The terms digital transformation and digital disruption are often thrown into the same hat. While they do feed off each other, you must know how to differentiate between them. It will help you make the right business decisions and ensure your operational model is competitive and in line with your product or service and that you meet the market demand.
Defining digital disruption and digital transformation
In a March 2017 article, we looked at an appropriate definition for disruption and transformation.
- Brian Solis, of Altimeter Group, defined digital transformation as “…the realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle.”
- Digital disruption, as defined by author David L Rogers is what “…happens when an existing industry faces a challenger that offers greater value to the customer in a way that existing firms cannot compete with directly.”
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How does digital transformation help your business?
Embracing all things digital should always rank high on a business’ priority list if only because the nature of consumer behaviour commands that your brand be present in the digital realm. Your target audience is tech savvy, even if the product or service you are offering isn’t. We all have connected devices in our homes and at work. Social media links us all and the advent of the sharing economy makes it easier than ever for consumers to fully bypass product manufacturers and service providers through peer-to-peer value propositions.
In a nutshell, digital transformation helps your business stay in touch with your consumer base and keeps your operational processes agile, flexible and resource efficient.
Digital disruption: it’s eat or be eaten
Once you understand the concept of digital transformation, it’s easy to see how it correlates with disruption. A market disrupter will have embraced a digital mindset and developed a business model that makes use of what is there in a novel way. This puts them in a position where their value proposition remains unmatched, effectively turning the market upside down and, sometimes aggressively, letting them take over your industry.
Two of the biggest recent disrupters: Airbnb and Uber
Uber and Airbnb are oft-cited examples of market disrupters that shook their respective industries—hospitality and transportation—to their cores. These companies developed a disruptive business model that offered the same service as their major competitors but without the hassle of having to provide the actual consumable product. They embraced the principles of the sharing economy and gave end-users the possibility to conduct business amongst themselves in a flexible and transparent way. Why go to a hotel when you can rent another person’s home through Airbnb? Why book a taxi when there is an Uber car just around the corner?
This simple approach to service delivery worked for two reasons: Airbnb and Uber implemented it successfully first and it is incredibly consumer-friendly. The results speak for themselves. Even with the recent bad publicity, Uber remains a key player in the transport industry worldwide.
Transform to thrive
Your best bet to combat digital disruption is to become the disrupter first. To do so, you need to adopt an agile business model that encourages digital innovation, opens new business avenues, and gives you a huge operational advantage over the competition. Through transformation, you may find you’re actually disrupting yourself. If that is the case, you know for a fact that you are disrupting your competition as well.
By that same token, if you find that a competitor has become a disrupter, you can catch up and maybe even supplant them. But, it must be said, championing digital change does not necessarily mean that you’ll be able to squash every potential disrupter. Sometimes a novel concept put together by a smart competitor is just too strong to beat. But by not keeping up, you are almost certainly dooming your company to be left behind.