Digitization is rewriting the rules of competition

Digitization is rewriting the rules of competition

Digitization is rewriting the rules of competition

Digitization is rewriting the rules of competition, with incumbent companies most at risk of being left behind

These are uncertain and challenging times for traditional organizations across every industry

Digitization often lowers entry barriers, causing long-established boundaries between sectors to tumble. At the same time, the “plug and play” nature of digital assets causes value chains to dis-aggregate, creating openings for focused, fast-moving competitors.

New market entrants often scale up rapidly at lower cost than legacy players can, and returns may grow rapidly as more customers join the network.

Digital disruption has the potential to reshape markets faster than perhaps any force in history

Digitization is the single biggest trend affecting every company. It challenges every company to think about the drivers of value creation and capture as well as modes of differentiation beyond familiar dimensions of cost and quality. Digital capabilities increasingly will determine which companies create or lose value.

Fast fish which eats the slow fish - Disruptive

A swarm of new tech businesses eating away businesses

Digital technologies create near-perfect transparency, making it easy to compare prices, service levels, and product performance. Consumers can switch among digital retailers, brands, and services with just a few clicks or finger swipes. This dynamic can commoditize products and services as consumers demand comparable features and simple interactions.

Business models will rise and fall at a tremendous speed

Digital dynamics often undermine barriers to entry and long-standing sources of product differentiation. Web-based service providers in telecommunications or banking, can now tap markets without having to build distribution networks of offices and local agents.

Incumbents’ strengths like advantage of scale are no longer a defense against the speed and high stakes of digital disruption

Digitization isn’t a one-stop journey. A case in point is music, where the model has shifted from selling CDs and then MP3s to subscription models, like Spotify or Tidal. Today, software and mobile technology allow consumers to have access, just when they need it, to the things they used to have to buy and hold.

The big question

The impact of digital disruption may send many companies out of business. The big question is whether traditional companies can move fast enough to get ahead of the wave of change – or at the very least ride it.

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About The Author

Torben Rick

Experienced senior executive, both at a strategic and operational level, with strong track record in developing, driving and managing business improvement, development and change management. International experience from management positions in Denmark, Germany, Switzerland and United Kingdom

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