Industry leaders share how disruption keeps them awake at night

April 14, 2016
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What keeping Africa’s business leaders awake at night? What’s motivating their key decisions and most strategic investments?

For many years, the IBM C-Suite study has taken the pulse of the world’s business leaders. The most recent C-Suite study reveals a new and overarching concern that is universally dominating the mind of leadership across the globe: Disruption.

The world’s leaders – including those across Africa – are facing an Age of Disruption.

The 3 key drivers behind today’s disruption are:

· New technologies are making it ever more possible to disrupt the status quo

· Industry boundaries are blurring meaning that competition can come from anywhere

· Digital is creating a new battleground for business presenting new opportunities and threats

Today’s disruptors are re-shaping whole markets and their influence can rapidly spread across the globe. What is making disruption today so potent and worrying is the way it attacks and overturns the fundamental principles and assumptions that yesterday’s market leaders are founded on.

Disruptors are affecting incumbent companies by:

· Re-inventing the market – breaking down traditional industry boundaries and disturbing the current chain of value

· Changing the rules of the game – where the tastes and preferences of customers are forever shifted in a new direction

· Turning strengths into weaknesses – so that the factors that made yesterday’s incumbent so formidable (characteristics like size, brand image, expertise in a certain technology or competence in delivery a certain type of service) are flipped into weaknesses, overheads and liabilities that drag them down into obsolesce

So great are concerns about disruption that new buzzwords are entering the business vernacular such as “Uberization”, which refers to the disruptive taxi service, Uber, and the potent, widespread impact it is having on taxi services across the world. One CIO of a leading transportation company described why the new breed of disruptors, like Uber, is striking terror into the world’s business leaders:

“It’s where a competitor with a completely different business model enters your industry and flattens you.”

That “business model” is the fundamental assumptions that went into the DNA of traditional transportation companies, and this is what is really under assault. True, disrupters may be delivering their services through Digital means (Mobile, Social, Internet of Things), but on this new battlefield, their disruptive effect really comes from striking at the jugular of the incumbents – the very principles upon which their success was founded.

Take Airbnb as another example. Traditionally a company that sells hotel rooms builds and owns hotels, or at the very least franchises them. To create a compelling experience, they hire and train staff. Many strong international hotel companies have established their entire brand on that premise. Airbnb – which owns no hotels and hires no hotel staff – completely re-writes those rules.

And it isn’t just virtual companies like Uber and Airbnb that are re-writing the rules. Others are changing the rules is different ways. Netflix not only changed the rules of Movie rentals (you don’t need to distribute DVDs to sell movies) with casualties like Blockbuster collapsing, but they’re now disrupting even the way TV shows are created and consumed through the use of analytics. WhatsApp is disrupting Telcos globally with WhatsApp messages now far outnumbering Text Messages globally.

Of course, today’s disrupters can’t be complacent either. Tomorrow they are potential fodder for the new game changer, unless they too can out-think the next disruption that is inevitable.

Disruption is happening fast in Africa. Companies like Safaricom have disrupted Mobile Payments with M-Pesa, forever blurring the distinction between Banks and Telcos. Start-up Pesabazzar is challenging the traditional Insurance Brokerage model. Kenyan innovators like BRCK are re-inventing – not just power supplies – but how education and training is delivered to schools and businesses. And companies like Tugende are innovating new financial models to empower small business. The list goes on and grows daily.

Part of what’s drive the rise of wannabe disrupters is that the barriers have never been lower. Today’s disrupters:

· Require Fewer resources – many disrupters started out with tiny teams and grow rapidly

· Need Less investment – new technologies such as Cloud and support for innovators make it easier than ever to turn an idea into a prototype that can find an audience

· Can have a Global Impact – more than ever before new ideas and approaches can spread like wildfire across communities so that yesterday’s underground movement can become tomorrow’s business-as-usual. Of course few make the leap, but it’s so tantalizing close a leap. Of course, disruption is not new, but its ferocity is greater than ever before.

By Nicholas Nesbitt, IBM General Manager for East Africa

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