There’s another technological race going on now, and this time, it’s on the social front. Customers sustain a business, so retaining existing customers while reaching out to potential buyers is not only an important part of a business but also makes economic sense.
“65% of a company’s business comes from existing customers, and it costs five times as much to attract a new customer than to keep an existing one satisfied.”~ Gartner Inc.
The business world has changed a lot in the past twenty years. The words ‘mouse’, ‘cloud’, ‘windows’, and ‘apple’ all carry alternate connotations now. Those born in 80s and later are accustomed to digital devices.
Digital disruption is shaking up the industry.
A majority of corporations today would cease to operate without technology. Long gone are the times where everything was manual. Digitization has made it easier to store and find data. When this information is stored in electronic databases, searching becomes quicker and accurate.
Digital disruptions are the changes caused by digital technology that alter the established ways of doing business, social interactions, value creation, and the way we think.
‘Disruption’ is a disturbance that interrupts a process, activity, or event. Although the word ‘disruption’ carries a negative connotation, it is not all bad. Digital disruption can be both a threat and an opportunity.
Thanks to a shift towards technology, traditional businesses are forced to rethink their way of doing business in the digital world, regardless of whether they want to. They must incur more costs in an attempt to digitize. On the other hand, the shift to technology could also help businesses succeed. Let’s take a look at both sides of the coin.
‘Disruptive innovation’ is when a new technology displaces an already established piece of technology. It is a term coined by Clayton M. Christensen, a professor at Harvard Business School.
In his book ‘The Innovator’s Dilemma’, Clayton writes that two types of technology exist: ‘sustaining’ and ‘disruptive’.
Sustaining technology relies on improvements to technology that already exists. Larger corporations are more suited to work with sustaining technology. They build products with the assurance that customers will like and capture a bulk of the market-share.
Disruptive innovations are often produced by an entrepreneur or someone outside the market rather than the market-leaders themselves. It involves going against the grain, and leaders are more likely to stick to the tried and tested formula for success within their industry.
The Battle to Digitize
Because of digital disruption, traditional businesses are rethinking how they do business. Companies with a clear digital strategy will succeed while those without will struggle to stay afloat. Just like in the natural world, the business world is about adaptation and survival of the fittest.
Companies themselves have become the product of the shifting business environment. Most companies haven’t fully digitized yet, and are in the growth stage of digital transformation.
Corporations are striving to make everything digital, social, and mobile. Technology has interfered with every line of businesses, but it isn’t regarded as a negative now. Social networking technology has helped many businesses connect with their customers and revamp their business models in the consumer’s favor.
It is the SMEs and startups that threaten the status quo. Instead of competing with the big dogs, they go after a niche in the market. If this technology matures, its audience will increase, eventually replacing or going toe-to-toe with the technology that came prior.
Digital Disruption in Action
Digital disruption is about upsetting the established order. Disruptive innovation creates a new market and disrupts an existing market. Basic mobile phones overtook telephones, but then smartphones took the world by storm, almost rendering basic phones themselves irrelevant. With the combined features of a watch, camera, and computer in a lightweight device, smartphones shot to popularity.
The Unified Payment Interface (UPI) introduced by some Indian Banks is yet another example of digital disruption. This will virtually leapfrog the Indian populace into the upper echelons of digital payments through the mobile.
Beacons and IoT are transforming the retail industry. Thanks to open APIs and the Cloud, banks are changing their delivery models. Beacons have emerged as an important piece of technology for merchants in the retail industry. They benefit both the customer as well as the company. With the help of Bluetooth, the retailer gets to find out the interests of the customers and the customers get to shop and find items easier.
Hybrids are also examples of disruptive technology. The electric hybrid car is an automobile that runs on gasoline and electricity. It took the already effective automobile and made it eco-friendlier. It was not meant to displace the original, but to branch out and start a new line of products based on it.
Is digital disruption a bane or a boon?
Digital disruption is not just about the technology. It revolves around the customer and what the consumers want. Thanks to disruption, it is easier for customers to keep in touch with the business, and easier for the business to learn what customers think of their products and services.
A business cannot expect the same things to stay relevant forever. The world is changing every day, and technology along with it. The flexible ones have adapted to these changes, and those that could not have perished. Companies living in the past have gone extinct as a result of their competitors upgrading to newer technologies.
There are good and bad parts of digital disruption, but the ‘good’ far outweighs the rest. Every business will be forced to digitize at some point or the other, but they can use this digital disruption to help them. It is time to digitize for the better!