Which Organizations and Industries Are Most Likely to Face Disruption?

Charles Warnock
Aug 8, 2019
Exponential Enterprise

The short answer? All industries and organizations are likely to be disrupted.But it’s a great question, one we hear frequently at SU. We all will simply have to change the way we operate, for a very good reason: We’ve set up our organizations to take advantage of the best technologies that are currently available. When the technologies we run our organizations on change, so must our business models and operations. This has been the case for much of history, but today’s rate of change is much faster and farther-reaching than ever before.Disruption has been around since at least the third century BC when Greek philosopher and inventor Archimedes began experimenting with levers, pulleys, wedges, and wheels. These simple machines radically transformed the way humans worked and lived, and continue to have a significant impact today.What’s different is the rate of change, which is happening at a greater scale and speed than ever before. We’ve gone from a world that’s framed in local and incremental progress to one that’s global and exponential. Just as early 20th-century businesses were transformed by innovations like electrification and assembly lines, today’s organizations are reinventing themselves to take advantage of exponential technologies.

Disruptive Industries

In the 1980s and 1990s, many organizations built their operations around information technology advances including desktop computers, databases, enterprise software suites, and the internet. Some organizations achieved powerful competitive advantages by creating faster, more efficient processes around the transformative technologies of that era.

Disruptive Industries

In the 2000s, organizations evolved to take advantage of social media, mobile devices, and cloud computing. As these technologies were incorporated into operations, products, and services, organizational roles and structures also changed. New roles like directors of social media and mobile device strategies began to emerge.

Disruptive Industries

In the last decade, exponential technologies like AI, blockchain, 3D printing, and the Internet of Things (IoT) began to take center stage. These technologies emerged even faster than previous generations by building on existing digital platforms. Once again, many organizations are changing their processes and business models—or creating innovative new models—to leverage these technologies to create breakthrough products and services.

Technology radar

In hindsight, it is easy to recognize when these transformative technologies began to achieve broad adoption and commercial impact. But predicting when future technologies take off is a little more challenging. For example, consider the history of machine learning, which involves algorithms that learn from data and enable us to make more accurate predictions. The term “machine learning” was coined in 1959 by Arthur Samuel of IBM. Sixty years later, the use of machine learning has exploded due to the availability of faster, cheaper computing power and the vast datasets required to train machine learning algorithms.Machine learning and other AI-related technologies are driving massive change through nearly every industry, as they merge and converge with other exponential technologies including blockchain and IoT. This trend assures that the pace of change will continue to accelerate.The billion-dollar question: Which fast-moving exponential technologies are so transformational that they will drive sweeping changes in every commercial business, but also throughout the government, academia, and not-for-profit sectors? Since none of us can be sure, perhaps the best approach is to ensure your organization has a strong technology radar—a person or team responsible for tracking the development and deployment of exponential technologies that are relevant to your business.

Moving Lights

Danger signs for disruption

Innovation and disruption are two sides of the same coin, according to entrepreneur and author Terry Jones. These two terms can certainly be in the eye of the beholder, depending upon which side of the coin you find yourself. In addition to monitoring technology and trends in today’s dynamic environment, there are some steps that organizations can take to tip the balance away from disruption, and toward innovation.

Double-down on digitalization

Organizational transformation involves much more than digitalization, but it’s an important factor and a good indicator of an organization’s future-readiness. For example, in recent years, the mortgage industry has struggled under the weight of costly and error-prone manual processes. Loans cost nearly $9,000 to produce, took 45 days to close, and the mortgage industry consumed more than two billion sheets of paper annually. In recent years, the digitalization of mortgages has made the mortgage process faster and cheaper, with fewer errors and customer headaches.In general, industries that have fewer digital processes in place—and more paper-based processes that are subject to human error and involve more manual, repetitive tasks—hold more opportunities for innovators looking to shake things up using exponential technologies. Some sectors that are ripe for innovation and reinvention include government, healthcare, and agriculture. At the national level, research shows digitalization has a positive effect on economic and employment growth.

Modernize human resources

In years past, human resources departments often were regarded as cost centers with little strategic value, and HR leaders often had little representation at top executive levels. Like every other organizational role, fast-moving exponential technologies are driving waves of change in human resources and talent management. In their book Human + Machine, Paul Daughertyand H. James Wilson dispute the notion that killer robots loom as a threat to our careers and potentially, our existence. Instead, they describe what they call the “Missing Middle” as a new era of collaboration in which machines augment human abiltiies to attain dramatic improvements in business performance and growth that would be unattainable for humans or machines working separately.At Hong Kong venture capital fund Deep Knowledge Ventures, human and non-human executives already work side-by-side. In fact, one of the non-human executives, an algorithm known as Vital (Validating Investment Tool for Advancing Life Sciences) is credited with helping the firm avoid bankruptcy by flagging investments in “overhyped projects” that the firm chose not to invest in. The firm’s managing partner, Dmitry Kaminskiy, believes Vital has helped the Deep Knowledge board make better, more logical decisions. A fascinating case study, and one that underscores the ways our traditional human resources functions will need to reimagine their roles in the years ahead.

Elevate the customer experience

Cable and cellular providers, banks, airlines, and insurance companies are among the usual suspects at the bottom of customer satisfaction polls. Organizations that are slow, inefficient and deliver subpar customer experiences are prime targets for reinvention and disruption. Though most people don’t seek change for the sake of change, they will readily adopt better, faster, cheaper, less frustrating solutions.Poor customer experience is one reason AI and related technologies have made rapid inroads in sales and support. It’s still early days for chatbots—simple computer programs that simulate human-like conversational interaction—but they already have made a significant impact on marketing, sales, and customer support. According to Salesforce research, 69% of consumers prefer chatbots over apps for quick communications with brands.Other advantages of using chatbots include instant responses, streamlined communications, and 24-hour service. Despite the obvious potential advantages in providing simpler, faster customer interactions, brands must tread carefully when introducing automated solutions for customer service. For example, many Amazon customers use Alexa smart speakers every day but have never spoken with a human employee. When an AI-powered assistant becomes the voice of your brand, it’s critical to get these interactions right.

Self-disruption is best

It’s important to realize that being in a role or industry that may be disrupted does not mean you will be disrupted, or that disruption is always a negative. Organizations that are prepared to disrupt themselves by offering innovative alternatives to their current core products can gain a huge advantage over their competitors. Sometimes simply the threat of disruption can illuminate exciting new paths. You can get some expert guidance about preparing for and averting disruption in our popular ebook, The Exponential Leader’s Guide to Disruption.Learning and experimenting with exponential technologies, monitoring the competitive landscape, and joining a community of like-minded changemakers can help you shift your perspective from disruption to the reinvention of your organization for future growth.