Savvy, competitive business owners know disruption is a constant.
No matter the industry, it’s not a question of whether you must deal with disruptive forces — it’s when.
For many major industries, the “when” is now — and it’s a persistent concern.
A recent report from Accenture that analyzed 10,000 companies across 18 industry sectors from 2011 through 2018 found that 71 percent were in or on the brink of significant disruption. An estimated $41 trillion in enterprise value across the U.S. has been impacted since 2011.
Among the industries currently most affected by disruption are health/medical care, financial services, manufacturing and transportation. How — and how quickly — businesses in these sectors respond are critical keys to their long-term success.
Johnson Financial Group’s Chief Information Officer, Tim Brown, shares his insight on how business leaders can adapt to emerging technology:
Emerging technology is changing the way we live, fundamentally, at a pace so rapid it can feel overwhelming at times. It’s imperative for businesses to build strength to adapt to the pace and speed, assessing the volume of change. They also must foster a culture of learning because innovation comes from determining how to solve a problem. I call it building a muscle of innovation and agility.
Business leaders need “the muscle” because as they contemplate how to respond to problems. They can be inundated with an array of new technologies as choices, such as artificial intelligence [AI], blockchain and robotic process automation [RPA], depending on their industry.
Preparing for change and how to adapt are vital objectives for businesses of all types and sizes. We often think of global giants such as Amazon when focusing on disruption but the fact is that smaller businesses often have more at stake – there is far less margin for error.
And timing, when to “jump on,” is critical. In the midst of disruption and change, business owners must be aware that their competitors likely already are innovating and adapting, and their customers’ expectations are being shaped. That, in turn, affects customers’ impressions of the firm’s value, products and services.
That product pressure means business owners must be positioned to go to where their customers are and market to those expectations. Knowing how your customers interact with technology and where they go for information will tell you how to design and promote your products and services.
Here are examples of disruption leading to innovation:
More than 10 years ago, a national bank with a direct banking model sought a way to compete with other banks. Bank leaders developed a new innovative way for clients to deposit checks, starting with a home printer scanner process.
However, they soon realized that smartphones could be used to take photos of the checks, making it possible for individuals to make deposits from virtually any location.
The technology itself — taking photos with a smartphone — was not innovative, but its application was groundbreaking. Although they faced considerable fear about the security of making deposits via smartphones, the bank’s leaders were courageous to take a prudent risk.
What came to be known as Remote Deposit Capture solved the bank’s problem and made them competitive with traditional banks.
Innovation is accelerating exponentially in medicine and medical care, with techniques such as gene mapping and bioinformatics leading to new or refined treatments.
For example, in the 1990s, genome sequencing, the mapping of a person’s unique DNA, cost $2.7 billion. Today the cost can be as low as $700.
The information gathered in genome sequencing ranges from significant discoveries in medical research to so-called personalized medicine, in which products can test an individual’s sensitivities to specific drugs, and doctors can determine which treatment is most likely to help a cancer patient, all based on a patient’s genes.
Personalized medicine has had an indirect impact in the life insurance industry, which also is in the midst of significant disruption.
The ability of gene mapping and other research to unleash massive amounts of information about individuals has the potential to dramatically affect the cost of life insurance. That is because the insurance is based on probabilities determined in part by an individual’s age and health status.
The potential impact increases as people continue to retain their health and live longer.
Supply chain and manufacturing
This sector is perhaps the best example of the impact of disruption. Businesses as large as Amazon, Walmart, IBM and auto manufacturers have experienced massive change and produced numerous new products and services by incorporating innovations such as blockchain, IoT technology, RPA and AI.
That innovation trickles down to small businesses that incorporate and benefit from the innovation as they serve their own customers. A few consumer examples include virtual assistants (Siri, Alexa, Google Assistant), video doorbells and whole house security systems, remote car starters, and smart homes that allow you to control lighting, heating and appliances with your laptop or phone.
Production innovations include robots that can process product orders, assemble products and RPA systems that can conduct financial and administrative transactions.
The most recent and recognized disruption and innovation in transportation likely is the development of driverless or self-driving cars, but self-driving trucks also are being used in the trucking industry and evaluated by the U.S. Postal Service.
However, safety concerns have prompted innovation for decades with developments such as cruise control, lane assistants, airbags, adaptive headlights, and even rear-view mirrors and anti-lock brakes. All these innovations have one thing in common — they are rooted in problems that need to be solved.
The spark plug to innovation
New technology has many positive aspects, such as simplifying our lives and making things easier – “Alexa, pre-heat the oven to 350 degrees.” The downside is disruption. However, the challenges created by that disruption also are the sparkplug to innovation.
Ultimately, when it comes to technology and long-term success, if you and your business are not moving fast enough, you will lose out.
Your business must be nimble, skilled in your field and committed to a culture of learning. You also must be willing to solve problems that arise and take calculated risks that can lead to innovation.
By building that “innovative muscle,” you will have the speed and agility to move quickly to your ever-changing market and your customers’ expectations, helping to ensure your ability to deal with disruption and succeed over the long term.
Karla Krehbiel is southeast regional president for Johnson Financial Group.