A New Way to Look at Digital Disruption

In a recent report on the current state of digital disruption, the Global Center for Digital Business Transformation (the DBT Center), a partnership between leading IT firm Cisco and renowned Swiss business school IMD, offers a powerful new conceptual image for thinking about the way in which digital disruption is redefining industries and reshaping our global economy.

The DBT Center report describes the functioning and impact of digital disruption as a vortex; specifically, that industries inexorably move toward a “digital center,” which represents the greatest possible extent of digitization of business models, offerings, and value chains. DBT Center researchers first imagined the “digital vortex” when conducting research to determine which industries are particularly vulnerable to disruption; as they unpacked the image further, they found three main features of vortices especially useful in helping to understand digital disruption.

  1. Relentless pull

whirlpool water funnelWhen we think of a vortex that occurs in nature, such as a whirlpool, we get a clear and striking visual image of how objects are drawn relentlessly toward its center through the rotational force it exerts (we can also imagine a child’s toy boat that is drawn toward the bathtub drain as soon as the plug is pulled). In terms of digital disruption, we can think of the heart of the vortex as the state of maximum digitization described above; in other words, a state that the DBT Center report’s authors refer to as “the new normal” (however, it’s important to note that this center is not a static end state, but rather a state of being that is characterized by rapid and constant change). This “digital center” exerts a powerful pressure on all businesses and industries in the sphere of its influence. Essentially, as some businesses successfully transform themselves into digitized enterprises, their contemporaries are forced to follow suit as best they can in order to remain competitive, and thus all players in the landscape move inevitably together toward the center of the vortex.

Coupled with this concept of relentless pull is the idea of speed. In a natural vortex, an object’s velocity will increase exponentially as it nears the center; in the digital vortex, enterprises often find that, while the adoption of early or basic digital elements can be a slow and cumbersome process, they get better (and faster) at digitizing the more they do it.

  1. Chaotic patterns

What makes digital disruption particularly challenging for many enterprises to understand, to say nothing of developing their own response and strategy for how to handle disruption, is that the landscape of digital disruption is so chaotic and complex. Things evolve and change so rapidly and incongruently that it can be difficult to discern or identify any patterns or trends. Moreover, without an understanding of what the “laws of nature” are, many companies are at a loss of how to move forward.

Here again, the image of the vortex serves as a useful symbol. Vortices are, by nature, highly chaotic. As objects caught within a vortex move from the periphery to the center, the path they travel is by no means uniform or predictable; rather, an object at the edge one moment can be pulled directly into the center, then shot back to somewhere in the middle. However, in spite of this chaos, all objects are still obeying the basic rule of movement of a vortex, which is that everything converges on the center. In this way, the vortex image helps to provide useful context for the progression of digital disruption—even though it may not be moving forward at a pace or along a trajectory we expect, digital disruption is still proceeding according to the overarching principle of central convergence. The fact that the movement patterns of individual enterprises (objects) seem random does not therefore mean that there is no fundamental rule at work.

  1. Collisions and recombinations

goats collidingAs objects collide with one another in the swirling environment of a vortex, they may break apart and recombine during their progress towards the center. In digital disruption terms, the DBT Center report’s authors describe this as “combinatorial disruption.” The idea at work here is that, as enterprises move toward the digital center, they digitize whatever aspects of their business they can, shedding the physical components that inhibit competitive advantage. These digital value components can then be “repackaged” into disruptive business models that bring together different types of previously discrete capabilities and find new ways of delivering customer value.

Combinatorial disruption builds on the previous concept of “combinatorial innovation,” which describes how the historical standardization and convergence of technology has facilitated technological combinations and recombinations, which in turn have given rise to new inventions. Combinatorial disruption takes this one step further: the recombination of constituent digital parts leads not only to new technologies but to new business models, another—equally important—type of breakthrough.