Digital disruption is not digital destruction

23 Jul 2015

As featured in DisruptiveViews

Digital disruption is not new, by any means, yet its very nature means that is constantly changing and no enterprise can simply rest on its laurels and ignore the continuous change.

Experts say we are entering the third major stage of digital disruption. The first came with the era where rich information could suddenly be communicated broadly and cheaply, forever changing how products were made and sold.

The second wave, referred to as Web 2.0, was the era of the ‘long tail’ and of collaborative production on a massive scale where small enterprises and self-organizing communities of autonomous individuals performed certain tasks better and more cheaply than large corporations.

We are now entering the third wave referred to as ‘hyperscaling’ where big is beautiful again, especially if it’s data and competitive mass transcends physical boundaries by utilizing the cloud, virtualization and high-speed connectivity.

Some ‘traditional ‘companies have managed to survive one or more of these stages, many have had remarkably long and profitable lives cut short by their inability to adapt, let alone innovate.

It’s not just innovation and the uncertainty it brings that is frightening – it is the risk involved with both taking the innovative plunge as well as the risk if doing nothing at all.

Thus is proving to be a dilemma for many CEOs that have neither experienced the pace of change, nor been trained in MBA courses on how to recognize something never seen before and determine what effect it might have on their business. Gambling at the casino might have better odds!

Of course if you are big enough and have a track record of innovative success then others will follow your lead and make you even more successful.

Take the example of Amazon, a pioneer in online book sales that morphed into a community of reviewers that helped sell more books. Then came the clever use of analytics to make suggestions on books that might appeal to the customer.

This evolved into the Amazon Marketplace, a platform hosting a community of small sellers that now numbers more than two million. All these strategies benefited from the network effect: the more participants, the more choices; the more reviews, the richer the experience.

Not resting at that, Amazon was trendsetter of the third wave of digital disruption moving to hyperscaling by building a “global network of eighty fulfillment centers and relentlessly broadened its product line to include almost any product that can be delivered by truck.”

But it was the sheer scale of its data centres, computing infrastructure and standards it developed that led to the launch of Amazon Web Services (AWS) that hosts thousands of businesses, many of them competitors, making use of its complex stack of computing services.

“From deconstruction to community curation to hyperscaling – at no point did Amazon sit back and wait for trends to emerge. Rather, it seized the strategic opportunities presented by each successive wave of disruption, ruthlessly cannibalizing its own business where necessary.”

At the same time that progressive companies have adapted, innovated and kept pace with the changes highlighted above, there has also been a dramatic change in the way they view and mitigate risk.

One downfall of speedy execution is often the lack of thorough testing or implementation of security. Hackers, fraudsters and even organized crime syndicates will exploit any vulnerability. Leakage caused by incomplete processes and speedy or poor system implementation used to go months before audit teams stumbled upon them.

However, the same advances in computing power, software development and innovation that have created the digital disruption waves also resulted in fraud monitoring and revenue assurance systems that took advantage of the incredible computing power and big data at hand to monitor systems in real-time.

These have also evolved and advanced from IT systems to network elements, servers and third-party systems to monitor and audit processes in real-time across the whole business. The era of enterprise business assurance (EBA) is now here and offering the innovators the comfort and security of dynamic risk management they have not experienced before.

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