For the past few decades, digital technologies have been systematically transforming one industry after another. The transformations have generally proceeded along three different stages. First comes the use of IT to improve the productivity and quality of production-oriented, back-end processes. Distribution comes next, leveraging the universal reach and connectivity of the Internet over the past 20 years. The transformation then reaches a tipping point when technology radically changes the user experience, - as has happened with the rise of smartphones over the past decade, - leading to a fundamental disruption of the industry and its business models.
While this digital disruption journey is ultimately inevitable, the pace varies widely across industries. The IT industry has been the most disrupted, - often by its own digital creations in a kind of sorcerer’s apprentice scenario. Over my long career, I’ve seen many once powerful IT companies done in by technology and market changes, and either disappear altogether or become shadows of their former selves.
Beyond IT, few industries have felt the impact of digital forces like media. Everything seems to be changing at once, from the way content is produced and delivered, to the sources of revenue and profits. In less than two decades, the global recorded music industry has lost over half its revenues, while the drop in newspaper advertising revenue in the US has been even steeper. Retail has also been undergoing major changes with the rise of e-commerce, as has telecommunications with the transition to mobile phones and wireless data.
How about the banking industry, which has long been a major user of information technologies, - including back- and front-office automation, ATM’s, Internet banking, data-driven risk management, fraud detection, and mobile financial apps?