Article 5 minute read

Businesses must adapt or

die
09th May 2017

The growing risk of irrelevance

in the digital age
The fourth industrial revolution is upon us! As technology continuous to occupy
almost every aspect of our lives, we are entering the digital age fully willing and
aware. Previous industrial revolutions have been significantly ground breaking
for human kind, accelerating progress through the use of steam engines,
electric power and subsequently, electronics and information technology.
However, this time, the industrial revolution is set to change the way we live and
work beyond our wildest imaginations. Characterised by a fusion of technology
that is blurring the lines between the physical, digital and biological spheres, the
fourth industrial revolution will mean the end of business, and life, as usual.

Disruptive technologies such as autonomous cars, drones, 3D printing,

blockchain, internet of things, wearables, robotics and many more are gaining
momentum as an increasing number of real world use cases start to emerge.
Traditional business models are struggling to survive under the demands of the
digital economy and incumbent companies are facing the risk of extinction.

Why digital disruption matters now?

Technology based disruptions are not new to the business world. Since the
1980s, several instances of new technologies, such as email and the Internet,
have completely changed the way we do business. Conversely, there have also
been technology based hypes that did not live up to their promise. For those
who remember, the entire dotcom era comes screaming back to memory!

Experienced business leaders who have lived through the hypes will probably
feel sceptical about the impact of digital disruption. Nevertheless, several
factors clearly distinguish the current era of digital disruption and compel us to
seriously consider its impact on the global business landscape. Three top
factors that catalyse digital disruption are described below:

Unprecedented pace of technology development

Over the last decade, technology development has accelerated at a dizzying

pace. The relentless drop in prices of components, hardware and software
have contributed to rapid manufacturing advancements. Additionally, each
phase of technology development builds on the previous phase at an
exponential rate, moving ideation and discovery forward leaps and bounds.

Today, we have open access to unparalleled processing power, unlimited

storage capacity and cost effective cloud computing, which have all come
together to create an ideal bedrock of technological development. With this,
literally anyone can design, develop and test new technologies at a whim,
limited only by their imagination.

Evolving consumer behaviour and preferences

 There is a common misconception that millennials (born between 1980s-
2000s) are the definitive digital natives. However, if we take a closer look at the
consumer segments adopting new technologies, we will find that they span
across all age groups. Statistically, 50% of the global population are active on
the Internet, while just over 37% are active social media users. As technology
becomes increasingly affordable and easy to use, consumers globally are
getting connected, mobile and digital-savvy.

I find that the most interesting outcome in this scenario is the fact that digital
technologies are modifying consumer behaviour, permanently. For example, in
just a few short years of using platforms such as Facebook and Instagram,
consumers have become accustomed to new behaviour patterns. Now, when
interacting with any business or brand, many consumers expect hyper-
personalisation, instant gratification, seamless cross-channel experiences and
24/7 access. Companies that do not keep up are likely to get phased out.

Competitive pressure from new digital businesses

Incumbent companies initially dismissed digital based businesses as hype.

However, these new entrants are becoming harder to ignore as they quickly
grow and reach billion dollar valuations. Again, this may be reminiscent of
DotCom era of the late 1990s, but there is one fundamental difference. DotCom
companies were built mainly based on a new technology – the Internet.
Conversely, digital entrants are building their businesses based on
understanding the behaviours and preferences of digital consumers.

These entrepreneurs, many of whom are digital natives, have a strong

understanding of how to apply technology to elicit insights into evolving
consumer needs and create superior customer experiences. This has enabled
digital entrants to rapidly grow their consumer base to the millions, which
would have been a colossal undertaking for startups of the past. Additionally,
new entrants such as Uber and Netflix have redefined the way consumers
access their products and services, enabling on demand, real-time
consumption.

This new competitive business landscape is forcing companies to rethink their

traditional business models, existing operations, as well as archaic approach to
interactions with consumers. As a result, companies are forced to explore
:
 digital technologies to stay relevant.

Go digital or go home
In a typical business environment, concerns over daily operational challenges
take precedence over new or innovative solutions. This is further reinforced by
top level communication and organisational metrics. Traditional approaches,
such as creating an app or using social media to communicate with
customers, only scratch the surface of digital transformation. Companies need
to look deeper into their operations, review the evolving needs of their
customers, and determine how to apply digital technologies to improve the
business operations and offerings.

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