“Nearly 1 in 2 business leaders fear digital startups will make their business obsolete within 3-5 years,” this is according to a global study by multi-national IT corporation, Dell Technologies.
Despite having bigger budgets and greater access to resources, many big businesses are finding it hard to keep up with startups when it comes to producing groundbreaking, disruptive innovation. This has placed even greater pressure on medium and big businesses to remain innovative if they are to survive.
This challenge, along with others, came out of the study by Dell. The focus of the research, conducted among business leaders operating medium and large enterprises across 12 industries worldwide, was what is referred to as big business’ “looming digital crisis.”
SME South Africa asked 3 thought leaders to give insight on three of these challenges: how big businesses can compete with disruptive startups, the need to drive innovation as well as how businesses can adapt in a fast-changing market.
CHALLENGE: How big business is fighting to remain competitive
“78% of businesses believe digital startups will pose a threat to their organisation”
Jonas Bogoshi, general manager of Dell EMC South Africa
Q: Why do big businesses consider startups a threat?
A: It’s a by-product of the digital economy. Digital technologies are the ultimate leveler. They enable digital-first companies to surpass expectations; create new ways of working, engagement models and consumption habits. In short, they have the power to turn the status quo on its head and consign traditional firms to the history books. Companies feel threatened because they are only too aware of the risk of being ‘Uber’d’, ‘Airbnb’d’ or ‘Tesla’d’ in their own backyard.”
Companies are certainly operating in a new world order. Today’s digital consumers are hungry for faster, slicker, personalized services. Those that can’t keep up will fall behind. The next wave of the digital revolution will see a new crop of leaders take their seats.
However, digital ways of working also represent opportunity. For too long, ‘disruption’ has been a loaded term. We shouldn’t fear disruption. If it forces us to be the best we can be, it’s a force for good.”
Q: How should businesses be handling this particular threat?
A: By embracing organizational transformation, companies can mitigate the risk of falling behind. Continuously and quickly creating new smart products and consumer-grade applications will enable companies to stay on the front foot. However, this can only be done through modernising and taking a software-led approach. Soon, almost every business will need to have software development expertise at their core. When you consider that some companies haven’t written a line of code in 20 years – this will be a big leap ahead.”
“By embracing organizational transformation, companies can mitigate the risk of falling behind”
CHALLENGE: Staying ahead in the innovation stake
Just 5% of businesses can be classed as ‘Digital Leaders’
Keith Jones, founder of Sw7 – a tech innovation accelerator
Q: How are businesses handling the pressure of having to go digital?
A: The short answer is that they are not. There are massive savings to be had and the way of doing business requires a fundamental shift in thinking. It is the future and the sooner they begin the journey, the better. The problem is where do you start? What is a good decision and what is a bad decision? They are asking advice from technical people, most of whom have no valid advice to offer.
The problem is the businesses look to technical people for advice, but they are slow to change their ways as everybody else. It’s hard to get sound advice about how to go about leveraging the cloud. Businesses get confused by all the jargon and making the right ‘strategic’ move. The shift to the cloud should be a common sense one where the business can see and validate the cost savings.
Q: How does a business ensure that they win in the innovation race?
A: Innovation is a land grab. The sooner you get to market, the sooner you can get more customers and reach critical mass to tip your business into profitability and the market. It’s a normal commercial market with a lot of opportunity, so there’s a race going on. Good healthy capitalist behaviour.
Q: Can businesses who are not tech-focused survive or will they go obsolete?
A: Everything comes down to cost to serve. It’s not about digital or innovation or anything else. If you can do more with less you can run a better business. This leads either to a price or profit advantage. So, the answer is yes, businesses that do not remain competitive will be left behind, that’s the way the market works.
“Innovation is a land grab. The sooner you get to market, the sooner you can get more customers and reach critical mass to tip your business into profitability and the market”
CHALLENGE: Keeping up in an increasingly fast changing market
‘48% of global businesses don’t know what the market will look like in the next three years’
Craig Wing, futurist and business strategist
Q: Why do businesses find it difficult to predict the future?
A: Typically, what companies do is that they tend to use backward-looking-forward extrapolation. What that means is that they say: 2016 is where we are and this is how the world has changed in the last five years from 2011 till now, and they extrapolate in a linear fashion what they think is going to happen. However the world is no longer changing linearly but exponentially and because the rate of change is happening so much quicker, there is an inability to comprehend in an exponential manner.
Q: How should business leaders be managing this challenge?
A: There’s a saying that you can’t predict the future, you can only travel it. What you can do is look at signals, understand human behaviour, and technological factors. You need to be able to challenge yourself in ways that you have not done before. There’s a guy Alvin Toffler who says, you should be able to learn, unlearn and relearn. That means you should challenge every bias that you have. Ask: how do we change the way we look at the world and how do we realise that the world may be different moving forward?