8 Forces of Digital Disruption

There are a few unique forces that come into play which differentiate digital disruption from other "Industrial Revolution" seen in the past like the assembly line manufacturing. These characteristics below help us identify sectors that would get impacted the most as well as what would be the impact on my company.

1. Digital evolution has been fast – the number of users and data produced is doubling every few years. The pace of change is so fast that it is disruptive both socially in terms of customer behavior as well as industrially in terms of product design or delivery and associated cost structures.
2. Due to Moore’s law and associated nature of technology, digital mediums are becoming increasingly cheaper while also simultaneously getting more powerful.
3. Digital business models favour “variable costs” over “fixed costs” as the rate of change is very fast and there is a need to immediately respond to a flexible competitor e.g. I had worked with a UK Insurer who launched a direct customer CONNECT channel by using rented cloud infrastructure and contract specialists within 6 months. Many components of Digital Business are available as a service e.g. Software (As A Service - AAS), Infrastructure AAS, Platform AAS, Database AAS, Analytics AAS etc.
4. These, amongst other things also cause startups to viably challenge an established organization since entry barriers may be lowered in some cases. With establishment of 3D printing technology, custom ASIC fabrication and contract component manufacturing – the time to market for a prototype has greatly reduced.
5. Digital business models derive value from gathering intelligence and analytics. Most of the successful digital business models depend on a deeper, systemic understanding of customer as well as own production or supply chain. This is one of reasons for success of Uber over Radio Cabs or Amazon (additionally enabling exploitation of the long tail demand). Also, digital business models for successful companies are scalable.
6. Digital businesses can unbundle and reconfigure an existing product in a variety of ways that enables customization and personalization at an individual customer level rather than at Segment or Persona level e.g. A Publisher was able to unbundle digital subscriptions in a manner so as to offer Sports Magazine issue during Wimbledon, Gardening Magazine during Spring and Fashion Book during summers to its subscribers within a single annual fee. This was mainly because the fixed cost overhead of publishing on paper was minimal.
7. Customer interactions have increasingly become digital, i.e., smart phones are ubiquitous while the internet penetration has boomed. Since customers spend more time on social networks and carry devices with multiple sensors for location, activity and camera – service delivery and interaction have got multiple creative opportunities.
8. The next phase is enabling connected devices as Internet of Everything where legacy systems and even people would get digital interfaces giving rise to Machine to Machine interfaces in addition to Human Computer Interaction and people to people interaction. This would be the next digital disruption.

Hope this gives us an idea of why things are the way they are and understanding is the first step towards improvement.

May The Force Be With You!!