In 2016 we surveyed more than 500 chief strategy officers globally to understand their level of readiness to tackle digital disruption.
Eighty per cent of the executives we spoke to in India conceded that digital disruption
is here, and more than 90 per cent of them agreed that their industry would be disrupted at some point in the next five years, acknowledging that a proactive strategy to address it is important.
Yet, one third of them stated that they were underprepared or not prepared at all. A year since, the needle has moved, but large companies still remain at risk, just like the estimated 75 per cent of the S&P 500 companies predicted to go out of business by 2027 due to current market disruption.
Surviving and thriving in the new digital world order require game-changing innovation. Yet most companies continue to rely on gated innovation processes traditionally used for product development. The digital age, which is marked by seismic shifts across several areas — from analysing customer demographics to redefining the competitive landscape — requires a non-linear approach to innovation. It needs a total solution mindset aimed at creating specific customer experiences, driven through an ecosystem of partners.
Let’s take the SBI, for example. A few months ago, SBI’s Buddy
touched 10 million downloads. This is significant for two reasons. It shows that India’s largest and oldest bank is disrupting itself in the face of digital disruption.
On the back of a digital strategy, it is on its way to carving a position as a bank for millennials, who contribute 70 per cent of total household income and are the largest borrowers today.
It also demonstrates the value of platform-led innovation. SBI’s Buddy
is a mobile wallet, which creates value for everyone who connects to it. Customers can access a range of service providers for everyday needs such as taking a bus or booking a movie ticket, connecting and transacting seamlessly, and service providers gain access to millions of new customers. Platforms are all about unlocking value for the ecosystem by allowing it to compete as a cluster.
The platform economy enables more inclusive growth by providing three distinct benefits to small and medium enterprises — access to new markets, entry into new supply chains and a new area for business innovation. Consider as evidence the success of niche consumer product companies using marketplaces such as Amazon to take specialised products to global consumers or the opportunity to easily partner with large companies such as Philips, which is reinventing itself as a health technology company, delivering improved outcomes by bringing together medical providers and digital pioneers to provide consumers with better health care experiences. Similar models are being replicated by GE, Siemens and others, making it easier for small businesses to join advanced supply chains. Finally, consider the emergence of many unicorns from India over the last 10 years, several of whom are platform players.
The power of platforms isn’t entirely new. The Industrial Revolution, too, was brought about by a type of platform — factories. Factories harnessed the technological disruptor of that time — electricity — bringing together workers, raw materials and delivery channels to enable more efficient manufacturing. Similarly, today, platforms enabled by disruptive digital technologies are uniting customers and providers in large-scale digital markets.
Platform ecosystems are emerging as important value creators globally, and strategic growth opportunities for the future. According to IDC, by 2018, more than 50 per cent of large enterprises will create or partner with industry platforms. Digital disruption
is a reality, and for businesses, it’s no longer a question of whether or when but how they should move forward now.
The author is country managing director, Accenture India