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Life in the Digital Vortex

The State of Digital Disruption in 2017

A peripheral concern for most firms in 2015, digital disruption now impacts half of companies globally - and has become a top-of-mind issue at the board level. 

Our latest research uncovered these and many other important insights about how the state of disruption across industries has changed since 2015. This new study from the Global Center for Digital Business Transformation (DBT Center), an IMD and Cisco initiative, draws on survey data from hundreds of executives, along with quantitative data, such as where venture capitalists are placing their bets.

The results show large differences among industries in how they are experiencing the effects of disruption in the “Digital Vortex.”

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Digital Vortex
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What a difference two years makes

The Digital Vortex represents the inevitable movement of industries toward a digital center in which business models and value chains are digitized to the maximum extent.

The force of the vortex separates physical and digital sources of value, yielding “components” that can be readily combined to create new disruptions and blur the lines between industries.

Industries closest to the center of the Vortex face the most substantial disruption, while those around the edges feel less immediate impact. As a group, all industries have moved closer to the center, where the velocity and magnitude of change are the highest; no industry has retreated in the Vortex (i.e., experienced less disruption).

The No. 1 spot belongs to the media and entertainment industry.

The media and entertainment industry has seen massive disruption across print media, social media, TV, music, and movies. The five most vulnerable industries – media and entertainment, technology products and services, retail, financial services, and telecommunications – remained unchanged in the new study.

Digital disruption is no longer an intangible event that may occur at some undefined point in the future. Roughly half of the surveyed executives report that digital disruption is already happening in meaningful terms in their industries, compared with only 15 percent in 2015 (see Figure below). Digitally driven market change is also quickly gaining the attention of C-level executives. In 2015, digital disruption was not deemed worthy of board-level attention in about 45 percent of companies. In 2017, only 17 percent feel this way.

Organizations’ willingness to respond to digital disruption, however, is improving, as shown in Figure below. In 2015, only 25 percent of executives claimed their organizations were actively responding to digital disruption. This number jumped to 31 percent in 2017. Nevertheless, 40 percent still feel their leaders do not understand the threat, or are responding inappropriately, only a slight improvement from 2015.

About this report

Over the past several months, the Global Center for Digital Business Transformation surveyed 636 business leaders in 44 countries across 14 industries to understand their attitudes and behaviors toward digital disruption. This data was supplemented by third-party data sources from CB Insights and The Wall Street Journal.

The ranking was based on a composite of four measures:

  1. Investment: where venture capitalists and others are putting their money, by industry
  2. Timing: when, and at what rate, digital disruption is likely to occur, by industry
  3. Means: the strength of barriers to entry for digital disruptors, by industry
  4. Impact: the potential magnitude of disruption, by industry

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