Another digital disruptor was the acceptance of on-line shopping forcing bricks and mortar stores to rethink their business model – or close. Myers, David Jones, Harvey Norman, JB Hi-Fi, and Dick Smith have all had to embrace digital disruption.
Newspapers, radio and TV have had to change as on-line publishing, ‘rivers of gold’ classified advertising, news sites, music and video streaming changed the way we consume news and entertainment content.
Who would have thought that Airbnb would become the largest ‘hotelier’ yet not own or manage a single room? Or Uber putting a substantial dent in the traditional taxi business.
These are just a few examples of the tip of the digital disruption iceberg. A new 28 page report from Capgemini and the University of Sydney Business School makes interesting reading - especially if you look at their first finding
- Digital Disruption often feels sudden, yet the source of disruption has often been present, and even observed, for a while before it creates a significant impact. In other words the businesses that are about to be disrupted have known of the threat for some time – and not been willing, able, or agile enough to do something – either change their ways or work out how to prevent it from happening.
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The report has five other key findings
- It is key to understand the mechanics by which Digital Disruptive Intermediaries (DDIs) change the value flow in markets to uncover vulnerabilities and new opportunities in your business.
- The current wave of emerging technologies are so disruptive because they both transform the way value is generated and change our thinking and understanding of how a market operates.
- DDIs change the allocation of supply and demand by exploiting the flow of information, not the control of physical assets. Not only does this make them disruptive, it means they can grow extremely rapidly.
- To prepare, incumbent businesses need to think systemically and experiment and innovate using digital technologies that are outside of their current, established business structures.
- The biggest threat to incumbent businesses is their adversity to risk that prevents them from reacting even when disruptive change is upon them.
Is change good?
Established business models and work practices that were successful for decades are being challenged or are no longer viable. Digital Disruption is often seen as a threat by established business as it destabilizes their tried and true business models and often removes their reason for being. The reality is that times change, people want more choice, and better prices.
How do DDIs disrupt?
The report identifies eight different DDI archetypes and the ways in which they innovate and disrupt various markets:
- Digital stores aggregate suppliers to provide online one-stop shops in order to own the customer experience
- Content Hubs disrupt the media industry and change the ways in which consumers interact with media services in an on-demand way
- Sharing Hubs enable the accumulation of user-generated content, over time threatening and competing with traditional mass media for consumer attention
- Promotors focus on price. They introduce price transparency and take on the role of channelling price-conscious customers to the best offerings
- Aggregators allow customers to easily compare information-rich products in fragmented markets that are often deliberately opaque
- Discriminators are built around customer opinions and reviews; they disrupt established ways of defining quality, particularly in service markets
- Crowd Sourcers gather customers to source services or suppliers via digital platforms in a way that’s straight forward, levelling the playing field between large and small suppliers
- Matchers reorganise the allocation of demand and supply, in particular in formerly monopolised markets, disrupting established allocation mechanisms.
The report analyses changes in the above 8 categories brought on by Amazon. Netflix, YouTube, iSelect, Expedia, TripAdvisor and many more.
Its thought provoking and compulsory reading for anyone with aa business.
