According to Jennifer S. Banner, CEO of Schaad Companies LLC, and a board member of BB&T Corp. and the Federal Reserve Bank of Atlanta, digital disruption is one of the “squeaky wheels” in corporate board rooms.
Banner said banks are increasingly concerned with software companies like PayPal, Venmo and Simple that are disrupting financial services with new digital business models. “When it comes to business models, nostalgia is dangerous,” she noted.
Echoing this sentiment, Christopher Perretta, EVP & CIO of State Street Corporation, shared how competition is no longer limited to traditional places. Thanks to digital disruption, he said, “new competitors are coming out of left field.”
— Mendix (@Mendix) May 20, 2015
Research: Digital Disruption Threatens One-Third of Revenues
New research revealed by MIT’s Center for Information Systems Research (CISR) at the Symposium puts the threat of digital disruption in stark business context. According to the study, board directors estimate that 32% of revenue is at risk over the next five years due to digital disruption.
One panelist went so far as to suggest that companies won’t exist in 10 years if they focus only on “traditional products.” The way forward, he suggested, is to offer products and related services enabled by digital technologies.
— Digital McKinsey (@DigitalMcKinsey) May 20, 2015
Every Company is Now a Software Company
And here we have the double-edged sword that is digital: for as many companies that see it as a threat, there are just as many, if not more, that view it as an opportunity. Speaking about the latter, George Westerman, Research Scientist for the MIT Center for Digital Business, said “Digital masters don’t see technology as something to adopt. They see it as an opportunity to transform their business.”
In order to capitalize on this opportunity, leaders must rethink how they see their companies and become more like the innovative startups threatening their very existence. “Regardless of industry, every company is now a software company,” said Mendix CEO Derek Roos. “Successful companies are putting software at the heart of their business and making it the differentiating factor.”
— MIT CIO Symposium (@mitcio) May 20, 2015
126-Year-Old Spice Company McCormick Spawns an Innovative Tech Startup
You might not expect a 126-year-old spice company to lead the charge in becoming a software company, but that’s exactly what McCormick has done, according to Jerry Wolfe, CEO of Vivanda.
Looking to better engage online consumers, McCormick created a new digital service called FlavorPrint. The food equivalent of Pandora’s Music Genome Project, FlavorPrint draws from extensive food and sensory science data to provide consumers with individual FlavorPrint profiles and personalized recipe recommendations.
The initiative was so successful that the technology was spun out of McCormick as a new startup: Vivanda.
Digital Transformation Requires Unprecedented IT-Business Collaboration
At the end of the day, it was clear from the MIT Sloan CIO Symposium that successful digital transformation requires new approaches plus an unprecedented level of collaboration between IT and the business.
“Digital transformation can’t be an IT issue only,” said Roos. “You can’t just take existing IT and decide to go fast.”
Read the rest of the posts in this series: