expect hyper-personalisation, instant gratification, seamless cross-channel experiences and 24/7 access. Companies that do not keep up are likely to get phased out.
- Competitive pressure from new digital businesses
Incumbent companies initially dismissed digital based businesses as hype. However, these new entrants are becoming harder to ignore as they quickly grow and reach billion dollar valuations. Again, this may be reminiscent of DotCom era of the late 1990s, but there is one fundamental difference. DotCom companies were built mainly based on a new technology – the Internet. Conversely, digital entrants are building their businesses based on understanding the behaviours and preferences of digital consumers.
These entrepreneurs, many of whom are digital natives, have a strong understanding of how to apply technology to elicit insights into evolving consumer needs and create superior customer experiences. This has enabled digital entrants to rapidly grow their consumer base to the millions, which would have been a colossal undertaking for startups of the past. Additionally, new entrants such as Uber and Netflix have redefined the way consumers access their products and services, enabling on demand, real-time consumption.
This new competitive business landscape is forcing companies to rethink their traditional business models, existing operations, as well as archaic approach to interactions with consumers. As a result, companies are forced to explore digital technologies to stay relevant.
Go digital or go home
In a typical business environment, concerns over daily operational challenges take precedence over new or innovative solutions. This is further reinforced by top level communication and organisational metrics. Traditional approaches, such as creating an app or using social media to communicate with customers, only scratch the surface of digital transformation. Companies need to look deeper into their operations, review the evolving needs of their customers, and determine how to apply digital technologies to improve the business operations and offerings.