Digital Disruption Is Harder to Face Than You Think

10/01/2012 02:00 pm ET | Updated Dec 01, 2012

We've all heard the word disruption. Most of us think we know what that is. And we've all heard the word digital. Most of us think we know what that is, too. But put them together -- digital disruption -- and they add up to much more than the mere sum of their parts. Digital disruption, when properly understood, should terrify you.

In short, you should think of digital disruption not just as disruption magnified or even disruption squared. Think of it as disruption accelerated at several orders of magnitude. Three sources of digital power -- the prevalence of free tools and services that enable disruptors to rapidly build products and services, the rise of digital platforms that are easily exploited by aspiring competitors from all directions, and the burgeoning class of digital consumers ready to experiment with new services -- have combined to unleash a disruptive force that will completely alter every business on the planet.

I speak about digital disruption somewhere on the planet nearly every week and most of those meetings start well because people think they know what digital disruption is and they think they are prepared for it. But they don't.

It's not their fault, most of them still hear the word disruption and think of the classic case studies, you know, where IBM didn't see the shift from mainframes to PCs and therefore was disrupted or where the movie theater business was disrupted by TV in the 1950s. But if you live solely by the lessons taught by those disruption case studies, you are not going to be prepared for digital disruption, because you won't see it coming.

Or if you think you see it coming, you won't realize just what you're seeing and you won't be prepared for it. That's because digital disruptors don't have to replace your entire business in order to render you obsolete. Lose It! -- a simple app for keeping track of daily calorie consumption -- didn't have to create frozen meals and an elaborate point system for prescribing food choices to disrupt Weight Watchers. It merely steals the attention of the dieter away from the larger offerings of the bigger weight loss services, engaging the consumer more often, for more minutes per day, at significantly lower cost -- free, in this case. If Weight Watchers only had to compete with Lose It!, that would be one thing, but it also competes with hundreds of other little attention snatchers, apps and services that help you achieve the goal that used to be Weight Watchers' specialty, from apps like RunKeeper that track your runs to gadgets like the Fitbit that count the steps you take and wirelessly transmit your activity levels back to a website or app to keep you motivated.

The same thing is happening in every industry we work with, from financial services to healthcare to heavy industry. Even a company that produces construction materials is subject to disruption from apps and services that help commercial construction managers track big projects from start to finish, relegating the sourcing and delivery of materials to a mere feature of the app itself.

We conducted a global survey of industry executives through the early part of 2012 to see just how aware executives around the world were that digital was about to disrupt them. It turns out that 89 percent of them agree that digital will change their industries and 67 percent are actually excited about the prospect. But the real rub comes when you ask them how prepared they are to deal with digital disruption. Just 33 percent believe their company has the policies and practices that will enable it to adapt.

At first glance, they are not in denial about the power of digital disruption to change their business and they are refreshingly realistic about how hard a task it will be to adapt. Or are they? Unfortunately for these same organizations, the real truth reveals itself when we separate our respondents based on title -- those working at the VP level or above compared to those who work for them. For example, in response to the question about whether or not the company has the policies and practices necessary to address digital disruption, 49 percent of senior executives believe their company has what it takes. But the people actually doing the work, those living by the policies and dealing with the practices, are much less optimistic -- just 24 percent of them agree the company has the right policies in place.

So while most of us think we know what digital disruption means because we live digital lives and we've read all about disruption, most of us -- especially those of us at the top of the organization -- are blithely unaware of just how powerful digital disruption is and how hard it will be to compete with it.