March 7, 2014
Suppose you're a thermostat maker who learns that Google just spent $3.2 billion to buy another thermostat maker. You can be pretty sure "digital disruption" has struck. But most of us don't get that clear a knock upside the head.
"Everyone talks about disruption like it's global thermonuclear war," remarked Mark McDonald, an Accenture managing director who heads up the firm's digital business strategy practice. "None of the companies that everyone talks about being disrupted died overnight. It happens gradually."
Here are four subtle signs that digital disruption is coming your way, compliments of McDonald's presentation Thursday at the Fusion 2014 CEO-CIO Symposium in Madison, Wis. What's interesting is that they're not even digital -- there's nothing here about your competitor launching a mobile app, partnering with Facebook, or accepting BitCoins.
1. You're working harder for each additional unit of revenue.
McDonald thinks digital marketing efforts are masking this increased effort as companies overlay digital marketing and customer service efforts on top of conventional marketing and service without removing any legacy costs -- for example, a bank that adds digital services such smartphone check deposits but isn't able to close any branches to offset its digital costs.
2. Your customers as a group are getting older.
"We're on the verge of the single biggest transfer of wealth in this nation ever, as Baby Boomers start to move on to their next endeavor -- off planet," McDonald said (to nervous laughter from the Baby Boomers in the audience).
[Want more from Mark McDonald? He's a thought-provoking and highly entertaining presenter, and he'll be speaking at the InformationWeek Conference March 31 and April 1 in Las Vegas.]
If your customer base has aged more than seven years on average over the last decade, you're already disrupted, because younger customers aren't coming in to replace the ones who leave.
3. Your company's staff-to-revenue ratio is rising.
Beware of "human middleware." If you're hiring people to sit in the middle of transactions and processes -- expediters, customer service people -- you have a problem you don't really understand. "The world is moving too fast to solve it just by adding human middleware," McDonald said.
4. You believe that what worked in the past will work again.
Managers must understand the much faster pace of change in digital business and pick their spots carefully: Where should you hew to tradition and where should you introduce new digital efforts? "If you are chasing your competition, you're actually playing into their game," McDonald said. Trying to drive digital innovation everywhere in an existing organization, he said, will pull the organization apart.
McDonald's parting advice for management: You're the single biggest factor that needs to change to cope with digital disruption. Managers must use digital tools to give more information and responsibility to "the edge" – customers or customer-facing employees -- to respond to what customers want. "The edge is where it's happening," he said. "The edge is where you create customer value."
Engage with Oracle president Mark Hurd, NFL CIO Michelle McKenna-Doyle, General Motors CIO Randy Mott, Box founder Aaron Levie, UPMC CIO Dan Drawbaugh, GE Power CIO Jim Fowler, and other leaders of the Digital Business movement at the InformationWeek Conference and Elite 100 Awards Ceremony, to be held in conjunction with Interop in Las Vegas, March 31 to April 1, 2014. See the full agenda here.
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