Digital Disruption Threatens to Topple Corporate Giants

by Matt Klassen on June 30, 2015

Once thought untouchable atop their thrones of corporate power, questions are now being asked whether many of the titans of the business world will be able to survive the transition to the digital age, as such lumbering behemoths threaten to be swept aside by smaller, more agile, tech savvy competition.

As Reuters journalist Eric Auchard explains, it almost like the corporate giants of the world now find themselves in much the same nightmare as the fictional character Gulliver, “waking up to find themselves under attack from modern-day Lilliputians, small start-up companies which overwhelm their established rivals with new technologies.”

As Auchard goes on to say, the classic characteristics of market incumbents—things like massive scale, distribution control, global brand power, a massive worldwide reach, and millions of customer relationships—are no longer the insurmountable obstacles they once were, and many believe a significant portion of the world’s most established companies won’t be able to successfully navigate this paradigm altering digital disruption.

According to a study conducted by a research centre at top-ranked Swiss business school IMD, the International Institute for Management Development, the vast majority of business leaders think at least 4 of the world’s top 10 ranked companies won’t survive the next five years, crumpling under the weight of exponential technological development.

“Not just lone companies, but entire industries are being side-swiped by these effects,” said James Macaulay, co-author of the study, which polled 941 business leaders from a dozen industries in the world’s 13 biggest economies.

“Digital disruption now has the potential to overturn incumbents and reshape markets faster than perhaps any force in history,” the survey states.

And the fact of the matter is that few industries are safe from such rapid technological advancement. “Disruptive players are coming from out of nowhere,” says Macaulay. “Now it’s individuals who want to rent their homes and vehicles,” he said, referring to home rental service Airbnb, office-sharing firm LiquidSpace and similar “sharing economy” start-ups.

In almost every industry smaller, leaner, and more agile start-ups are starting to make their mark; in the automotive industry it’s radical out of the box thinkers like Tesla, in the taxi service it’s controversial ride sharing company Uber, for hotels and the rentals market, it’s the easily accessible Airbnb.

As technology continues to change industries around the world, the thought is that the lumbering behemoths of a bygone corporate age simply won’t’ be able to keep up, falling victim to their own size and power. Truth be told, though, perhaps that’s not a bad thing, as extinction has long shown itself to be a necessary precursor to new life.

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