StrategyTechnology

Disrupt your organization before high tech can do it for you

By Sri Manchala, Chairman & CEO, Trianz

Established, “born analog” companies do not have to look far to notice high-tech’s influence on their industry. Tesla has turned the entire automotive world upside down. Uber and Lyft have reinvented the taxi business. Airbnb has changed the way we travel. The list of “born-digital” companies impacting legacy businesses goes on and on.

So how do traditional companies keep up with an industry that continuously innovates until they’ve dominated their markets? In Rule #3 of my book Crossing the Digital Faultline, I illustrate how leaders can “Disrupt your own organization before high-tech does it for you.”

Trianz’s research shows that up to 30% of existing companies will not survive the end of this decade due to rapidly changing business conditions. That is why legacy companies must use data-driven disruption to mitigate the risk of encroachment or face the real possibility of extinction.

How an Iconic Brand Used High-tech’s Model to Embrace Disruption

In less than four years, Disney implemented a data-driven strategy with a complete understanding of their customer ecosystem. Based on insights from consumer data, Disney got to work appealing to a new generation of younger viewers by creating blockbuster movies from their Marvel and Pixar franchises.

Then after acquiring Hulu and its streaming capabilities in March 2019, Disney brought all-digital content assets and a well-tested streaming platform under one organizational umbrella. They then launched Disney+ with a massive advertising and promotion campaign across all TV and internet media platforms in November 2019.

Within only fourteen months, along with the stress of the pandemic, Disney+ garnered more than ninety-five million customers and disrupted the entire digital streaming industry. This is just one example of a legacy company striking back at high-tech.

By deploying the right data analytics systems and reinventing your value proposition, any born analog company can generate the same benefits through digital disruption.

Adopting the High-tech Industries Second Most Powerful Asset

After acquiring the right people, successful disruption starts by utilizing high-tech’s second greatest power source — data and analytics. Of course, the high-tech industry sells products and services, but the game only begins with the sale. By analyzing their users’ behavior and demographics, high-tech has developed a competitive advantage by leveraging their digital intellectual capital to better understand user demands and preferences.

For example, the centerpiece of the Netflix strategy lies in its customer data. From the moment customers log on, Netflix is analyzing ethnicity, gender, age, and language to segment their customers. By monitoring searches, preferences, and attention spans, they can suggest content catered to their customer’s viewing habits.

Netflix can even see customer issues, complaints, and tech support questions in real-time, often using analytics to anticipate a customer complaint before it happens. In fact, using data for continuous adaptation was so vital to Netflix’s success that today we may as well consider them more of an analytics company than a media streaming service.

From digitized applications, smart agents in their software, and IoT in physical products, high-tech is continuously amassing business and consumer data. To compete and survive, traditional companies must be able to access and structure data to better understand their customers, technologies, and competitors.

Lacking a fact-based decision-making process to address seismic shifts like we’re seeing outside of tech further accentuates the risk of their encroachment. If leaders fail to embrace and successfully manage data in all its forms, I’m afraid many companies struggling to find answers will not make it past what I call the digital faultline.

Using Data to Reinvent Your Value Proposition

One secret to success for any company is recognizing when your organization needs a fundamental change. Unfortunately, many iconic brands fail to recognize these opportunities due to a broader culture of resistance, or a focus on defending old turf.

Drawing on my knowledge of disruptive innovation, and my experience helping traditional companies capture opportunities, I often walk leaders through the outline of the cycle of product or service disruption. The phases in the cycle capture patterns that our research uncovered across both B2B and B2C industries – patterns leading to data-driven reinvention.

In Phase 1, the reimagination of customer need/utility gives birth to new concepts of value. In Phase 2, the reimagination of customer experience creates value that is then packaged and delivered to customers through innovative and engaging experiences.

Finally, with the reimagination of customer engagement in Phase 3, the disruptor no longer needs to make assumptions or track legacy industry players. Their data analysis fuels cycle after cycle of value and experience refinement; the iterative cycle of innovation and reinvention.

By mastering the cycles of product/service disruption, leaders in every industry can learn to mimic and tailor the process of technology-led value proposition innovation, keep improving iteratively, and ultimately cross the digital faultline. It doesn’t matter if you’re born analog or born-digital. These are the methods of the great innovators, and the means for survival.

About the author: Sri Manchala, the Forbes Books author of Crossing the Digital Fault Line: 10 Rules of Highly Successful Leaders in Digitalization, is the CEO of Trianz, a highly specialized digital-transformation services firm headquartered in Silicon Valley and serving clients globally.

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