Digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services. The rapid increase in the use of mobile devices for personal use and work, a shift sometimes referred to as the consumerization of IT, has increased the potential for digital disruption across many industries.
Generally, digital disruption happens after a digital innovation, such as big data, machine learning (ML), internet of things (IoT) or the bring your own device (BYOD) movement. Digital innovation then affects how customer expectations and behaviors evolve, causing organizations to shift how they create products and services, produce marketing material and evaluate feedback. This shift in digital strategy can occur on an individual, organizational, industry or societal level.
The term digital disruption has become something of a cliché in recent years and is often misused to describe any product involving digital technology or the use of digitization to better compete against marketplace peers. It is often confused with the term disruptive technology, a term coined by Harvard Business School professor Clayton M. Christensen to describe a new technology that displaces an established technology.
Examples of digital disruption
A few examples of digital disruption include:
- The digital camera business disrupted the industry of film photography and photo processing.
- The subscription economy business model, as used by companies like Amazon, Hulu and Netflix, caused a disruption within the media and entertainment industries by changing how content is accessed by customers and monetized by advertisers.
- Freemium products, such as Spotify, LinkedIn or Dropbox, that allow users to sample a basic product with the option to pay for the full offer, put more emphasis on developing a well-known brand behind a product or service.
- On-demand services, like Uber, have disrupted more traditional services like taxis.
- The rise of electronic reading has redefined the print and publication industry.
Importance of digital disruption
It is important for organizations to embrace digital disruption in order to gain a competitive advantage. When an industry experiences digital disruption, it typically signals that consumer needs are shifting. Therefore, understanding the disruption allows companies to keep existing customers happy as well as create opportunities for new customers. It also gives companies a better idea of human behavior and how trends may occur over time. A few best practices to follow that ensure digital disruptions are more of an opportunity than a threat are:
- Pursue initiatives that might cause a disruption, do not be afraid to be the disruptor.
- Consolidate data assets and use them to make decisions.
- Brainstorm ideas for entirely unique products, services or channels.
- Employ customer data in new, innovative ways.