Disrupt or Be Disrupted

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The IBM Global C-suite study shows what is keeping the CxOs up at night, “the ‘Uber syndrome’ – where a competitor with a completely different business model enters your industry and flattens you,” said one executive

The biggest threat is new competitors that aren’t yet classified as competitors.” Piotr Ruszowski, CMO, Mondial Assistance, Poland

A few years ago, CxOs could see the competition coming. The biggest risk was the advent of a new rival with a better or cheaper product or service. And you could fend off the threat by improving or expanding the range of products and services you offered, or getting to market more efficiently and imaginatively. Today, the competition’s often invisible until it’s too late.

The competition isn’t just coming from new permutations of old industries, though; it’s also coming from digital invaders with totally different business models. These companies typically target a key part of the value chain, bypass the incumbents and seize control of the customer relationship, making other suppliers irrelevant. There are two kinds of invader: digital giants and ankle-biters.

The digital giants can damage you with a few well-placed punches. But the ankle-biters are equally dangerous en masse. They’re small, smart and agile. They’re also unencumbered by legacy infrastructure. In fact, they often don’t have any infrastructure at all because they use others’ assets. And they’re hard to spot until they’ve taken a chunk of your flesh.

Prepare for digital invaders

On the one hand, CxOs welcome the chance to develop better goods and services, utilizing more efficient manufacturing techniques and more sustainable energy sources. “We’re counting on technology to fuel our next wave of growth,” declared the CFO of an Indian insurance company. On the other hand, CxOs are desperately trying to cope with a “technological onslaught,” as the CIO of a Malaysian healthcare provider put it. And the stakes are extremely high. “If we gamble on the wrong thing, it could have a really negative impact on our business,” the COO of a Belgian electronics firm commented.

Most CxOs anticipate changing the way their organizations engage with customers. They’re especially interested in creating more digital, individualized experiences (see Figure 5). As the CEO of a British utility noted, “We now have the tools to understand 90 percent of our customers, but we need to get to segment-of-one understanding.”

More than half of all CxOs are also looking for additional innovation from outside sources to help them mount an effective counter-attack. And they plan to partner more extensively to access that innovation. “If we work alone, our future growth will be constrained. We need to collaborate with other organizations,” the CIO of a Chinese consumer products company remarked

Create a panoramic perspective

The more nebulous your enemies and the faster the pace of change, the wider – and further – you need to look. Yet it’s extremely difficult to glimpse beyond the immediate future. As the famous philosopher of science Thomas Kuhn pointed out, scientific progress is typically irregular – a series of “peaceful interludes” punctuated by intellectual revolutions.6 It’s also, arguably, becoming even more unpredictable, as knowledge becomes increasingly specialized and fragmented, and crowdsourcing and crowdfunding play a bigger role in innovation.

“The hardest thing is working out whether what’s happening is hype, trend or tsunami.” Faik Açıkalın, CEO, Yapı Kredi Bankası, Turkey

However, many members of the C-suite freely admit they find it hard to see what’s coming next, let alone reflect on the wider implications. “It’s impossible to predict what will affect our business because there are so many variables,” the CMO of a South African bank stated.

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