The rise of the incumbent disruptors

We are entering a new era for business where companies with a past have a built-in advantage not easily replicated or leapfrogged by newcomers. To gain an edge, they're harnessing data and technology.
13 March 2018

Enterprises own the data and will lead innovations | Source: Shutterstock

The competitive advantage that startups have over large corporations is this: they’re innovative and agile. Up until now, that’s been enough to lead the disruption necessary to transform the world.

But the next stage of disruption needs more than just creativity and agility. It needs better application of today’s technologies to solve tomorrow’s problems – those that have been consistently haunting the human race.

According to a new study, Incumbents Strike Back: Insights from the Global C-suite Study, by the IBM Institute for Business Value that surveyed 12,800 C-suite executives (CXOs) across all industries and 110 geographies, believes that this is the age of incumbent disruptors – and it’s the rise of a new era.

An era where existing enterprises, those with access to the bulk of the data in the market – current and historic, will leverage technology to analyze and study them, and come up with solutions that exemplify disruptive innovation.

In fact, 72 percent of surveyed CXOs claimed that incumbent organizations – rather than new entrants – are already leading the disruption in their industry. By comparison, only 22 percent say smaller companies and start-ups are leading disruptive change.

The study found that 57 percent of the organizations with a strategy to disrupt are builders or owners of a platform business model.

By facilitating direct interactions between consumers and producers, enterprises are able to gather all the data they need – to dominate their market segments and scale new ones.

Since companies already own 80 percent of the data in the world, they’re ahead of startups from the get-go. All the deep knowledge, experience, and expertise locked in their data can be harnessed to build the ideal solutions.

According to IBM, these incumbents are equipped with strategies for developing digital skills, innovator talent, and platform-based business models. They’re also partnering with organizations in their value chain to share physical assets and people skills.

Incumbents turn their expertise in managing infrastructure and assets into a significant disruptive advantage, especially by investing in technologies like blockchain and Internet of Things (IoT) that facilitate data sharing.

As a result, incumbents that outperform their peers will continue to rapidly prototype and will reward both fast failure and successful innovation.

However, traditional businesses also need to remember that if they don’t have the right attitude and if they’re not agile they –  might lose their edge and maybe even their business – overnight.

The IBM study revealed that the most forward-thinking CxOs are repositioning their vision, culture, and operations to foster agile enterprises and support collaboration and experimentation.

These progressive leaders are shifting from top-down control toward autonomy, liberating employees to shape their enterprise’s strategic direction. And they’re creating a more fluid work structure, enabling cross-functional teams to form and move quickly.

Organizations that value agility are willing to reward experimentation and rapid responses to market changes.

They trust employees’ ideas and each team’s course of action. And they’re not afraid to let their teams see their views evolve as they move forward. By embracing agility, they get closer to the people who matter most: their customers. And that’s how they win in the long run.