In 2007 the world started to feel the rumblings that its platelets were beginning to move. It had an experience like this 10 years before with the dot-com bubble starting to emerge. Fuelled by the expectation that an uncapped revenue source had just been discovered; the dot-com bubble begun to inflate affirmed by Metcalfe’s Law where the number of possible connections will continue to increase, and as the markets believed; translate to supernormal profits. This is when the belief in ‘e-magic’ started to infiltrate the capital markets forgetting about the basics of business where profits, or the plan to make them, are actually what allows businesses to aspire to scale and grow with a sustainable goal. The e-business models of the time; or more realistically, ‘e-business ideas’ still hadn’t worked out how they could turn connections into a revenue flow where value could be sustained. However, to be fair, they didn’t need to while the market and its money people were high on ‘magic happening’.
The digital era has triggered the commencement of a major transformation shift that will see business enter a new stage in its evolution. It has been here before but the scale of the change this time around makes this shift much more significant.
It will deliver some winners for those that choose to rise to the challenge but will also see many businesses become uncompetitive because they have chosen to keep their head in the past – with the hope that the same storybook will continue rewarding a philosophy of ‘volume and numbers’ that allowed many to grow and prosper through the industrial era.
The term ‘digital disruption’ is being used on a daily basis to describe changing events, strategic initiatives and in some cases different technology applications. The misconception in many of these references is that it’s about the actual technology solutions. Rather, digital disruption occurs more from the effects of the technology and how this impacts the economic potential of the business model.
The business model is the focus of the potential disruptive effects because that’s how a business makes its money. If the level of profitability and further economic potential is being affected, then the business model is facing disruptive effects that is heading down a pathway of becoming unprofitable if it chooses to persist with the same business modus operandi.
As more things around us go on-line and people interact to leave a trail for a digital life pushed by the changing trends of ‘mobile’ and ‘Internet-of-Things’; data is becoming the new source of power. It is the raw material that business needs to harness and harvest to gain insights into their customer and unlock previously dormant productivity potential. When plugged in, businesses will have a new sense of real time (the NOW) by aggregating data that will provide a new dimension to business decision-making – leading to greater opportunities. However with this avalanche of new data comes another threat – understanding what data is ‘nonsense’ and what data is ‘not’.