Business leaders globally believe that innovation isn’t being fuelled by disruptive start-ups but instead by the incumbents, who are acquiring new skills. This is according to IBM’s third cross-C-suite Study, drawing input from 12,854 respondents across six C-suite roles, from 112 countries.
The latest report reveals insights from the C-suite on everything from innovative incumbents, the path to personalisation, building platforms for future business models and effective capitalisation from data – in a quest to demonstrate whether there is a clear path to success for businesses in the future.
The report suggests that innovation is no longer the province of the hungry upstart. Disruption is emerging as a capability that the incumbents are ready to embrace, and they are seeking and championing change even when the status quo happens to currently be working quite well for them. Organisations that have weathered recent disruptions have grown stronger – and better ready to transform – as a result.
Despite the headline-grabbing upheavals caused by major industry disruptions, executives surveyed for the study seem ‘remarkably sanguine’. Fortified by strong relationships and assets, they are succeeding in reinventing themselves, according to the report
For the most part, they don’t seem too concerned about disruption having an immediate impact on their businesses. Moreover, it’s not the fearsome digital giants they’re most worried about, but the competition from once lumbering, now innovative, industry incumbents. As innovative incumbents have become smarter about competing in a disruptive digital age, C-suite business leaders now say they represent more of a competitive threat than the new entrants to their market.
Over one-third, 36%, of C-suite executives in the report stated they felt little or no impact from disruption in their industries. Surprisingly, even more (44%) said they don’t see any urgency to transform their enterprises in response to disruption.
In all, just 27% say they’re experiencing significant disruption, an unexpected finding given the deluge many predicted and the fear-mongering about the need to “innovate or cease to be relevant” – as a response to the threats from start-ups, such as Uber and Netflix, moving in on traditional industry turf.
The Uber and Airbnb phenomena rolled through markets with excess capacity and eroded profits for many. Just 23% of C-suite executives say that competitors from outside their industry are a significant source of disruption. Digital giants continue to concentrate their power in some industries, but according to the C-suite executives surveyed, they aren’t the ones leading disruption. And, according to the report, nor are the start-ups.
The digital giants’ dominance daunted entrepreneurial start-ups and the venture capital (VC) firms that fund them, and as a result the number of business start-ups in the United States recently reached a 40-year low. Even in industries with higher than average turmoil, like financial services, where start-ups have a relatively larger presence, innovative incumbents are credited with the lion’s share of change.
According to IBM, incumbents have succeeded in honing their skills to acquire nascent disruptors, along with their digital skills and innovator talent. Financial services firms have been snapping up fintech, insuretech and regtech companies at record pace. In other industries, Walmart acquired platform retailer jet.com, among other start-ups, while UPS bought Coyote Logistics, the “Uber of trucking.” Airbus – along with Virgin Group, Qualcomm and other companies – invested in OneWeb, an organization building 640-plus satellites to provide global broadband Internet access.
The question then remains - is disruption from start-ups dormant?
Not likely, according to the report.
Any new wave of disruption ahead is just as invisible to organisations today as it has been in the past. Even in relatively stable markets dominated by a few firms, circumstances can still change suddenly. Subscription services like Birchbox, Blue Apron and Dollar Shave are growing rapidly, creating volatility in many categories. Dollar Shave was later acquired by Unilever and now many incumbent retailers and consumer packaged goods companies offer subscription services.
To find out how they are driving this change, download the full report here. Find out how incumbents are fighting the digital giants march to dominance while learning to innovate through start-up mentality by downloading the full report here.