London’s ‘black cab’ taxi drivers are used to disruption. Whether it’s being stuck in traffic jams, queuing in roadworks, or coping with unpredictable weather – they’ve seen it all.
But nothing, absolutely nothing, compares to the disruption they are now facing. It’s from Uber, the app that lets you request, ride and pay for a taxi journey from your phone. It’s disruptive to the London taxi industry and it might be too late for London’s ‘cabbies’ to apply the brakes.
This disruption reaches far beyond the taxi ranks in London. Driverless cars threaten the major auto manufacturers. Airbnb is challenging the traditional hotel industry. Television distribution is being upended by digital distribution outlets like Amazon Prime and Netflix. Make no mistake: Digital business trends are disruptive and the pressure is only going to get more intense.
This theme of digital disruption is picked up in a new Harvard Business Review Analytic Services report, sponsored by CA Technologies. The report, “Surviving Disruption, Leading Change: Winning in the Application Economy”, explores the impact of digital disruption and what organisations can do to win in an economy increasingly dominated by apps and other digital-based services.
The global survey of 250 business leaders from primarily large organisations in financial services, manufacturing, healthcare, telecom and many other industries found that 44 per cent of respondents say they expect their industry to be significantly disrupted by digital business trends over the next three years. Some 22 per cent say this has already happened.
Of course, many acknowledge that technology is the answer: We frequently hear CEOs standing up at their annual general meeting saying, “We’re not a bank, we’re a technology company,” or “we’re not an airline anymore, we’re a technology company.” The report finds that 53 per cent of organisations are investing in modern technology to develop digital products and services faster. In fact, it’s the number one action being taken to compete more effectively in the digital economy: rolling out innovative new services that keep customers satisfied and sticky.
However, getting the technology right is probably the easy part. The primary obstacle to digital transformation named by respondents is that they are bogged down in organisational bureaucracy. Data is siloed, decision making is siloed and visibility is siloed. Moreover, 31 per cent of organisations still suffer from a culture that is adverse to change.
Become a digital frontrunner
So how are successful organisations winning in this disruptive, dynamic and unpredictable business climate?
It’s all about speed. According to the Harvard Business Review Analytic Services report, Frontrunners are making speed a competitive advantage. Some 68 per cent say they are adept at developing new technology capabilities quickly, compared with only 25 per cent of Stragglers. For example, 48 per cent of Frontrunners develop mobile apps in less than four months compared with only 31 per cent of Stragglers. Frontrunners are also significantly more likely to use an agile approach to software development – 42 per cent describe themselves as advanced practitioners of agile development while only 8 per cent of Stragglers do.
To capitalise on digital business opportunities requires change in many dimensions. While respondents’ primary focus is on creating a great digital customer experience (42 per cent), this was followed by investments in transforming core business operations and processes (34 per cent) and employee work processes (31 per cent).
Security matters too. According to the study, 45 per cent are very concerned about a variety of security risks as their businesses become more digital. Most security experts agree that the more digital a business becomes, the more pervasive are the threats. For most, it is no longer possible to keep intruders out. Rather, security must be built-in to multiple layers of the enterprise, with the capability to detect intrusions and respond quickly to limit the damage.
Drawing it all together
Companies increasingly compete on the quality of their software, and the speed with which they can roll out new products and services. However, many lack the people, processes and technologies to compete successfully in the application economy, and organisational inertia is a huge impediment.
Executives must break down silos inside their organisations and push collaboration. They must be willing to sacrifice some stability in order to drive change. They will forge more flexible relationships with partners to exploit new business models and achieve greater agility and speed. They will invest in modern technologies to develop digital products and services faster. They must get comfortable moving from big planning efforts and long execution cycles to a more rapid test-and-learn approach.
The real danger, as London’s ‘black cab’ drivers are finding, is inertia. The risk for organisations that get stuck in the past is great. Those that figure this out and are able to lead the change will not only survive disruption, they’ll help write the rules for the new application economy.
For businesses with agile mind-sets, the right people and the right technology, the opportunity is enormous.
Marco Comastri, President and GM, EMEA, CA Technologies
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