by SoftServe TeamApr 12, 2017

The 3 Factors that Enable Digital Disruption

6 min read

Every tech industry blog, newsletter, and weekly update email is packed with articles about digital transformation: why you should be doing it, how to succeed at it, and statistics demonstrating the haves and have-nots of digital nirvana. However, very few of these articles discuss the factors that led to this revolution or those driving the need for companies to change. Perhaps a brief look at history — very recent history, but history nonetheless — will inspire onlookers to jump into the game.

Uber, Facebook, Alibaba, Airbnb, and several others have disrupted their respective industries — but what made this disruption possible? It’s not as if consumers were truly unhappy with the status quo… or at least it didn’t seem that way. Digital disruption was possible because of a convergence, or the timely occurrence, of three key factors outlined below.

CONVERGENCE FACTOR #1 – TECHNOLOGY

Advances in technology, especially in mobile, data analytics, and cloud computing, seemed to flourish overnight and dramatically reduced the overhead required for businesses to launch, reach their customers, and collect the data necessary to tailor their new customer-centric business models around existing paradigms.

It wasn’t just the development of these technologies that made this possible, but also our rapid adoption of them — especially mobile. In what felt like no time at all, nearly everyone owned a smartphone and was using it everywhere. You can’t walk down the street or sit in a restaurant without seeing people with their faces buried in screens.

According to Pew Research, 77% of U.S. adults now own a smartphone.

Similarly, in less than four years, Snapchat went from being a quirky, mobile-only app that your teenager used to a major media outlet valued at over $20 billion. Seventy percent of 18- to 24-year-old Americans with smartphones use Snapchat, which is why it’s now considered by many to be the best place to market to young people.

CONVERGENCE FACTOR #2 – INTELLIGENCE

At the same time that technology was advancing, we began the practice of collecting — and analyzing — people’s views, swipes, and clicks. Amazon, Facebook, Google, and Netflix quickly became highly adept at capturing user data and turning it into valuable insights about their customers’ behavior.

According to IBM, more than 90% of the data in the world was created within the past two years.

Some organizations are still struggling to leverage this data, while others have learned to do amazing things with it. eBay, for instance, claims to have amassed one of the largest consumer repositories of data on the web today. The company has been gathering data from its digital shopping experience across all its platforms since its inception.  eBay’s advanced targeting tools enable it to break down broad audience groups into highly specific, niche segments, allowing for more precise and effective marketing strategies.

Tools like these allow brands to identify exactly where shoppers are in their purchasing journeys and target them with products accordingly. For example, within the consumer segment of new parents, eBay has developed ways to predict what stage of pregnancy or parenthood a shopper might be in based on their purchasing behaviors. By tracking behaviors — such as a shopper buying clothes for a newborn 12 months earlier — eBay can predict when these customers are likely to shop for clothes for one-year-olds.

CONVERGENCE FACTOR #3 – CUSTOMER EXPECTATIONS

The change in consumer expectations is likely a result of advances in technology and data analytics, but it is also the single most powerful driver of digital disruption. Society quickly learned to value the experiences associated with purchasing products and services. In some cases, we have even demonstrated a willingness to pay more for premium experiences. Certain customer segments, namely millennials, appear more inclined to prioritize experiences over products.

Disney launched its MagicBands and MyMagic+ program in 2013 with the goals of increasing personalization and transforming the customer experience through data analytics and wearable technology. MagicBands and MyMagic+ not only allow guests to customize their experience while on the property but also provide Disney cast members with a wealth of data, enabling the company to deliver highly tailored experiences.

According to the Los Angeles Times, the experiences paid off. For example, when a guest enters Disney’s Be Our Guest Restaurant, they are greeted by name and told to sit anywhere they like. Their food will “magically” find them. Similar experiences include characters greeting guests by name and knowing important details like birthdays. Disney’s friction-free interactions allow customers to focus on the magic of the experience while keeping transactions seamlessly in the background.

CONVERGENCE AND ITS IMPACT ON THE BUSINESS LANDSCAPE

The convergence of these three elements has created a tsunami of change that has rippled through countless industries, laying the foundation for what some refer to as the Fourth Industrial Revolution. Industries with low barriers to entry bore the brunt of the storm, including retail, financial services, media and entertainment, and healthcare, while others remain in the storm’s path. Siloed business units and deep-rooted legacy infrastructures have enabled lean, nimble start-ups — cultured in design thinking and agile development — to ride the wave of convergence and steal market share at an unprecedented pace.

This convergence has, without question, changed our business landscape forever. Many of the companies now at the top of the Fortune 500 weren’t even on the list until very recently — and only 61 of the original 500 remain. Companies like Kodak, Polaroid, Blockbuster, and Sports Authority could not pivot fast enough. Despite the warning signs, they succumbed to this disruption. Why? While this convergence was unfolding, some organizations sat idly by, watching their market share erode and their business models become irrelevant.

Their outcomes serve as a cautionary tale about the importance of digital transformation. Forward-thinking organizations are embracing it, adopting new business practices, and taking proactive measures to position themselves to remain competitive in an increasingly challenging market.

If you're looking to navigate digital transformation with confidence, SoftServe can help. Reach out to us today to explore how we can support your business goals.

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