Tuesday, May 13, 2014

BPN 1680: Disruption – so what is next?

Over the last decade we have seen that the internet, smartphones and tablets – as well as, for example, solar panels – have been very disruptive innovations. They have wiped out businesses and have created havoc in many industry sectors, such as retail, publishing, entertainment, telecommunications, music, photography and more.

So what is next? Emerging technologies such as wristband trackers, Bluetooth Low Energy (BLE), Google Glass and smartwatches are certainly next on the list. The whole development of wearables is going to be very disruptive. A key sector that will be hit with this is healthcare. That sector has been far too slow to adjust to the situation where their customers (patients) at home have been excluded from most of the technological innovations. With increased health awareness, increasing costs and higher lifestyle expectations, the next wave of innovations in this sector will come from end-user services; and wearables are going to empower customers to take a far more leading role in healthcare activities.

As has become clear from the current changes in the market the new emerging technologies will continue to take on the role of game-changers, especially for companies who are looking to make meaningful and valuable connections with their customers. The importance of this is that companies who have already made the cultural change, and with the assistance of ICT tools have placed the customer at the centre of their business model, will be able to embrace these innovations. However many companies – and even whole sectors – are not yet in a position to benefit from these innovations, and before they can do so they will have to undergo a painful and costly business transformation. Those who fail to do so will end up – as has happened over the last few years in relation to the internet and smartphone innovations – as road-kill on the digital superhighway.

Organisations will have to reinvent themselves and change their business models in order to remain relevant to their customers.

While all of the technological elements are critical in these disruptive developments even more important – or at least equally so – is affordability. The fact that within years these technologies reached mass markets indicates that customers can afford them; large-scale uptakes of previous innovations (radio, TV, telephone, cars, home electronics) often took many decades.

What makes these technologies so disruptive is that they can remove much as 80% of the costs from the old ‘analogue’ business models. This is very worrying for the developed economies, where for several years in a row many industry sectors have experienced a decrease in productivity. According to a report from the Productivity Commission, in Australia seven of the twelve key industry sectors show negative productivity. Unless these sectors transform themselves they will only slide further back. At the same time we see large productivity increases in developing economies. Here innovations can be developed from a greenfield position (no legacy), and in these cases innovations only add 10% to costs in their business models. In developed ‘brownfield’ economies retrofitting innovations (that is, transformation from existing models) costs at least ten times more.

This cost factor is a significant contributor to the delays in organisations transforming themselves. They face a significant upfront investment in order to make themselves smarter.

However, once implemented these innovations provide organisations with enormous efficiencies and real time data. This then assists them to speed up decision-making processes, while at the same time liberating consumers, providing great services and experiences, and tailoring communication to a location and a moment.

Paul Budde - See more at: http://www.buddeblog.com.au/frompaulsdesk/disruption-so-what-is-next/#sthash.n1Y4KrOV.dpuf