Industries that have either been changed or are being changed forever include real-estate sales, entertainment and media (especially print) publishing, advertising, education, retailers, recruitment, transport/logistics, financial services/banking and travel among many others. There is no going back.
The balance of power has shifted back to consumers. It doesn’t matter how much Gerry Harvey complains and it doesn’t matter if the Australian Government places GST on online offshore purchases.
Reality is that consumers can see the much wider range of goods available online and overseas, they like the lower cost and will flock to better service. Business can choose to adapt or suffer the consequences, but it cannot hide and it cannot bury its head in the sand pretending digital disruption is not occurring.
Overall, we still have a long way to go. Commercially, legally and culturally in many cases (especially for new technologies) we still have to catch-up and really think and consider the implications – advantages and disadvantages. The consequences may go much further than anticipated.
1. The Employee Experience
For employees disruptive technologies may not have had the desired impact. In some cases employees are empowered and enabled by disruptive technologies – but largely these employees are not in a majority. In many cases disruptive technologies have resulted in a smaller workforce made up of more highly skilled staff creating a greater risk profile for employers. The motto “Our people are our most important asset” is broadly accepted, but not necessarily put in practice by the executive.
In many cases disruptive technologies have resulted in:
- Blurring the boundaries between work and personal life resulting in employees being accessible 24 hours a day (mobility/smart phones). A tired employee is not effective or highly productive.
- Expanded responsibilities and work hours with no additional reward, and no training or inadequate training on the new technologies deployed.
- Immature software/technologies being deployed that simply did not work as intended or not fit for purpose resulting in denial of service to customers, and employees having to perform work manually or devise manual or other workarounds.
- Many expensive technology projects running 2 – 3 times over budget and 30 percent over planned schedule.
- Toxic organizational work cultures where staff are simply seen as a resource to be utilized and discarded.
- Increased levels of mergers and acquisitions and greater instability.
- A tougher more competitive market where margins are lower due to increased competition meaning many businesses are squeezed and have to make their employees more productive by working harder or smarter.
- The sad part is that disruptive technology has huge potential for improvement in employees’ workplace conditions thus benefiting customers and the business itself, but most often this potential is not realized. There are some exceptions to this including Google, Atlassian, the start-up sector (albeit small in Australia but large in USA – Silicon Valley).
2. The Customer Experience
The customer experience has been good, but not perfect. Customers are better informed with access to the internet providing an opportunity to compare quality and prices of goods before purchasing. This has resulted in increased competition and lower prices. Online offshore purchases have reached a level previously unseen with consumers quite happy to accept a delay in goods being delivered in return for convenience and lower prices, not to mention a broader choice.
Disruptive technologies have provided new alternatives thus increasing choice. Thank goodness for Uber and Airbnb. They have also resulted in improved levels of service in the industries they operate in. Still in many areas especially where you have pseudo-monopolies (or duopolies – two major providers and a raft of smaller ones) there are still problems. Some large companies are using disruptive technologies purely to maximize their revenue and gouge customers. Airlines are a classical point in case using sophisticated data analytics and variable pricing and manipulating the number of seats / capacity to drive up prices at specific times, usually in times of high demand.
Many websites do not have any option or capability to allow customer complaints to be lodged, or provide customer support to resolve issues. Others use technology to swindle their customers. For example a well-known major travel provider using classical “bait-and-switch” tactics. After flying for 9 hours you arrive at your destination only to find your hotel has no record of your reservation – and they put you in a much cheaper “sister/affiliated” hotel blaming email. If you fight hard you get a refund and/or alternative suitable accommodation. Then you find out you were not an isolated case but many people just don’t bother to fight.
Many companies see customers as a resource to be exploited and milked. Disruptive technologies have made it easier to identify and avoid such companies. Quality of experience is still an issue at times. It’s pointless having a taxi app if the taxi doesn’t turn up, is dirty/smelly, or doesn’t have room in the boot for your luggage.
However, overall the balance of power has shifted in favor of the savvy customer who is willing to stand-up for their rights and who is reasonable – business has to make money too in order to stay in business, but the product/service must be competitively priced and be of comparable quality.
3. The Business / Supplier Experience
Disruptive technology is without a doubt transformational. However such technology is the enabler not the driver. The driver has to be business strategy which takes into account disruptive technologies. The opportunity is there for business to use disruptive technologies to derive benefits that can be shared by the customer and the business, by streamlining operations – improving efficiency, improving the customer experience, and offering a broader set of high quality products and services that are competitively priced.
A classic example were retailers that built highly sophisticated supply chain operations using disruptive technologies to support a business model that delivers value to customers namely lower prices for good quality groceries. All good. Yet the same companies were caught forcing their suppliers into particular channels or online markets using terms and conditions that significantly disadvantaged them and payment terms were punitive.
Nevertheless, there are quite a few companies (including large ones) undergoing successful transformation mostly as a result of changing market conditions which in turn may have been caused by disruptive technologies. They include:
- A major Australian bank that has completely revolutionized its technology platforms.
- A major Melbourne based telecommunications provider as a result of the NBN being deployed, and
- Multiple resources/mining companies that have centralized and streamlined their operations so that the collapse in commodity/metals prices has not resulted in totally destroying their margins because they shrank/optimised their cost base.
Business/suppliers cannot avoid the disruptive technologies “tsunami” either. Business will either transform successfully, die, or be acquired on less-than-favorable terms. In cases where you have a value price disconnect and customers are overpaying, disruptive technologies will create visibility thus making the situation untenable for business. The pace of change will increase over the next five years, making some industry silos tenuous and thus forcing some businesses to reinvent their business models.
Many services businesses will have to move up the value chain and change from problem-solving to value-unlocking. The provision of skilled labour based on daily rates will diminish with the advent of Cloud and SAAS. Value based models based on simple and clear performance KPI’s and value generated and shared, will emerge impacting commercial, legal and management practices.
4. Other Consequences of Disruptive Technologies
Include (just the few I can think of):
A. Accelerating the commoditization of unskilled and semi-skilled labour.
B. The prevalence of identity theft.
C. So called “big” projects will be fewer. If it takes more than 12 – 18 months question very hard the motives behind such a project. One of the most successful C$500 million 10 year transformation programs was a Canadian Railways company that broke the journey down into C$30 – 50 million projects over that time period, and then executed the journey flawlessly to achieve more than C$1.6 billion of benefits. Divide and conquer!!! Still in some cases the need for a “big” project will be unavoidable. If that is the case then make the CEO and entire leadership team accountable. How to successfully execute such projects is a topic for an article in itself.
D. Increased need for Cyber Security.