UPDATE: January 2015 – I have provided an update to this post here.
Highlights are that one-third of Australia’s economy faces a “short fuse, big bang” scenario where the effects of digital disruption will be far reaching and greatly transform a number of industries.
— Deloitte Digital AU (@DeloitteDIGI_AU) January 16, 2013
In the report, the authors refer to changes – both positive and threatening – as ‘digital disruption’.
For some, digital disruption will be explosive and immediate – a force that rocks the foundations of their business. For others less vulnerable to digital trends, the changes will be slower and more subtle. For others again, digital innovation will be the cornerstone for future value creation.
Specifically for the Australian market, this report shows that sectors such as finance, retail, media, information and communications technology have a short fuse and can expect a big bang.
At the other end of the spectrum, miners, construction groups and many manufacturers have longer fuses and face less incremental disruption to their business.
Sectors like education and health, while set to experience profound changes, have a longer fuse and potentially a greater opportunity to plan their response.
I would argue for UK, EU and US markets, the finance, retail, media, and information and communications technology sectors are also at the greatest risk of a “digital bang” in the short-medium term.
As such, CEO, CMOs and CIOs need to not only understand the changes affecting their industry by the onslaught of digital, but also ensure they have the right skills internally that “get” digital and the effects.
I really like what Deloitte say here:
The digital economy isn’t just about speeding up
communication across borders or changing the skills workers need; it’s about changing the very nature of consumption, competition and how markets work.
More profoundly, it is also driving a significant shift
in the balance of power between organisations and individuals. The explosion in connectivity and the availability of information is putting today’s consumers, employees, citizens, patients and other individuals squarely in the driver’s seat.
Throughout my working life over the last 26+ years, I have seen two major disruptive changes that have profoundly affected business, and the way as consumers we interact with companies.
The first was in the late 1990s when the internet provided instant connectivity between consumers and companies.
Without the “big bang” delivered by the internet, things we now take for granted such as email, online banking and shopping would never have existed.
If this report was conducted 14 years ago, then the retail and banking sectors would figure prominently as those ripe for a huge digital bang.
The second revolution in the last 20 years I believe has been social media. The rise of Facebook, Twitter, YouTube and the like has allowed consumers to talk back to brands in a way they were never able to until recently.
This has massively disrupted how brands advertise to and service customers. Now I can complain to thousands of people who follow me on twitter via on my mobile while still in the shop where I experienced poor service.
Twenty years ago I would have received a curt look from a manager and perhaps a form to fill out, now I get a very public apology direct from the brand, and the issue is solved in minutes. This is just one small example of how this new social version of the digital bang is completely disrupting business as we know it.
The fact that my tweet can be amplified in minutes, means that traditional processes around customer service have to be immediately reworked for the social wave sweeping through the retail and service sectors.
One of the charts in the report explains Deloitte’s digital disruption map and where each industry sits. Click the image for a larger view.
Along the x-axis is timing in years (on the left is shorter timeframe) and the y-axis represents the impact and % change on the business.
How to respond to the threat of a digital bang?
The second part of the report looks at how organisations should respond to digital disruption.
The graphic from the report summarises this (click for larger view).
Deloitte list 9 levers that can be used to respond to digital disruption and are grouped into categories of
- recalibrating your cost structure
replenish your revenue stream
reshape your corporate strategy
The report is very detailed at 52 pages, and is best read in a couple of sittings. It will be a very uncomfortable read for the CEO,CIO,CSO and CMO of any company who has been established for some time and not able to adapt quickly.
Digital disruption has started. Those companies and Digital CEOs that can pivot and embrace digital as many did in the late 90’s and early 00’s will be successful.
From everything I have heard about Dame Marjorie Scardino who has been the CEO of Pearson (publisher of the Financial Times) for the last 16 years and has just announced she is stepping down, she is a CEO who really gets digital and has been behind the FT’s online and mobile strategy – with proven results.
To get digital, you need to be digital.
I’ve recently changed my twitter bio to emphasise this – and it now reads
CEO of @kred. Part strategy, part business, part technology & 100% digital. Sharing insights on digital + social at LondonCalling.co since 2004
The Deloitte report is well worth a read – grab it via http://lc.tl/sfbb and read it if you dare!