I had the great privilege of attending and speaking at Fortune Global Forum this week, which gathers business leaders to discuss the most pressing challenges we face and to set the global business agenda. The theme of this year’s conference was “winning in the disruptive century” and focused on how businesses must operate in order to stay competitive in this environment. One common concept fueling discussions around the disruptive market we’re navigating was connectivity. CEOs across industries – manufacturing, technology, healthcare, finance and so on – are recognizing the need to not only digitize, but to reinvent themselves to stay ahead. As I reflect on the conversations I had at the Fortune Global Forum, here are some of the points that really resonated with me:
Businesses are poised to lead on digitization if we make it our priority.
Current forecasts around the number of connected devices are too conservative. By 2030, I believe that there will be closer to 500 billion connected devices. With digitization every aspect of day to day business will change, from supply chain to customer interface to productivity, every company will become digital. However, according to The Global Center for Digital Business Transformation, only 25 percent of executives have a proactive plan to address digitization. Leaders at Fortune Global Forum agreed that value is created by not just connecting things, but by how you use these new connections to make an impact on not only business, but also on governments and society.
I’ve met with government leaders in France, Israel, UK, Germany and India who not only understand the impact of digitization, but they’re moving quickly to bring it to life for their countries. I think we have something to learn from these leaders. First, that digitization should be a priority on our national agenda here in the U.S., as technology strategy will play a critical role in our success as a country in the digital world. Second, that digitization should also be at the top of the corporate agenda. If governments are moving on digitization with this type if tremendous speed, our businesses have to move even faster and be even more dynamic to realize the full potential of this opportunity.
Your company is defined by much more than just your core products.
Most companies today make 90 percent of their revenue from two or three products that have been in their portfolio for some time. To stay competitive in today’s disruptive environment, you can’t stay doing the same thing for too long. Business leaders must have the courage to expand into new emerging areas ahead of market transitions. This takes courage!
An overwhelming majority of leaders at the Fortune Global Forum noted that this challenge keeps them up at night, and that it’s made even more pressing by the increasing number of connected devices that are coming online. For instance, with the rise of mobile, my fellow panelist BT CEO Gavin Patterson saw an opportunity to make a foray into a new market and had the courage to expand his business beyond voice. This was just one of countless examples of how BT reinvented itself over its hundred-year history. This theme of reinvention rang true for others too, including Wells Fargo. To be successful in the digital world, leaders must find new profit streams and tie everything back to customers’ expectations.
Your competition today may not be your competition tomorrow.
Forty percent of market leaders will be displaced or eliminated by digital disruptors in the next 10 years. In my opinion the average time to disruption (meaning a “substantial change” in market share among incumbents) is now about 3 years, a dramatic escalation in the rate of competitive change versus historical levels. These disruptors offer differentiated products and services and better value than incumbents. This creates a hyper-competitive landscape driven by digital disruption, where lines between industries are blurring and markets are changing exponentially.
Companies that fail to keep up with the accelerating pace of innovation in this environment will be left behind as new competitors grab hold of market share. We saw this type of disruption occur with cloud and mobile, for instance, and we must always be thinking about the next transition. It’s important to remember that the disruptors of today look much different than they have in the past. If we don’t pay attention to this next generation of competition, we risk being left behind entirely.
The Fortune Global Forum agenda has made it clear: business leaders recognize the tremendous sense of urgency around our digital future. We are in the midst of one of the most revolutionary changes in technology we have ever seen which will have 5 to 10 times the impact of the Internet to date and will impact all industries – manufacturing, telecommunications, financial services, healthcare, and others. To win in this new age, businesses must make digitization a top priority.