How to Thrive on Digital Disruption (Accenture Study Reveals)

Almost all of the Chief Strategy Officers (CSOs) surveyed by Accenture Institute for High Performance around the world say digital disruption will reshape their industries, however, very few are equipped to navigate the change. The institute’s “Thriving on Disruption” study divulges that 93% of surveyed CSOs agree that new technologies will rapidly change their industry in the next five years but only 20% are well-prepared for sudden industry disruption.

Methodology

The study surveyed 561 CSOs across 10 industries in 11 countries between November 2015 and February 2016. The respondents are from the companies that have revenues greater than $1 billion across the following industries:

  • Automotive
  • Banking
  • Chemicals
  • Consumer goods and services
  • Insurance
  • Oil and gas
  • Pharmaceuticals
  • Retail
  • Telecommunications
  • Utilities

The online and phone survey included 11 countries:world map

  • Brazil
  • Canada
  • China
  • France
  • Germany
  • India
  • Italy
  • Japan
  • Spain
  • United Kingdom
  • United States

Key insights

The study’s goal is to identify the attitudes and behaviours of companies who are well-prepared for disruptive innovation insightin their industries. It found that those companies have the following characteristics:

  1. Collaborating for growth (Partnering more frequently — and with unusual pairings)
  2. Investing in platforms (Connecting customers and business partners — both at scale and on-demand)
  3. Operating in openness (Taking concrete operational steps to be collaborative, such as applying specialised areas of expertise to new business areas and implementing new operating procedures in collaboration with business partners)

According to the report’s authors, almost all of the well-prepared CSOs (95%) say that their company growth agendas over the next five years depend on collaborative partnerships. They’re actively using this strategy to support innovation and R&D. Companies that are ready for digital disruption are a third more likely to build partnerships with advertising agencies, innovation companies (26% more likely), design service providers (24% more likely) and even customers (26% more likely). They’re also 36% more likely to collaborate with companies beyond their core industries, and 32% more likely to align with companies they consider as direct competitors. According to the study, this collaboration gap has only increased in the past five years.

Peter Lacy, managing director of Accenture Strategy, suggests that the time has come for companies to reconsider their approach to business strategy because digital disruption is breaking down the walls of established industries. And in order to successfully navigate industry convergence and fortify their network of alliances to build collaborative operating models, they should change their mindset to competing as a ‘cluster’ (instead of competing as a single company), which will then create a shared value for their alliance partners and customers.

Meanwhile, 88% of CSOs who claim to be well-prepared for industry disruption have already begun investing in platform-based business models and will continue to do so in the coming years. Among the CSOs who are actively investing in these platforms, the ones achieving the greatest benefits are far more likely to create operating models that are collaborative and open.

Lacy says companies that are using platforms are successful because they capitalise on the innovation of an entire ecosystem compared to leveraging only the resources within a company, which will not just help them to survive the disruption but also to gain a competitive advantage.

Recommendations

Paul Nunes, managing director of Accenture Institute for High Performance, believes rapid and disruptive change is coming, no matter what industry you’re operating in. Based on the declining lifespan of companies, the current economic outlook suggests that 75 percent of today’s leading industry players will be gone within the next decade. According to him, although some companies aren’t ready for this disruption, they can make strategic investments in technology platforms that support more collaborative operating models.

The study suggests three broad approaches that incumbents should pursue:

  1. Don’t face disruption alone. You should deepen and broaden partnerships with customers, providers, and a wide array of companies within and beyond your core industry.
  2. Make yourself indispensable. You should use your company’s focus and expertise to become part of the integrated solutions that customers demand.
  3. Embrace operational flexibility. Consider the organisational changes you’ll need to be more collaborative and open — both with your processes and employee mindsets.

 

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