Three trends make digital disruption an urgent priority

Three trends make digital disruption an urgent priority

Regardless of how you view “digital disruption” — angst-inducing threat or energizing opportunity — it’s no longer a theoretical proposition. Digital innovations are now shaking up every industry — the result of a confluence of three main trends.

The first is a technological one. Advances in cloud computing, data analytics, video, social networking, and, most important, the consumer-funded infrastructure of mobile devices and connectivity have laid the groundwork for business as unusual. Think of how the likes of Uber in ride sharing, HealthSpot in healthcare, Coursera and Udacity in higher education, Spotify in music, and TrueCar in auto sales threaten to disrupt mature industries (Uber already has) by leveraging some of those digital technologies. It’s still early days.

The second trend is a more social one. The broad consumerization of IT not only has made the unwashed masses comfortable with all manner of apps and devices, turning them into ready customers of innovative digital products, services, and features, but it also has made CXOs and line-of-business execs more keenly aware of what digital innovation can potentially do to transform their companies and industries. So they’re leading the charge. Whether you like it or not, CEOs, CMOs, sales executives, HR leaders, and other “non-IT” types are involved directly in setting digital strategy and making the requisite technology purchases.

The third is a commercial trend, an offshoot of the first two. The biggest digital natives are getting restless to move into new markets — for example, search giant Google into financial, telecom, home automation, and package delivery; room-sharing pioneer Airbnb into dinner party services; social networker LinkedIn into media and content. They now have market caps to grow and shareholders to please. They’re upping their game.

As a result, there’s a much greater sense of urgency among the mainstream players to reorganize themselves as digital businesses. Take Capital One. In an attempt to “deliver like a technology company and not like a traditional bank,” says CIO Rob Alexander, it has hired scores of mobile developers and software engineers and created a phalanx of Agile teams to write its own software, rather than relying on contractors.

Meantime, lots of establishment companies are snapping up digital pioneers. Capital One’s December 2012 acquisition of ING Direct gave it a major digital footprint in banking, and it went on to acquire Bundle, an online tool that lets customers compare their spending habits with others, and BankOns, an early-stage mobile startup that rewards customers with discounts based on their spending behavior.

Last year, Wal-Mart acquired OneOps for managing cloud workloads, Tasty Labs for software to connect with social networks, Inkiru for data analytics, and Torbit for website optimization. Wal-Mart isn’t just reacting to those with designs on its retail business; its bold moves into banking, healthcare, and other adjacent markets have a major digital component.

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