Digital disruption is transforming every industry at a much faster pace than was the case with any other technology in the past, be that the steam engine, electricity, the telephone, computers, or even the Internet. As a direct result, the structure and dynamics of most industries will change more in the next 10 years than they have in the past 25.
Sounds astounding, but almost certainly true. Take the car industry. Besides improvements in fuel efficiency and changes in the styling of cars, today’s auto industry is not particularly different from that of a century ago. Within a decade however, it will look completely different. The disruptors, Tesla, Waymo, Google’s sister unit, and Woober are all digital natives leading the charge with electric batteries, autonomous driving, and ride sharing. Similar disruption is underway in every industry, from banking to education to retail.
The disruption is profound in two ways. One, it is comprehensive and is reshaping every element of the business model, including what you make, how you make it, how you buy, how you sell, your relationship with customers, suppliers, and other partners, as well as how you manage the company internally.
Given the scope and pace of this disruption, it is crucial for business leaders to beware the digital lipstick syndrome. That is embracing digitization along superficial features of the business model. An example would be a newspaper that assumes that merely making its content accessible online is enough. Online media is a fundamentally different beast in everything that matters, content, reach, pricing, and advertising. A bank that starts to use data analytics a bit more than it did historically or a manufacturer that starts to use cloud services rather than its own servers. Putting on a digital lipstick is easy to do for both you and your competitors.
It does not convene any competitive advantage. More crucially, it lures managers into believing falsely that their company is now digital. This complacency slows them down in transforming the company at its core. This is what happened to Eastman Kodak. The company’s leaders could see that digital imaging was starting to chip away at traditional photography, however, they tried to embrace digital imaging while also trying to protect the legacy film business. As a result, they were far too slow in making the pivot.