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SIX SIGNS THAT YOUR COMPANY IS TARGETED FOR DISRUPTION

IS YOUR COMPANY TARGETED FOR DISRUPTION?

Digital disruption is happening in every major industry—no exceptions.

Many executives are looking over their shoulder to see if they are in the crosshairs of a digital insurgent. But sometimes it is not easy to distinguish ongoing competition from truly revolutionary disruption.

Not all companies are faced with a clear and immediate disruption scenario. The following are six signs that your company may be targeted for disruption.

IS VENTURE CAPITAL (VC) TARGETING YOUR INDUSTRY?

While they may not get it right all the time, a lot of VC money flowing into your industry indicates a consensus that your company and industry can be out-competed on technology. It is a collective bet on your disruption.

VCs love digital challenges to traditional industries. Facebook, Airbnb and Uber were all created with the backing of venture funds.

New cloud-based platforms can provide a low-cost basis for an alternative retailer, bank or service firm.

Therefore many disruptors use technology to compete on price—for example, robo-advisers that are undercutting traditional asset management fees by 75%.

Are your sales people reporting pressure on prices? Are margins being squeezed? This could be pricing pressure coming from low-cost disruptors.

NEW PRESSURE ON PRICING

Surveys consistently show that millennial customers are more comfortable with technology, and less loyal to established brands, than boomers.

They often present the first rank of defectors, and an out-migration of this critical customer segment could be an early signal of disruptive alternatives.

LOSS OF YOUNGER CUSTOMERS

YOUR BEST IT PEOPLE ARE DEFECTINGIs your culture so old-school that you are losing IT personnel to your disruptive competition?

Are you becoming a training ground for the very firms that are challenging you? What do they know that is causing them to make the switch?

LEGACY SYSTEM BYPASS

Are your internal customers going outside the system to get things done?

Are they practicing “bring your own app” to get the functionality they need? Are they developing cloud-based alternatives to the company networks?

If they are seeing the benefits, so might your disruptive competition. Your technology may be making you vulnerable to external disruption.

A COMPETITOR ACQUIRES AN INSURGENT

Some firms are concluding that the best way to beat disruptors is to buy them out.

The combination of a promising new tech approach with the customers and deep pocket of an established competitor can present a potent threat to the old order.

A competitor’s acquisition of a disruptive challenger can signal their belief in the new model, and create a significant new challenger.

This is one of a series of Economist Intelligence Unit discussions, sponsored by Hewlett Packard Enterprise, on the digital transformation journey. For in-depth analyses of digital disruption, securing the internet of things and managing legacy technology, please click on these links.