5 questions to determine your digital disruption timeline
A potential client told me last week that “we need to have a direct relationship with our customers by 2022, or else we won’t have any revenue.” We discussed their plan to disintermediate or “cut out the middlemen” via digital channels and leverage a cloud-based marketing platform. The plan should succeed if they can provide a quality product, reach potential customers and give customers a reason to engage. I was impressed that the client knew the exact date when they needed to be digital.
The potential client’s dilemma got me thinking about timelines for digital disruption in different industries. It would be nice to have an exact date and ensure you’ve got a plan in place to transform your business before then. Deloitte has some good industry analysis and recommendations in their paper Digital disruption: Short fuse, big bang?. They list retail trade, arts and recreation, ICT and media, finance, professional services and real estate as the industries that are going to face digital disruption quickly and with significant change.
Every company is different and using Porter’s Five Forces analysis we can come up with a reasonable list of questions to help determine your timeline:
The threat of new entrants: Is there a startup that will take your customers using a digital channel? Uber has done a successful job disintermediating the taxi industry via digital channels. Substitute products or services: Will people use different service models in the digital channels? Netflix is a good substitute for cable TV operators such as Foxtel. Bargaining power of customers: Will the reduction in information imbalances, quick and easy comparison websites and international competition affect your company? For example, iSelect and Compare The Market has put price pressure on insurance because customers can easily compare products. Bargaining power of suppliers: Will suppliers go directly to customers via a digital channel? The grey market has allowed international suppliers to ship directly to customers all around the world. Competitive rivalry: Will an existing competitor innovate via their digital channels? The amount of money spent by Australian banks in the last five years shows how digital channels have become more important for customer engagement, satisfaction and retention. These questions along with the Deloitte paper should allow you to start thinking about how your company can survive disruption. The earlier you think and plan for your disruption the better prepared you will be when it arrives.
Paul Winters is a Director at Syntegrity Solutions, a specialist IT consultancy that focuses on digital innovation enablement. He has over 10 years experience in the IT industry and has consulted on APIs, integration and security to enterprises including top-tier banks and insurers.
Image courtesy of the US Embassy in New Zealand from Flickr.