The new buzzword: Digital Disruption

Have you heard of Digital Disruption? If not, get used to it; it’s happening right now and it’s not going away. What is it?

It can be described as the changes that occur in an industry or an enterprise when new digital technologies affect the way we do business. Here’s an example.

The Ecovis KGA team recently went out for its annual staff dinner. After enjoying drinks in the office we left to catch our pre-arranged taxis only to find they had not arrived. After a 20 minute wait we realized that we had no transport.

Some of the more tech-savvy members of our team got onto their Uber apps and within minutes we had cars arriving to take us to our dinner destination. Uber’s gain was the traditional taxi company’s loss; all through the use of available technology.

Within the next year or two, for the first time in history, workplaces around the world will see concurrent participation by five generations when the Gen-Zeroes start working. That generation represents people who have grown up around smartphones and tablets, apps and social media and see them as essentials of everyday life.

In fact, many of them do not use media that has been commonplace for decades. Most do not read newspapers or watch TV newscasts, choosing instead to discover what is going on in the world around them via social media.

The business that fails to adapt to this new technology and manage digital disruption is in real danger of being left behind: the world is changing far faster than most of us realize.

Technology is transforming the way we operate and how we engage with our business partners. We all have to recognize that fact and have strategies to deal with the new way of doing things to flourish in this modern age. We also have to realize that the “new way” is continually reinventing itself as new technologies become available, almost on a daily basis. (…)

In 1919 Conrad Hilton founded Hilton Hotels, and today the group has about 680,000 rooms available in over 4,000 hotels in 91 countries; the value of the company is now around US$25 billion.

In 2008, Brian Chesky and Joe Gebbia, two men in San Francisco struggling to pay their rent, started renting out space in their apartment via the Internet to unknown guests who slept on air mattresses and were fed a home-prepared breakfast. Airbnb was born.

Today, without owning any significant real estate, Airbnb lists 1,500,000 accommodations in 190 countries, and the company has an estimated value of US$20 billion.

It is unlikely that Airbnb is going to bring about the demise of Hilton – there will likely always be a demand for the services Hilton provides – but traditional hoteliers will need to adapt to the new phenomenon and use technology to their best advantage to keep pace with the market. Astute use of technology may go a long way to matching the competition that Airbnb represents.

In the past, a company seeking to sell its product would usually have a rep make direct contact with the customer to convince them of a need to make the purchase.

Nowadays, the astute marketer who has embraced technology will use it to make the initial contact, creating interest, and then marketing automation generates the desire to purchase. Sometimes there is no need to even have a salesperson make contact with the customer.

Anyone who has bought something on Amazon knows that once a trend of purchasing activity emerges, you are prompted by email notifications when similar products become available – a very different way to sell than the traditional methods.

At Ecovis we realize that technology has had an enormous effect on the way professional services are rendered, and it is changing the face of the accounting and legal professions. Through the advent of online, cloud-based accounting packages such as Xero many of the traditional methodologies followed by accountants have gone out of the window.

Xero now boasts a sign-up rate of over 400 new users per day; it updates its systems and processes constantly, at the expense of other service providers who have not read the writing on the wall.

While Xero began in New Zealand, it has rapidly achieved a global reach and is revolutionizing the way businesses perform their own accounting functions as well as how their external accountants assist them. In short it has changed the rules of the game.

The legal profession is not immune to such disruption; one has only to look at how LegalVision in Australia has changed the way people buy their legal advice. It is an online, virtual law firm that employs fulltime, properly qualified and experienced lawyers who can provide specified legal services for a fixed fee. An inquiry is answered within two hours and routine matters are dealt with, avoiding the need to go to a law office.

Neither Xero nor LegalVision is likely to fully replace accountants and lawyers, but providers in those professions must realize that there are options available to clients that may affect their own service offerings and they must adapt their practices to cater to the different alternatives provided by advancing technology. (…)

Other industries such as retailers, hoteliers, travel advisers, financial service providers and even banks need to take notice of how technological innovations are placing their traditional service offerings under threat. Both Apple and Google are now offering financial services to compete with banks.

As scary as this may all sound, it is nothing to be feared. Instead, we should embrace it and see it as representing both challenges and opportunities for the future.

The challenge is to keep up with technology and to stay ahead of the game; the opportunity is to transform the experience that your customers have in doing business with you.

Digital disruption is here to stay; so get with it or get left behind.

The challenge is to keep up with technology and to stay ahead of the game; the opportunity is to transform the experience that your customers have.

Author
Gareth Hoole