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November 26, 2014
It is business’s turn to drive disruption as leaders double down on digital transformation
By: Mark McDonald

Digital disruption started with customers adopting digital innovation faster than companies. The resulting information, access and mobilization imbalance put many companies on their heels and industries from Insurance to Banking and Retail transformed around them. As we enter the second digital decade, business is getting off its back foot. That is the conclusion of a recent research report entitled Digital Double Down, how far will leaders leap ahead?

The report highlights a changing attitude among executives to digital transformation. It highlights how business will be a new source of digital disruption and identifies how disruptive strategies create distinctions between future digital predators and digital prey. Let me highlight these points in sequence to provide a flavor for the report.

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Digital transformation moves from reactive to proactive

Corporates have been on the back foot compared to customers and start-ups when it comes to digital. Business leaders have internalized the digital news. Fifty-two percent (52%) of the 1,100+ executives surveyed believe that digital technology will completely or significantly transform their industries. Let’s call them digital transformers. The rest are digital followers who do not see digital as a transformational force in their industry.

The distinction between transformers and followers creates its own competitive force that goes beyond differing views on digital’s impact. Transformers seek to create further disruption based on growth. Followers expect digital to reduce internal costs. Transformers will force followers to act in response to their investments to remain competitive.

Growth is the goal of disruptive strategies and investments

Customers already affix brand value to the quality of a company’s digital channels. The importance of that association will increase as digital transformers emphasize growth-oriented investments to twice the degree of digital followers. Those investments in new experiences, services, products and channels will further differentiate transformers from followers. The resulting disruption will further disrupt markets, as the importance of a growing digital gap will be lost on digital followers with their internal focus on cost takeout.

Digital disruption creates a new fault line in market segmentation

Digital disruption was once the exclusive domain of small start-ups rather than large incumbents. That distinction is losing its descriptive power according to the survey results. Large firms with more than $US15 billion in revenue are among the most aggressive in terms of investing in digital disruption with 63% of firms of this size falling into the transformer category.

Size is one of the fault lines between transformers and followers, but not in a way that you would think. According to the survey results, there is a missing middle in terms of digital segmentation. Followers dominate the category of firms with revenues between $US1 billion and $US14 billion. These organizations will increasingly find themselves caught the middle between the need for change and the resources required to change. Executives in organizations falling into the middle should pay particular attention to these new dynamics.

The bottom line—digital is a company and consumer force

Transformation moves industries when an early and significant majority decides it’s time to make a change. Those conditions exist, according the survey results, when half of the market is doubling down their investment in digital disruption. Their actions, growth focus and size will accelerate and industrialize digital disruption by changing what it takes to win in the future. As a result, the early majority requires everyone to choose, change and adjust their strategies or paint themselves as targets for disruption.

Digital transformation moves from reactive to proactive

Corporates have been on the back foot compared to customers and start-ups when it comes to digital. Business leaders have internalized the digital news. Fifty-two percent (52%) of the 1,100+ executives surveyed believe that digital technology will completely or significantly transform their industries. Let’s call them digital transformers. The rest are digital followers who do not see digital as a transformational force in their industry.

The distinction between transformers and followers creates its own competitive force that goes beyond differing views on digital’s impact. Transformers seek to create further disruption based on growth. Followers expect digital to reduce internal costs. Transformers will force followers to act in response to their investments to remain competitive.

Growth is the goal of disruptive strategies and investments

Customers already affix brand value to the quality of a company’s digital channels. The importance of that association will increase as digital transformers emphasize growth-oriented investments to twice the degree of digital followers. Those investments in new experiences, services, products and channels will further differentiate transformers from followers. The resulting disruption will further disrupt markets, as the importance of a growing digital gap will be lost on digital followers with their internal focus on cost takeout.

Digital disruption creates a new fault line in market segmentation

Digital disruption was once the exclusive domain of small start-ups rather than large incumbents. That distinction is losing its descriptive power according to the survey results. Large firms with more than $US15 billion in revenue are among the most aggressive in terms of investing in digital disruption with 63% of firms of this size falling into the transformer category.

Size is one of the fault lines between transformers and followers, but not in a way that you would think. According to the survey results, there is a missing middle in terms of digital segmentation. Followers dominate the category of firms with revenues between $US1 billion and $US14 billion. These organizations will increasingly find themselves caught the middle between the need for change and the resources required to change. Executives in organizations falling into the middle should pay particular attention to these new dynamics.

The bottom line—digital is a company and consumer force

Transformation moves industries when an early and significant majority decides it’s time to make a change. Those conditions exist, according the survey results, when half of the market is doubling down their investment in digital disruption. Their actions, growth focus and size will accelerate and industrialize digital disruption by changing what it takes to win in the future. As a result, the early majority requires everyone to choose, change and adjust their strategies or paint themselves as targets for disruption.

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