The Impact Of Digital And Social Disruption On Big Business

Digital social disruption is, by definition, the creation of a business or offering that displaces the competition in your industry by providing better value to customers. It must be noted, that although ‘digital’ is not always a guilty party when we are discussing business disruption. In this case, it most certainly is front and center.

Digital And Social Disruption

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There are several key areas in which the impact of digital disruption is felt by big businesses. In particular, business formation, production sourcing, customer experience, and market penetration. These are key functions of all business, especially the marketing departments of big business, and digital has changed them.

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On the path to social disruption

With once restrictive digital disruption tools such as Augmented reality (AR), artificial intelligence (AI) and big data, not to mention these tools becoming cheaper and more accessible, start-ups and SMEs that were once unable to compete with big business sheer scale, are now in the hunt.

Clayton Christensen in his trailblazing text “The Innovators Dilemma” outlines a path toward disruption in four clearly defined steps of phases;

  • Phase 1 – Performance
  • Phase 2 – Reliability
  • The phase 3 – Convenience
  • Phase 4 – Price

Once these phases are realized, the playing field will have been leveled out, and only in stage 4, when scaling is required to establish greater economies of scale and/or reduction of costs and pricing, does big business get a competitive advantage.

AI and data management

With AI infiltrating everything, from CRM systems through to analysis. The big question is do we really need it? The simple answer is yes. For example, in the retail sector “AI is enabling retail businesses, through the use of chatbots, for example, to collect more data that can be effectively analyzed to help improve the customer experience.

When looking into the financial sector or capital space, CRM systems such as Affinity are actively trawling emails, contacts, and their contacts to make connections for the next venture capital play.

Fears on competition

There is nothing to fear, except fear itself when it comes to competition. According to a 2018 survey into Fortune 1,000 companies:

  • 54.4% of executives reported that an inability to be nimble and compete on data presented the most significant competitive threat that they faced.
  • 79.4% of executives said that they feared disruption from data-driven competitors.
  • 97.2% of executives said their firms were investing in big data and AI initiatives as they sought to become data-driven businesses.

These results are staggering, considering that a large number of these Fortune 1,000 companies lacked the ability to be agile. Disruption should be an organic process. When customers’ needs are met, through a greater level of performance, reliability, convenience, price, and meet consumer values.

Not only a little bit to a point that it drives nearly 80% of respondents to “fear” their competitors of all shapes and sizes. AI and big data in a sense have really leveled the playing fields when it comes to disruption.

The rise of social disruption

With the rise of social disruption, companies are now feeling the full force of social disruption when they either willingly or unknowingly act with disregard to a specific group or sub-culture within their ranks.

Thanks to social media and mass communication platforms, staff, clients and the community at large have the ability to mobilize at rates never experienced at all, literally wiping millions from company share prices in a matter of days.

This social disruption has moved far beyond “activist investors” such as Cark Icahn and Bill Ackman, it is done on mass, and without warning in many cases. Take the backlash for Nike’s policy for reducing female athletes. Or, the pushback against major Australian supermarket chains when they entered into a price war with local farmers.

Social disruption is undoubtedly powerful. That is why it may come as no surprise to hear that global investment firms like BlackRock and Vanguard are now expecting boards of directors to consider social risks that can disrupt their business and erode investor value.



About the Author

Luke Fitzpatrick
Luke Fitzpatrick is an academic speaker at Sydney University. He enjoys writing about tech, productivity, lifestyle, and is a contributor to Forbes.