Digital disruption: Data intelligence, digital supply chain and beyond

By Richard Perret

Over the past three years, there has been much discussion about digital disruption as it relates to businesses and business model innovation. One faction defines it as the process of smaller, entrepreneurial firms that focus on underserved, low-margin markets, then shifting toward domination of the mainstream segment upending the industry incumbents. Others take a less distinctive approach, meaning any form of innovation by anyone who alters value creation that challenges the status quo of existing business practices.

Regardless of how pundits, practitioners and academics define it, all appear to recognize that markets are in flux due to technological advances. The world is truly experiencing a continuous evolution as marketplace categories fuse, new segments emerge and the competitive landscape for entire industries is redefined.

You have seen how the rise of mobile, cloud and IoT have made digitization a core driver of disruption, and it’s beginning to affect virtually every industry. You are driven by a world of immediacy and responsiveness, where consumers have high expectations when they want to make purchase decisions. For example, consumers are empowered as digitization enables omnichannel fulfillment and provides them with many forms of buying and returning products. And this is just the beginning as businesses begin to reimagine ways to provide a superior customer experience.

Yet digitization alone isn’t the key to driving innovation and market advantage. Most CIOs should think of digitization as a highly consumable and viewable “lingua franca” of the firm’s processes, ecosystem and business model. Good examples include the current focus on digital supply chains that are an outgrowth of the earlier movement on supply chain visibility. These efforts have helped improve operational processes such as confirming order ship dates or in-store availability of products promoted online. However, the next phase is building upon this digital content and moving toward intelligence. That’s one of the reasons why CIOs focus on data and analytics as major areas of investment. More intelligence provides greater levels of insight, context and understanding to continuously make better choices about how to design businesses, supply chains, ecosystems and customer experiences. In total, this is referred to as digital intelligence.

Digital disruption infographic

Digital disruption is here to stay

To better understand the concept of digital intelligence and its potential to drive business disruption, IBM worked with Harvard Business Review to conduct a study in this domain. The paper affirmed that few organizations are immune to digital disruption, yet there is a worrisome gap that exists. Even more worrisome, only 14 percent of the respondents rated themselves as highly able to act quickly using their digital intelligence capabilities. So, those that can deploy still can’t act quickly enough on the resulting insights and intelligence they’ve developed.

It was clear from the study that the vast majority of firms need to exploit the data and insights they need at faster rates than ever before to cope with dynamic market and competitive threats. Digital innovators are sensing and responding faster to change, and they are best prepared for the challenges and opportunities ahead with digital intelligence. With input from more than 600 business executives worldwide, the study provides a lens into the value digital intelligence brings to your organization and helps you understand what these digital innovators are doing differently.

CIOs lead the way

CIOs are at the head of this movement. To lead in the era of digital intelligence, the CIO needs to strategize around a set of key characteristics and approaches that digital innovators are using for success.

Specifically, these innovators do the following:

  • Create a transformational strategy that embraces risk-taking. Digital innovators are able to detect and respond to change faster than digital laggards. Risk can become less of an issue and better managed if you can confidently respond quickly to change.
  • Adopt an agile, iterative approach to intelligent innovation. CIOs are focused on DevOps and agile development, but this also extends to data and insights. In a changing environment, you don’t have the time to focus on the perfect strategy. Innovators know this and employ iterative techniques such as the idea of fail early and fail fast as part of their operating model. Author and consultant Chunka Mui did a nice job describing this concept from his recent book as he talked about the need for larger companies to “think big, start small, learn fast.”
  • Promote a data-driven culture throughout the organization. A study respondent who is the director of insights and intelligence at a global media company summarized the idea of an expansive data culture well, saying, “The ability to draw upon the power of the collective — that’s what data analytics is all about. The holy grail is to connect all the dots.”

Digital innovators were much more likely to address this compared to the rest of the respondents — most specifically in their ability to reconcile disparate sources of data across their organization and have the right analytics tools in place.

Digital disruption is real. The good news is, incumbents are figuring this out and deploying strategies and practices to address their future.

This article was originally published on LinkedIn.