Adapt to digital disruption or die

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Valter Adão, head of Deloitte Digital and Innovation in South Africa, said that there is no safe haven when it came to what he described as the rapidly unfolding fourth industrial revolution.

With digital technology becoming more accessible as well as doubling in capability and halving in price, it is no longer the preserve of big business. Instead, small businesses and even single entrepreneurs posed a growing threat in what is becoming a business world that played by completely different rules.

All industries vulnerable

His starting point is the inescapable truth that no business is immune to the threat of digital disruption. Although, every industry would be ultimately challenged and altered, he noted that the retail sector is the most likely to suffer digital disruption first. Already, retailers are experiencing pain as a result of the digital revolution with ultra-efficient e-retail platforms ramping up to the point where there were recently more online than store-based sales on Black Friday for the first time in world business history.

The next most vulnerable companies are those in the telecommunications and technology sectors followed by financial and then professional services companies.

The Kodak moment

Saleem Cassim, director at Deloitte Consulting, says that in today’s transformational digital business world, the only true certainty is rapid and constant change. “The world has changed fundamentally. You can now do things you would have never thought possible 10 years ago and do business in a way that you would never have imagined. We need to understand what is happening within our respective industries in order to determine what we can do about it. Otherwise, we will get Kodaked.”

Kodak, which became synonymous with photography and film products for most of the 20^th century and was known for urging consumers to recognise and capture that life changing “Kodak moment”, failed to take its own advice and identify and respond to the rise of digital photography. The company, which was founded in 1888, began to struggle financially during the late 1990s. A too-late attempt to transition to digital photography failed and, in January 2012, the company filed for bankruptcy protection in New York.

In denial

Sadly, many businesses are not yet prepared to learn from the mistakes of others, said Adão.
Instead, some of the world’s largest corporations are still trying to “talk away” disruption, denying the fact that small digital competitors can overturn conventional linear business processes and replace accepted business models.

The end result is chaos and amazement with companies under threat often declaring that they never saw it coming. Many turn to regulatory bodies for protection. “If you are here then it’s probably time to bow out and sell. Regulators cannot protect you. It’s just a matter of time,” he explained.

Be curious

Adão recommended two take outs. “Firstly, when you see disruption coming, don’t write off a start-up, be curious. Secondly, understand that you can adopt and expand technology to get you on the exponential growth curve.”

He explained that, because digital innovation enabled organisations to reimagine and transform their businesses, a digital strategy of today is the corporate strategy of tomorrow. A digital strategy is no longer an additional component, but lies at the core of an organisation’s business plan, allowing it to gain competitive advantage in areas such as customer service and growth, while managing issues such as big data and risk management.

Leapfrogging traditional business lifecycles

For Cassim, the evolution of new technologies that enable companies to bypass the way business has been done up until now opens up exciting opportunities. This is especially true for South Africa (and Africa as a whole) where consumers are some of the world’s most connected via mobile technology.

“From an innovation perspective, South African companies have a lot to offer, especially when it comes to digital business models that are able to leapfrog traditional lifecycles and go straight to the smart phone,” he concluded.