Home » Study: Digital Disruption Is Inevitable And 75 Per Cent Of Brands Will Fail

1 August, 2016

Study: Digital Disruption Is Inevitable And 75 Per Cent Of Brands Will Fail

Nearly all of the chief strategy officers (CSOs) surveyed by Accenture around the world say digital disruption will reshape their industries but very few however are equipped to navigate the change.

That’s a key finding from a study called ‘Thriving on Disruption’, by the Accenture Institute for High Performance.

According to Paul Nunes, managing director, Accenture Institute for High Performance, “Rapid and disruptive change is coming, regardless of the industry that you operate in.”

He said, “Current economic outlook suggests that based on the declining lifespan of companies, 75 percent of today’s leading industry players will be gone within the next decade. Our research shows that although some companies aren’t ready for this disruption, they can borrow from the playbook of those who are.”

That means making strategic investments in technology platforms that supporting more collaborative operating models, Nunes says.

Those who feel most prepared are embracing new strategic alliances, devising more collaborative ways of operating with partners, and making themselves indispensable within a broader ecosystem.

The report should three broad approaches incumbents need to pursue;

Do not face disruption alone. Deepen and broaden partnerships with customers, providers, and a diverse array of companies in and beyond your core industry
Make yourself indispensable. Use your company’s focus and expertise to become a critical part of the integrated solutions that customers demand
Embrace operational flexibility. Consider what organizational changes you will need to be more collaborative and open—both in terms of your processes and your employee mind-sets

For the report surveyed 561 CSOs across 10 industries in 11 countries. It found that while 93 percent agree that new technologies will rapidly change their industry in the next five years, only 20 percent are well prepared for sudden industry disruption.

It’s the ecosystem, stupid

Companies that are better prepared for industry disruption are much more engaged in growing and broadening their ecosystem partnerships. According to the report’s authors, almost all of the best-prepared CSOs (95 percent) say that their company growth agendas over the next five years rely on collaborative partnerships.

“They actively use this strategy to support innovation and research and development, as compared to only half of those who admit they are less prepared.”

Companies that are disruption-ready are a third more likely to partner with advertising agencies, innovation companies (26 percent more likely), design service providers (24 percent more likely) and even customers (26 percent more likely). “They are also 36 percent more likely to collaborate with companies beyond their traditional industry boundaries, and 32 percent more likely to align with companies they consider direct competitors. This collaboration gap has only increased in the past five years,” according to the study.

“As digital disruption breaks down the walls of established industries, it’s time for companies to rethink their approach to business strategy,” said Peter Lacy, managing director, Accenture Strategy. “In order to successfully navigate industry convergence and strengthen their network of alliances to build truly collaborative operating models, they must shift their mindset to compete as a ‘cluster’, not as a single company, creating shared value for their alliance partners and customers.”

A significant majority (88 percent) of CSOs who claim to be very well prepared for industry disruption have already begun investing heavily in platform-based business models and will continue to do so into the future. This compares to only 42 percent of those who admit they are less prepared.

Among the group of CSOs who are actively investing in these platforms, those that achieve the greatest benefits are far more likely than their peers to build operating models that are collaborative and open. They embed collaboration into their culture through incentives, and revise their internal processes and technologies to make external collaboration ever more seamless.

“Platform companies are successful because they capitalize on the innovation of an entire ecosystem versus only leveraging resources within a company,” Peter Lacy continued. “Business that are well prepared for disruption are building their growth strategy on platforms and, as a result, are more likely to survive the disruption and gain competitive advantage.”

Methodology
The Accenture Institute for High Performance surveyed 561 CSOs, or their direct reports, at companies with revenues greater than $1 billion spanning 10 industries, including automotive, banking, chemicals, consumer goods and services, insurance, oil and gas, pharmaceuticals, retail, telecommunications and utilities. The online and phone survey was conducted between December 2015 and February 2016 and included 11 countries – Brazil, Canada, China, France, Germany, India, Italy, Japan, Spain, the United Kingdom and the United States.

This article originally appeared on B&T’s sister business site www.which-50.com

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