In our last research post, we discussed why you need to be at the forefront of the digital transformation race. This time, we look at how digital transformation affects your ability to disrupt and innovate in your industry. And this is evident in some of the most ground-breaking companies in the market today.
Innovating and disrupting in your industry is critical to staying competitive in a market. Research done as part of the 2018 TIBCO CXO Innovation Survey indicated that there is a direct dependency on maturity of digital transformation strategy and a company’s ability to innovate and disrupt. The research found that 55 percent of the 600+ respondents said they are able to innovate and/or disrupt within their industry, while at the same time, 83 percent fell short of the ultimate goal of disruption.
When further examining the research, there is a direct correlation between a company’s ability to innovate and disrupt and where they fall in their digital transformation journey. Respondents who were segmented as digirati (experts) were innovating or disrupting 71 percent of the time in comparison to digital beginners who were only innovating or disrupting 20 percent of the time. Even digital conservatives were innovating or disrupting at a rate of 51 percent, far exceeding the efforts of digital beginners. This clearly shows how critical digital transformation maturity correlates to a company’s ability to innovate.
Businesses who are most likely digerati or digital fashionistas have innovation and disruption as core values of their company. Take some of the best-known disruptors such as ridesharing services Uber and Lyft, as well as Airbnb and Netflix. These are companies who have found a way to successfully innovate and disrupt in their industries.
In 2018, Lyft and Uber reportedly captured a combined 70.5 percent of the US business traveler market, while rental cars capture 23 percent, and taxis with a mere 6 percent. This disruption has been detrimental to rental car companies and taxi drivers. Stocks in rental car companies have dropped as nearly 23 percent.
With Airbnb’s digerati mindset, it has proved to be transformative to the travel industry. Through technology, Airbnb has made it possible for travelers to live like locals do at an affordable income. Airbnb appeals to the digital-savvy millennials, with half of its bookings made by them. It has also given people a way to make extra income from rental or vacation properties that they don’t utilize as often as they would like.
While the last two companies are examples of innovators, Netflix is considered a “true disruptor” for its ability to gain a foothold in a low-end market that had been ignored by the incumbent in favor of more profitable customers, beginning with low-quality offerings, then eventually capturing the mainstream market by improving quality. Netflix started as a DVD business but eventually began to experiment with streaming, which took off exponentially, changing the way TV and movies were consumed. It has been successful in disrupting cable as a method to easily watch top TV shows and movies (through streaming) at an affordable price point. Now, with its original content, Netflix is proving to be the streaming service to beat.
What these examples demonstrate is that the further along a company is in their digital transformation (in this case, digerati and digital fashionistas), the more likely they are to innovate and disrupt. So if you want to be the next Airbnb or Netflix, think about where you are in your digital transformation journey and the steps you can take with your people, technology, and culture to achieve digerati status.