Digital disruption 'will displace 40% of companies in 5 years'

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07th December 2015

Two-fifths of today's companies will lose their market share within the next five years as a result of digital disruption, researchers have forecast.

Companies that fail to go digital over the next half-decade risk losing their market share to those that do, according to new research.

The report, published on Thursday (June 25th) by the Global Center for Digital Business Transformation (DBT Center), is called Digital Vortex: How Digital Disruption is Redefining Industries. It claims that around twofifths (40 per cent) of incumbent companies across 12 industries will be displaced in five years through a process of rapid digital disruption.

"Every country, every city and every business will be required to become digital in order to thrive and survive in the new digital economy," commented Martin McPhee, senior vice president of Cisco Consulting Services, which collaborated on the study. However, a survey of almost 1000 business leaders in 13 countries suggested that not all are prepared for the transition.

Almost half (45 per cent) of respondents were of the opinion that digital disruption does not merit board-level attention, with a similar figure (43 per cent) failing to acknowledge the risk that it poses to their business. Just a quarter (25 per cent) of business leaders described their approach to digital disruption as proactive. Nonetheless, threequarters (75 per cent) of respondents believe that digitalisation can be called a form of progress, 72 per cent reckon it improves value for customers and 66 per cent feel it empowers individuals.

Of the industries studied in the report, the tech sector showed the highest potential for disruption over the next halfdecade, with other datadriven markets media and entertainment, telecommunications, financial services, and retail close behind. The disruption itself will be caused by well-funded startups, according to DBT Center, as well as incumbent companies that take the digital opportunity by the horns. Michael Wade, director of the DBT Center, said: "The most successful disruptors employ what we refer to as 'combinatorial disruption,' in which multiple sources of value cost, experience, and platform are fused to create disruptive new business models and exponential gains."

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