Published 9. April 2015, by Caroline Holm and Mikael Stenstrand
Digital Disconnect: Plugging into Disruption in Sweden
Digital disruption. In today’s world, markets seem to change overnight. With companies coming on the scene with break-out innovation that effectively rewrite the rules for entire markets and sectors. It’s a business development model that looks more like a shark fin than the traditional bell curve. Instead of product or service adoption gaining momentum gradually and sustaining over time, companies experience sudden, dramatic success. Established businesses can disappear virtually overnight in the face of such sudden and unexpected competition. Consider companies like Kodak, Blockbuster and Nokia that once dominated their respective sectors but then lost their positions by not keeping up with technological development.
Up until now, disruption has been driven by start-ups like Spotify, Uber, Airbnb and the like. Now traditional companies are starting to take action. But most are still only scratching the surface of possibilities. Disconnected from a far deeper opportunity when it comes to digital. Instead, they’re focused mostly on cost cutting initiatives, hesitating to go further into disruptive plays that will drive revenue, innovation and growth. Doing that requires plugging into digital on a large scale: changing business models and radically re-imagining how to create value for the ever-changing digital customer. For those that do plug in, the reward will be a competitive edge that puts them far ahead of rivals. Companies that continue to hesitate will fall further behind and risk never catching up.
When and how do Swedish businesses perceive digital technology disrupting their own industries? How exposed do they feel to it and what actions are they taking? What are the trends shaping the Swedish marketplace and how do they compare to the rest of the Nordic region? These are just a few of the questions we sought to answer in new research by Accenture conducted in the fall of 2014, based on more than 400 interviews from executives within leading companies and public organizations in Sweden, Denmark and Norway. In Sweden alone, 150 interviews were conducted.
According to the study, Swedish companies acknowledge digital disruption is coming in the near future. In fact, 60 percent of all respondents expect their industries to change significantly in less than five years as a result. And almost all (95 percent) see it as a business opportunity rather than a threat. What’s driving digital? According to respondents there are two catalysts: “Meeting underlying customer needs (34 percent) and “reducing costs,” (24 percent).
Despite their awareness of when and how digital will reshape their businesses, few companies are prepared and many still seem to lack an understanding of the full implications of it. An overwhelming majority of respondents see digital as a business opportunity, yet only 17 percent report having a strategy for capturing the value of digital. What’s more, a full 71 percent of those surveyed don’t believe disruption will come from outside the borders of their own industry. This despite the fact that grocers are becoming bankers (ICA). And retailers are entering the insurance market (Amazon.) A vast majority—85 percent—are not primarily using digital to drive new sources of revenue outside their traditional business models.
Swedish companies that see themselves as digital leaders reported a higher positive impact on revenue from digital development than followers. How much higher? Over the last three years, leaders’ revenue growth was almost three times that of followers (3.2 percent versus 1.2 percent.) That’s because leading companies are beginning to experiment, moving beyond applications that are “one offs,” to efforts that go deeper: changing models, approaches and processes below the surface of their businesses.