Digital competition is disrupting the market and wiping out traditional forms of revenue by offering new services and models using digital technology. This article shares a few effectives ways in which companies can
The market, as we know it, is crumbling with new digital developments happening at an alarming rate. Traditional companies are being left behind in the wake of digital natives who do not suffer from the same clash of working with legacy infrastructure and integrating new technology. They were born in this technology world. And for those companies that have gone through a digital transformation to try and catch up, it’s a whole new world of risks and rewards.
The current rate of disruption spares no specific industry, while size, reputation, and history seem to offer no protection against it. The S&P 500 is an interesting barometer of the disruption taking place as Innosight notes in a recent reportOpens a new window , stating that:
- The average tenure of companies on the S&P 500 will shrink to just 12 years by 2027, from 24 years in 2016
- At the current rate of change, about half of the S&P 500 companies will be replaced in the next ten years
Digital competition is ‘disrupting’ the market and wiping out traditional forms of revenue by offering new services and models using digital technology. Think of the Ubers, Airbnbs, and Netflixs of this world. Traditional organizations are faced with a choice: transform or disappear.
The Legacy Landscape
The ‘old’ branches have a considerable challenge when it comes to digital transformation. Take banks for an example. They often have to deal with a lot of complex, legacy IT in the back-end, which makes even the most sophisticated banking apps complicated to manage and maintain. Besides, like many other traditional industries, they have a history of being the most successful in face-to-face dealings and therefore still have real estate. And how many chains with physical locations have already disappeared?
The first one to come to mind is Blockbuster, who were driven out of having a store on every corner by the luxury of streaming millions of shows from the comfort of your own couch. This is just one example, but there could be a huge list of brick and mortar stores who are feeling the pinch from digital competitors and being surpassed in sales by even their own online stores.
Progressive companies understand that digital transformation is a long-term initiative. These companies want to transform because they understand that the more intrinsic that digital technology is to their business, the more longevity they have, and that with more flexibility they will have to act quickly as the market continues to evolve. Besides, they increase their reach, have faster access to suppliers and offer the possibility to automate processes, thus reducing costs.
However, this is easier said than done.
In the event of malfunction, downtime, or disruption, digital companies can find themselves faced with a crisis. They cannot afford to be offline for any length of time, or to try and restore from incomplete backups that contain data from hours ago, never mind days.
Moreover, all data must be restored as thoroughly as possible, because how do you explain to all your customers that you have not received their orders? If you can even find out who that customer is and what their order was. It makes sense then that organizations must be continuously prepared for downtime, both planned and unplanned, but again, this is easier said than done.
This demand for businesses to be always-on, always available is driven in large part by the expectations of customers and users. We are a demanding bunch. With even the hint of a lag in the streaming of a movie and most definitely if a website crashes or is unavailable, the masses take to social media to protest – as long as it isn’t one of those sites that is down.
The era of high demand and quick complaints puts lots of pressure on organizations and can lead to swift reputation and revenue damage if not taken seriously.
Role of Social Media in Resilience
Now consumers have always been critical. However, now the channels are amplified and more abundant, and the impact is in public view for all other customers, prospects, and competitors to see. Although it is difficult to express in figures, social media’s effect on a company’s success – both in good times and bad – is palpable.
In the past, complaints were solved differently. My father used to be fairly loud when he had a complaint in the middle of a store on a Saturday afternoon, the busiest moment of the week, and it was always solved very quickly. This was very effective, but had little impact on company reputation, at most ten customers listened to it.
Nowadays every company has to deal with social media. For dissatisfied customers, there are not only many more ways to express their dissatisfaction, but there are also many more ‘spectators’. Exactly the same tactic as my father on Saturday afternoon, but with much more impact.
Of course, you can always ride the wave of a Twitterstorm with good customers service, fast responses and a bit of groveling. But, the real solution for organizations with a digital heart is to be able to quickly anticipate system failures for whatever reason and prevent against them to ensure smooth waters in the Twittersphere.
It may often seem like the precautions and advice of IT about planning for the unknown is expensive upfront and not guaranteed to be used in the near future, but when you think about the bigger picture, it all makes sense. Be prepared for anything, and you will be the victor in the age of digital and disruption.