The major cause of digital disruption is the rapid advancement of technology and globalization, which allows new business models to be introduced at an ever-increasing rate and with rapidly declining costs.
Digital business will break down traditional barriers between industry segments, creating completely new value chains and business opportunities
#1 – The subscription model
Netflix, Dollar Shave Club, Apple Music, Tidal – Disrupts through “lock-in” by taking a product or service that is traditionally purchased on an ad hoc basis, and locking-in repeat custom by charging a subscription fee for continued access to the product/service.
#2 – The marketplace model
eBay, App Store, Uber, AirBnB – Disrupts with the provision of a digital marketplace that brings together buyers and sellers directly, in return for a transaction or placement fee or commission.
#3 – The on-demand model
Taskrabbit – Disrupts by monetising time and selling instant-access at a premium. Includes taking a commission from people with money but no time who pay for goods and services delivered or fulfilled by people with time but no money.
#4 – The access-over-ownership model
Car2go, Peerby, AirBnB – Disrupts by providing temporary access to goods and services traditionally only available through purchase. Includes “Sharing Economy” disruptors, which takes a commission from people monetising their assets (home, car, capital) by lending them to “borrowers”.
#5 – The free model
Google, Facebook – Disrupts with an “if-you’re-not-paying-for-the-product-you-are-the-product” model that involves selling personal data or “advertising eyeballs” harvested by offering consumers a “free” product or service that captures their data/attention
Disrupt or be disrupted. That’s today’s digital mantra
Digital disruption may sound like it’s something one hear in buzzword bingo, but it is one of the most important movements facing businesses today.
Disruption and digitization is one of the major challenges for all companies
It is forcing businesses to look beyond the world as they know it, observe how things are changing on the outside, to change transform philosophies, models and systems on the inside.
But since many organizations have a large infrastructure, they’re unwilling or slow to change and take on that role.
They have technologies that have, in some cases, been in use for decades – “legacy technology”- but it’s not the legacy technology that’s the real problem. It’s the organization’s “legacy thinking” that gets in the way of positive and productive change.
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