Winning in Digital Innovation: Turning Scale and Legacy into Strengths

Many corporations struggle to match the agility of companies born during the Internet age. Even though size and an established position can be weaknesses, they can also create an advantage.

Innovation: The New Competitive Advantage

Scale and efficiency used to be the driving forces for industry leaders, but in the digital age, success depends on being able to innovate with technology and new business models. With developments such as artificial intelligence (AI), 3-D printing, and the Internet of Things causing waves of disruption, adapting requires far more than learning to use technology.

Speed and unpredictability are the defining features of the digital world, which introduces a fundamental shift in the nature of business and what constitutes success. In this paper, we explore how established corporations can take advantage of their legacy and scale and learn from companies that are innovating at the speed of digital.

Why Disruption Matters

Over the past few years, disruptive forces have hit industry after industry. Travel has been disrupted by Priceline, Expedia, TripAdvisor, and Airbnb, transportation by Uber, and retail by Amazon and Alibaba. For established businesses, the most disruptive threats tend to come from outside traditional competition. New companies not only spot opportunities to create value that many incumbents fail to see, they also tend to operate with different business models. In fact, it’s no longer about having a level playing field. The disruptors are playing an entirely new game.

Google is a master of this new game, converting an array of industries into advertising revenue. Amazon is another serial disruptor with its Amazon Prime now in a two-horse race with Netflix- undermining the model of traditional broadcast industries.

Even those that have not yet been significantly impacted by these forces are not safe. Over the next five years, 40 percent of companies will face some form of digital disruption, according to Forbes magazine. Artificial intelligence is beginning to attack knowledge-based industries previously seen as safe from disruption, thanks in large part to companies such as Google and Amazon offering “AI on tap.”

For global commerce, the potential impact is enormous. The past decade is replete with the corpses of once-great companies such as Blockbuster, Kodak, Nokia, and Borders, and many established corporations are struggling to keep up with the rapid pace of innovation and change.