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  1. Solomon Wisdom
  2. Sherlock Holmes
  3. Digital Transformation
  4. Tuesday, 26 March 2019

How vulnerable are you to Digital Disruption? in order to answer this question I did a search. One approach I found that was most intriguing was a piece from the MIT Sloan Review. 

The article poses two questions that you need to answer to position anf grade yourelf on how worried you should be:

1. What kind of business are you?

2. How likely are you to being disrupted?

What Kind of Business are you?

The MIT article prepares a taxonomy of enterprise types by the degree to which it might be vulnerable to digital using a 2X2 matrix showing 4 types of businesses: 

Digital disruption vulerability type of Firm source MIT 1

(1) The OMNICHANNEL Business:These deal directly with customers through multiple channels; (2) ECOSYSTEM DRIVERS - This is somewhat of a misnomer. What the authors actually mean is that these are the old Channel businesses, which control and are the conduits by which suppliers or producers can reach the ultimate customer, including through digital platforms such as Amazon or Ali Baba; (3) SUPPLIER Business whiich are dependant on the channel businesses or the Omni channel businesses suc as the retailers to reach their customers. These include wholesalers, insurance carriers, and other sectors reliant on mostly legacy chaannels. and ( 4) the so called MODULAR PRODUCERS. These are the old horizontals that service and cross cut industries and sectors such as payment processors, lenders as well as logistics companies in some cases. The companies that are closer to the customers and less reliant on other companies to reach their ultimate customers are likely to better survive digital disrutions provided they learn to better utilize the customer knowledge advantage yielded by customer proximity. 

The article then asks a set of seven questions which are scored and the score determines the extent to which your business is threatened or for that matter is offered an opportunity by digital transformation. The seven questions are:

Is or can your product or service be:

1. Electronically specifiable and searchable?
2. Ordered digitally?
3. Delivered digitally?
4. Augmented (or can be) with valuable information?
5. Threatened by enterprises in other industries that have relationships with your customers — offering competitive services to yours and disrupting your business?
6. At risk of being replaced with an alternative digital offering? (For example, books vs. e-books, or classroom education vs. online learning)
7. Going to be delivered digitally in five years?

The answer can be scored, typically on a scale as convenient to yield a score of how vulnerable your company is to digital disruption  - the higher the score the more vulnerable your business is. 

Combining the company type and the score amplifies the overall need for action on your part.

We will discuss the things eaach tyoe of company can do to address the threat of digital disruption in a post coming soon. Watch this space!

Source: MIT SMR



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