Business Management

C-Suite still ignoring digital disruption

This is a contributed piece by Martin McPhee, senior vice president, Cisco Consulting Services

Despite dire warnings, huge observable disruption and companies seeing their market share steadily eroded, the C-suite are still oblivious to the threat that technology is bringing right into their boardrooms. In a new joint research initiative with IMD, one of the world’s top business schools, we spoke to almost a thousand senior management and C-level executives across 12 industries who thought that digital disruption will displace approximately 40% of incumbent companies within the next five years.

Despite this clear red flag, digital disruption is not seen as worthy of board-level attention in about 45% of companies on average, according to the first report from the joint IMD Cisco Centre for Digital Business Disruption at IMD. In addition, 44% of companies either do not acknowledge the risk of digital disruption, or have not addressed it sufficiently.

What was surprising about the results of this study was that nearly a third are taking a “wait and see” approach, in hopes of emulating successful competitors. But the idea that all of these industry heavyweights will be agile enough to adapt to this new reality is fanciful. For example, WhatsApp’s 800 million users will send 50% more messages than all SMS combined this year. If that revenue loss wasn’t enough, OTT services are projected to drain global telecommunications companies of $386 billion in revenue between 2012 and 2018 through OTT mobile voice calling alone. In the UK, Snapchat now accounts for 75% of data traffic on Vodafone’s network. What answer do operators have against these OTT players who have developed more popular services and yet share none of the responsibility for the infrastructure?

Incumbent companies are thinking strategically, though. The research showed that 25% describe their approach to digital disruption as proactive—willing to disrupt themselves in order to compete. This complements the fact that 75% believe digital disruption is actually a form of progress, with 72% saying it improves value to customers and 66% feeling it empowers individuals.

The core driver behind this pace of disruption is the Internet of Everything that is predicted to have a total value at stake of $19 trillion from 2013 to 2022. The IoE presents a huge opportunity and while it is sowing disruption, it is a force for creation. Businesses need to understand how to most effectively adapt to digital disruption, where ultimately the only constant will be change.


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