Digital disruption:

Short fuse, big bang?

March 13 2013

Jeremy Knight

Surviving and thriving in the “new normal” business environment

What is Digital Disruption?

What is Digital Disruption?

• Analyses how the arrival of new digital technologies will drive change for

business, the economy and society as a whole

• Not just about the level of technology adoption (speeding up communication

across borders or changing the skills workers need); it’s about better meeting

consumer demand (changing the very nature of consumption, competition and how

markets work).

Digital Disruption: What we know…

• Digital Disruption will arise from digital innovation and is

critical to any economic or business plan

• It is as much of a force on the Australian economy as the

lowering of tariffs, deregulation, oil shocks and even the

mining boom

• It isn’t hard to predict; we have modelled its impact in

magnitude and timeframe and shown how organisations will

be impacted

• While we don’t know the colour or form factor of the

technologies we’ll be using in the next few years, we can

predict how they will reshape the business landscape.

Digital Disruption: A brief look back in time…

Mainframe

Le

vel o

f te

ch

no

log

y a

do

pti

on

Time

1950/60’s 1970’s 1980’s 1990’s 2000’s Today

Client Server

PC

Internet

Mobility

Phone/Tablet

“Dark Art” “Revolution” “Immersion”

High

Low

Digital Disruption: Why now? – the “new normal”

TIME

COST

ACCESS

Think it…do it – speed rather than

perfection wins…

Fail fast, fail cheap is the best

form of learning…

Standardisation of access with

global reach…

The customer rather than product is now the

centre of the value proposition…

Digital Disruption: Our research… The recent Digital disruption: Short fuse, big bang? report (Deloitte

2012), examined 18 key Australian industry sectors and compared their

vulnerability to disruption from two perspectives:

•the size of the impact (the “bang”)

•the imminence of change (the “fuse”)

The research considered factors such as:

extent of physical delivery of products and services

propensity of customers to use digital channels

importance of broadband and computing infrastructure in business operations

level of customer and workforce mobility and average age

significance of social media

innovations like cloud computing

how digital innovation might be inhibited by government regulations or other

factors

Organisations that stand to experience significant digital disruption within

the next three years are said to be on a ‘short fuse’. Those that can expect

major change in four to ten years are on a ‘long fuse’.

Digital Disruption: Map

Digital Disruption: Map

65% of the Australian

economy will be

affected within the next

5 years

Digital Disruption: Intensity & Incremental Disruption

Digital Disruption: Intensity & Incremental Disruption

What has

been done in

the last 15

years

What still

needs to be

done in 0-5

years…

Digital Disruption: Intensity & Incremental Disruption Quick response and large-scale action

required…

Levers to Respond: The 3 R’s 1. Recalibrate costs

2. Replenish revenue

3. Reshape strategy

Each organisation will have a different journey but they will need a comprehensive

response to increase their Capacity to Act…

Digital Disruption: The Levers Lever Key focus areas

People • Recruitment

• Training

• Monitoring and automation

Supply Chain • Just-in-time inventory

• Global exchanges and services

• Data analysis to drive customer satisfaction

Overhead • Reinvent IT

• Transition to the cloud

• Digitise core processes

New Segments • Give customers more

• Build communities

• Product Bundling

New

Geographies

• Digital marketing

• Host innovation

• Support new business

New Business

Models

• Mobile reach

• Deliver from the cloud

• Use the “crowd”

Asset Mix • Divest legacy assets

• Anticipate consumer behaviour

• Understand tax implications

Risk

Management

• Watch for inaction

• Secure data

• Examine new and emerging risks

Capacity to Act • Strong leadership

• Highlight strategic importance of “big picture” thinking

• Improve decision making

Levers to Respond: The 3 R’s 1. Recalibrate costs

2. Replenish revenue

3. Reshape strategy

Each organisation will have a different journey but they will need a comprehensive

response to increase their Capacity to Act…

Digital Disruption: Key Impacts

• A “big bang” will impact 65% of the Australian economy,

creating massive changes to customer markets

• Individuals are now at a state of technology immersion

and are constantly expecting organisations to put them at

their core and strive to stimulate their interest…

• Organisations can no longer define the market; it defines

them

• Traditional competitive advantages are no longer as relevant

(location, size, scale of operations)

Digital Disruption: Key Impacts

• Organisations are being judged against global market best

practice not just their historical competitors (Harvey Norman

v eTailers like Kogan)

• There will be winners and losers (eg. Borders book stores v

Amazon…)

• To survive and thrive, we need to focus on increasing the

organisation’s capacity to act - making business easier,

more efficient, innovative and safer for our customers…

Understand our unique problems - how are we

impacted and to what extent? (timing of the “fuse” v

impact of the “bang”)

Formulate the best method of response using a mix

of the “9 levers” – what priorities and to what level of

investment?

Questions?

Jeremy Knight

Deloitte Consulting

+61 3 9671 6089

jjknight@deloitte.com.au