RESEARCH REPORT

In brief

In brief

  • Companies in Saudi Arabia are feeling the same disruptive changes that are upending industries around the world
  • Using outside-in analysis of 100 Saudi Arabian companies, we’ve estimated how much trapped value exists across Saudi Arabian industries.
  • The report also delves deep into how to manage disruption like an innovation champion

In response to the natural evolution of businesses, as well as several external factors (e.g., demographic shifts, social and cultural expectations, technology-led innovation), large companies globally are preparing for disruptive change in their industries. This disruption comes in two forms, 1. Big Bang, where companies and industries are wiped out in a very short space of time and 2. Compressive disruption which take longer to happen but slowly eats into a company’s profitability.

Companies understand that they need to evolve—often in a radical way. However, they frequently get stuck in their current business models. They are overly focused on their “core” businesses (which is understandable, as this is where they grew up and it’s where today’s businesses make money) that they cannot get to the “new” emerging nearby.

So, what happens then is that organizations miss opportunities to release a tremendous amount of value that is trapped inside their current business models, supply chains and wider markets. We call this “trapped value” and it is typically unlocked by disruption. Actually, disruption is the necessary outcome, and the source of the disruption is innovation.

Organizations understand that innovation is crucial but finding ways to scale innovations successfully is extremely difficult and that is why companies are vulnerable to disruption.

With this context it is important that organizations build a practical path to lead in the NEW. To lead in the new, organizations must master four areas, perpetually and concurrently. These include:

Fifty six percent of Saudi Arabian companies are "omni-trapped" meaning that they are struggling to unlock current and future trapped value.
  1. Transform the core business to drive up investment capacity. This includes building competitive agility and more competitive cost structures in order to improve flexibility and increase profits in the existing core business model (e.g. using zero-based budgeting, sourcing, cloud technologies and intelligent automation).
  2. Grow the core business. Use the new investment capacity to support digital marketing and analytics (to gain new operational insights) and improve web/mobile interactions (to activate new demand and expand into new markets). For example, make smaller, strategic bets that add niche offerings to refresh the core business.
  3. Scale the new business. Scaling requires building a new innovation architecture inside the business (e.g., innovation hubs, labs, partnerships, etc.) that is reflective of the different levels of maturity of those innovations. It’s a prerequisite for moving new innovations from the start-up community to becoming material and scalable for a large corporation.
  4. Pivot wisely. This is not trivial. Clients need to strike a delicate balance: If they pivot too quickly from the core to the new, they will over-invest and financially stretch themselves too thin. If they pivot too slowly from the core to the new, they could become obsolete. That means they must carefully plan and decisively execute a “wise pivot.”
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65%

of Saudi Arabian companies are feeling the impact of disruption today

54%

of Saudi Arabian companies are susceptible to disruption in the future

Xavier Anglada

Managing Director

Yusof Seedat

Thought Leadership Director

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