Digital or die: why one in three global 2000 firms will disappear

“We’re at a major inflection point; probably as big – if not bigger – than the advent of the internet.” If you’re looking for dramatic pronouncements, then look no further: Thomas Meyer’s prediction, made on a recent roundtable hosted by Meet the Boss, reflects a growing belief that digital disruption will be the major game-changer for businesses both large and small over the next 18 months.

And although Meyer, Group Vice President for IDC Research, sees the majority of firms embracing this disruption and taking steps to put digital transformation at the heart of their businesses, up to one-third of the Global 2000 isn’t thinking that way. “The best thing that will happen to them is that they’ll just meander for a while,” he told us. “The worst is that they’ll become irrelevant to their markets and industries, and vanish altogether in the not-too-distant future.”

Of course, we shouldn’t be surprised at this augury of corporate obsolescence. Since it was first published in 1955, a whopping 88% of the Fortune 500 has turned over and been replaced. History has consistently proven that today’s industry powerhouses are tomorrow’s also-rans.

“Since it was first published in 1955, 88% of the Fortune 500 has turned over and been replaced”

Longevity is about staying consistently relevant to the customer – which means embracing change. As Susannah Sutton, Director of Corporate Development at Boots Opticians, told us: “You can’t diversify revenue in the 21st century without digital transformation.”

So what do firms need in order to ensure their continued relevance in an age of disruption?

Greater agility

If there’s one thing organisations need above all else, it’s an agile infrastructure that can respond rapidly to changes in business demand.

“In today’s environment it’s the non-traditional competitor you have to worry about the most,” says Manila Mclean, Head of Digital Marketing at Tesco Bank. “The big digital disruptors for us as a bank are new, non-bank entrants into the payments space – Apple, Google, PayPal, etc.

Those new players aren’t always burdened by legacy infrastructures, policies and ways of doing things. They’re able to look at traditional challenges in a new light, and move quickly to exploit opportunities. Developing agile methodologies – incorporating technologies, processes and a shift in organisational mindset – will be key to competing with those emerging industry disruptors.

More control

This isn’t about micromanaging. The CIO doesn’t need to make every tech-related decision in the organisation, or sign off on every IT purchase. In fact, such decisions are increasingly being taken outside of the traditional IT department, by end-users themselves. And that’s (mostly) a good thing, helping to increase the speed at which the business is able to respond to customer demand.

But you do need some form of joined-up thinking across the business when it comes to the use of technology, and that requires visibility into where those decisions are being made, and how those decisions impact the organisation as a whole.

CIOs need to be part of the conversations taking place around business IT requirements, while CMOs and other business users need to understand how their own technology acquisitions fit into the overall architecture of the business. Working in siloes, particularly when it comes to tech procurement, is no longer an option.

A strong customer interface

Getting closer to the customer has long been a stated goal for most firms, but in the age of disruption it will require much more than lip service. Take financial services, for instance. “There’s a big danger banks could become nothing more than a utility,” warns Scott Fleming, Marketing & Strategy Director at Citi. “We could just end up being the pipe that allows other interfaces to move money around, unless we move quickly and develop our own interfaces to compete on the front end.”

It’s a similar story in the travel and hospitality industry. “Traditional tour operators owned planes, charters, hotels, etc.,” says Pascal Moyon, Chief Digital Officer for Lastminute.com. “That’s now shifted to a recognition of the importance of owning the customer relationship.”

For that to work, you need to focus on data, and on creating apps that enable customers to enjoy a seamless, productive experience across channels and devices, whenever and wherever they want. Again, taking a joined-up approach will be key.

Leadership in disruption

Think of it as the attack of the three-letter acronym: CFOs slashing budgets, LOBs buying solutions direct from suppliers, CMOs taking ownership of all things digital, and CIOs under pressure to coordinate it all from a tech perspective. Now is the time for executives from right across the business to stand up and be counted.

“For me, it’s about differentiation,” suggests Mobica’s Managing Director Mike Gibbons. “It’s up to us to move things on and disrupt the status quo if the industry is mature. Where are the opportunities in our current challenges?”

Jeremy Hill, Marketing Director at SABMiller, agrees – and insists such direction has to come from the C-suite. “For it to be effective, digital has to filter down from the top and touch all levels of the organisation,” he says. “If you don’t think it’s important, you are unlikely to be competitive, agile or responsive today or tomorrow.”

Meyer is even more blunt. “You need to be thinking in terms of digital or dead,” he says. “It’s that black and white.” The wait-and-see approach is corporate suicide. You have been warned.

To hear more from Tom Meyer about why, over the next 5-10 years, 1/3 of the Global 2000 will fail, and the importance of your own digital transformation strategy, register for his upcoming ‘Digital Or Dead’ webinar.

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