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Transformative technologies will cause considerable disruption in business and industry

26 June 2019 Josh Builta

The term "transformative technologies" refers to technological forces of change so significant and powerful as to completely upend existing structures and mechanisms, in the process altering business, industry, and the current accepted means of production in fundamental ways. Disruptive by their very nature, transformative technologies change the status quo, with disruption often taking effect very rapidly.

The considerable degree of disruption caused by transformative technologies is indicated in the relatively high scores seen in Digital Orbit in the key metric of impact, which measures how a specific technology will change industry.

Among the business leaders and industry movers who serve as respondents to Digital Orbit's Key Influencer Survey, 56% believe that transformative technologies will have a high-to-significant disruptive impact on their industry within the next three years. Only 4% believe there will be little or no disruption. The survey is an appraisal of the six transformative technologies tracked by Digital Orbit—Artificial Intelligence, 5G, the Internet of Things (IoT), Cloud & Virtualization, Blockchain, and Video Everywhere—and their prospects for adoption from the perspective of important industry influencers and leaders.

But in which industries will disruption occur? And in what ways and form will the disruption manifest?

Variables affected by disruption

In Digital Orbit, IHS Markit examines specific variables vulnerable to the disruption brought about by the transformative technologies covered by the study.

The two most important variables are competitive dynamics and the opening of new market opportunities. The first variable investigates whether the adoption of transformative technologies will create a path for new market entrants or pave the way for smaller players to become market leaders. The second variable, meanwhile, asks whether implementation of transformative technologies will create new markets where none previously existed.

Three other variables are also relevant.

Disruption to the ecosystem is the variable that evaluates whether implementation of transformative technologies will shake up existing ecosystems or value chains in industry.

Disruption to organizational structure is the variable concerned with whether organizations within the affected industries will change their organizational structure and workforce when transformative technologies are implemented.

Restructuring of business models, the fifth and final variable, inquires whether the development of a transformative technology can cause radical change to existing businesses.

For business leaders and key decision-makers in industries or organizations, knowledge of impending disruption and the ability to prepare for it is of critical importance. Unfamiliarity or failure is likely to result in loss of market for a company or consign it to irrelevance.

Consumer industry and disruption

A review of the scores for the five variables in Digital Orbit shows that the consumer industry is expected to experience the greatest amount of disruption from transformative technologies. This is not surprising, given that the consumer industry has adopted most of the transformative technologies monitored by Digital Orbit.

How disruption will take place in the consumer and other industries will vary by technology, as shown in the chart below. Overall, the Digital Orbit scores indicate that new market opportunity and competitive dynamics will be the principal areas of disruption. Meanwhile, respondents in the Key Influencer Survey identified disruption to organizational structures as the most frequently cited factor of disruption in their organizations.

IHS Markit graphic on effects of transformatiuve tech

The chart also shows that "New Market Opportunity" and "Restructure business models" have somewhat similar results. This is a logical outcome: As transformative technologies open new markets in industries, enterprises will need to develop new business models to address the fresh opportunities that arise from the transformations taking place.

Josh Builta is senior principal analyst for transformative technologies at IHS Markit
Posted 26 June 2019


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