19 May 2014
Digital reinvention - Preparing for a very different tomorrow
The individual-centered economy is already here. The newest digital technologies – among them social media, mobility, analytics and cloud – keep changing how people, businesses and governments interact. These digital forces enable unprecedented levels of connectedness and so the world is already investing in consumer-centricity. However, these new technologies are truly still in their infancies. The transformation that is already underway will soon intensify, resulting in a paradigm shift from customer-centricity toward an everyone-to-everyone (E2E) economy. The implication for value creation and allocation will be profound. New IBM research shows that many organizations are still not ready to navigate the E2E environment. To prepare for the radical disruption ahead, companies need to act now to create experiences and business models that are orchestrated, symbiotic, contextual and cognitive.
Today’s uber-connected, empowered individuals seek 24/7 access and organizational transparency. They want to exert greater personal influence over organizations and participate in more digital activities as they conduct their daily lives. In the IBM Global C-suite Study, 55 percent of 4,183 C-suite executives report that consumers have the most influence on business strategy, second only to the C-suite itself. Looking ahead, 63 percent of the leaders we surveyed in this 2013 IBM Digital Reinvention Study expect consumers to gain even more power and influence over their businesses.
The culmination of accelerating digital and other technological forces is spawning disruption on an unprecedented scale. And yet, most organizations have not fathomed the full implications of a radically different, digitally-charged future. When asked what kind of digital strategy their enterprise has, more than sixty percent of CEOs told IBM they still lack an integrated physical and digital strategy.
Digital technologies will ultimately drive drastic changes in the economy: value chains will fragment, industries will converge and new ecosystems will emerge. As a result, the mechanics of value creation and value allocation will also change. Looking five years out, 58 percent of 1,100 executives we surveyed in the Digital Reinvention Study expect new technologies to reduce barriers to entry and 69 percent expect more crossindustry competition.
So, what will this future of continual digital disruption entail? How will new convergent technologies impact organizations and industries? What can organizations start doing today to begin preparing for a vastly different business environment? In particular, which investments, priorities and actions can set the stage for success during turbulent and ongoing change?
This 2013 IBM Digital Reinvention Study considers the answers to such questions. To better understand the deepening impact of digital technologies on today’s organizations, the IBM Institute for Business Value surveyed approximately 1,100 business and government executives and 5,000 consumers across 15 countries. We also conducted in-depth interviews with 30 leading futurists (see Methodology section in appendix for more details).
Our analysis of study findings shows that as technological change persists, the interactions between organizations and individuals also keep changing – and this change is accelerating fast. In fact, the global economy was characterized as highly organization-centered for most of the 20th century. Its current state – individual-centricity – emerged around 1990, but this will further evolve into an everyone-to-everyone (E2E) model of engagement.
Prospering in an E2E setting demands disruptive innovation that challenges established norms and blurs organizational boundaries. It will be critical to open up to external influences, expand partnering and accelerate digital investments – the sooner, the better. This executive report offers practical ways to prepare for that fast-approaching and very different tomorrow.
Now at warp speed: Digitization
Digitization is rapidly changing the nature of how individuals and organizations interact: the result is an individual-centered economy. Individuals are more connected and empowered, leading to rising expectations about information access, ubiquitous connectivity and transparency. The ability to stay connected through a variety of devices has increased consumer influence over organizations and drives a consumer-centric business strategy. Competition is coming from new and different areas, opening up opportunities for previously unforeseen entrants – and simultaneously creating new threats. Organizations are adapting innovative business models and using newly found digital capabilities to enable original consumer experiences. The IBM Global C-suite Study shows that the intense focus of the past three years on business strategy that reduces operating costs is shifting to a renewed focus on growth and transformation (see Figure 1).
In the early part of the 20th century, the economy was organi zation-centered and dominated by producer-driven consump tion. Ford and its Model T are an example of this model. Industries were characterized by high barriers to entry and capital-intense production, with larger enterprises controlling production.
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