4 signs you’re be­ing dig­i­tally dis­rupted

Ac­cen­ture exec Mark McDon­ald of­fers four notso-ob­vi­ous signs you may be fall­ing vic­tim

InformationWeek - - Global Cio - Chris Mur­phy is Edi­tor of In­for­ma­tion­Week. Write to Chris at cj­mur­phy@tech­web.com

Sup­pose you’re a ther­mo­stat maker who learns that Google just spent USD 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 re­cently at the Fu­sion 2014 CEO-CIO Sym­po­sium. 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).

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.”

Chris Mur­phy

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