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Commentary


In the world of technology, a lot has happened in five years — especially when you consider that most of it has been clouded by economic uncertainty. When Lehman Brothers went bankrupt, 11 million iPhones had been sold. Today the figure has reached 400 million. In 2008, there were no Android apps, Spotify didn’t exist, and printers printed in two dimensions.

But it’s not just the rapid adoption of new digital technologies that impresses. It’s what they are being used for, and how they are transforming traditional sectors beyond recognition.

There’s no doubt that digital technology has made it easier for companies to respond more quickly, improve productivity, exercise more control over inventories, and boost efficiency. Yet, even as we see how effective cloud, social, mobile and analytics technologies can be in automating routine processes and turning vast amounts of data into actionable intelligence, these technologies are but a prelude to something more profound.

Companies are using digitally fueled technology to create new, visionary business models that are unlocking opportunities in entirely new industry segments, and opening doors to new customer markets. This is resulting in higher growth than would be possible by remaining tethered to traditional business models.

Recognizing the potential that digital can offer, many top executives are quickly moving beyond questioning how to get the most out of cloud and mobility, and asking bigger, broader questions, such as “How do I reinvent my company?” and “How do I become the leader in digital customer engagement in my industry?”

New research published by Accenture this week at the World Economic Forum in Davos, Switzerland, reveals not just how companies are open to new technologies, but more significantly, how they are changing their entire business and operating models on the back of them. While 64 percent of the C-level executives we surveyed expect their companies to continue to focus on growth within their current industry, almost as many — 60 percent — plan to pursue growth in, or in collaboration with, other sectors.

It is precisely by joining forces with once-distinct industries that is creating what we call digitally contestable markets. As companies from multiple sectors collaborate to provide new value and new customer experiences, the boundaries dividing these sectors are dissolving. Consumers are becoming less interested in which company or sector is providing these experiences and services. And we are finding that these new markets are offering higher growth than is being enjoyed within traditional sectors.

Collaboration between sectors often starts when digitally enabled companies find new life through enhancements that expand their products or services well beyond their originally intended use, which attracts new buyers in new industries.

One of them is Osakidetza, the public health system in the Basque region of Spain, which is using Microsoft Kinect devices to enable telemedicine treatment of chronic patients. Using the Kinect devices, patients are given new ways to experience medical care, and physical therapists can offer remote consultations and quantifiably gauge progress. Therapy sessions can be more frequent, more targeted and shorter, thus reducing costs, improving outcomes and reducing patients’ recovery times.

General Motors originally released its OnStar connected-car service to provide access to emergency services, vehicle diagnostics and directions. A little more than a year ago, it formed a partnership with peer-to-peer car sharing start-up RelayRides. Users can now use this service to rent their vehicles, setting the rental price and allowing lessees to use a mobile app to reserve the car and even unlock and lock the door.

As life-saving, cost-reducing digital applications — from home health-care monitoring to the use of electronic medical records — gain traction across the entire healthcare spectrum, it’s easy to see how digital technology is expanding traditional health care into a broader market that is digitally contested by companies ranging from industries as diverse as software, entertainment and specialist engineering.

We’re also seeing major shifts in the way traditional companies are doing business as they become more digitally enabled themselves. In addition to offering its customers many online buying and service options, 95-year-old British grocery giant Tesco bought a majority stake two years ago in the U.K.’s largest video-streaming service, Blinkbox, and now offers customers movies on demand and other home-entertainment services. And in 2012, Tesco began selling its customers tablets, following its acquisition of digital book platform provider Mobcast.

These companies are doing two things. First, they are embedding digital technology within every aspect of the business, connecting the company with digitally-enabled suppliers and customers — everyone who touches, buys or services the company’s products. And they are opening themselves up to new flexible ventures and partnerships with other industry sectors. The digital enablement of companies and supply chains facilitates this cross-sector collaboration.

It has been said that recent waves of technology are not as fundamental as those in preceding decades, such as the mobile phone or the Internet. I dispute that. In fact, today’s convergence of existing technologies and the ability to harness large volumes of data are having a transformative effect. We are beginning to see that as some companies struggle for their very survival, others enjoy new leases on life.

In some ways, big is the next big thing. Large companies are going digital in big ways, moving from being digitally disrupted to become the digital disrupters. No longer are they reacting primarily to changes brought on by startups or technology giants like Facebook and Google. Now they are the ones incorporating digital technologies, innovating in surprising ways. Large companies are driving disruption in their own industries, even entering new ones. As a result, we will see entire industry sectors reform and customer markets being remade. And the companies that succeed will be those that not only implement new technologies, but demonstrate the courage to reinvent themselves and the products and services they offer.

As chief technology officer and managing director of the Accenture’s Technology Strategy and Innovation group, Paul Daugherty is responsible for Accenture’s technology innovation and growth agenda. He oversees Accenture Technology Labs, Accenture’s Cloud and Mobility businesses, and groups that incubate emerging technology capabilities. Reach him @pauldaugh.



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