Industry Incumbents make a comeback in the Age of Disruption
Whatever happened to disruption?
Here’s a quick question.
Not too long ago, ‘disruption’ was THE buzz word and the ‘uberization of everything’ was a massive threat to incumbents. What do you think came of those predictions?
Let’s look deeper! IBM found that in the showdown between new entrants and industry incumbents, 72% of C-suite executives report that innovative industry incumbents lead the disruption in their industry.
In fact, incumbents in industries like financial services, known for higher than average turmoil and a plethora of startups in the space, are known to have been the most innovative and are responsible for a big chunk of change. A prime example of this is Charles Schwab. They dealt with robo-adviser start-ups by offering their very own robo-adviser services free of cost.
Why incumbents are striking back
With ‘reinventors’ standing out and outperforming in terms of growth, innovation and profitability, it is clear that innovative incumbents are more of a competitive threat than newbies, no matter what the space!
Here are a few reasons why,
- The sheer volume of data they possess is a potential gold-mine of business opportunities and their best bet against disruptive companies.
- Incumbents enjoy the advantage of having valuable physical assets including infrastructure at their disposal.
- With deep pockets and the ability to absorb short-term setbacks, the risk appetite of incumbents is much healthier and they often must bear shorter term consequences in bearish times. Deeper pockets also mean that giants can simply acquire a start-up and join forces instead of competing against them!
- Incumbents also have well backed teams focussed on developing a vision and innovating.
- Another disruptive advantage is their co-creation potential. With trust built over generations and a long list of existing clients, incumbents can truly create changes that win people over by orchestrating compelling customer experiences.
- They possess the experience of having been through periods of change, the ability to restructure their organizations and leverage the best talent at their disposal by redirecting their efforts.
It is amply clear why incumbents have a competitive advantage even in today’s world, but the bottom-line is that the phase where giants were failing because of born-digital companies was just that, a phase. Incumbents have gotten wiser and are striking back like never before.
Software 4.0 for Industry 4.0
But what is this path of least resistance and substantial advancement that incumbents must tread to stay one step ahead in a world where survival and success often mean the same thing?
The Software 4.0 methodology was developed to answer this very question.
With Software being the key differentiator, it becomes a mechanism through which innovative incumbents are able to tap into their data capital. Innovators have to vastly increase their data capture, retention, enrichment, and consumption capability. They must exercise both sides of their brain and perform both modes of their bi-modal IT operation. There have to be operational efficiencies that focus on improving business-as-usual and provide space for business transformation experiments. This reimagination of technology and data are two components of #Software4dot0.
Enterprise and consumer applications should be able to collect data even when there is no current envisioned usage for them. We need to have catchment areas (e.g. data lakes) whereupon we can perform experiments. The results of the experiments (e.g. new model of operation) should be fed back’ into the applications and infrastructure. This fast changing environment has to be met with twin coping mechanisms: more human brain power and more machine learning. We can broaden the base of human capability by democratizing software creation and insight creation to a wider audience. Many incumbents (innovative and otherwise) are incorporating AI and machine learning into their arsenal.
With Software 4.0, software finds its way to all kinds of places like devices and services; into traditional and mixed reality models. Software 4.0 is software designed for use in the age of industry 4.0. The 4th industrial revolution simply cannot have the biggest players using outdated tech that doesn’t fully utilize and leverage data, devices and opportunity.
Let’s talk about Software 4.0
Software 4.0 is about mastering the “How” of a software driven business and inspires Persistent Systems’ approach towards working with customers on their digital adoption journeys.
Software product engineering today is continuous by design and is fundamentally different from IT services in how teams are formed or managed. Software and technology businesses are constantly shifting their attention between the big picture of continuous product innovation or design and the details of technology architecture, integrations, and quality to reach the next step of advancement before anyone else in the market.
Software 4.0 shows the way we can achieve the goals of continuous transformation– especially with multi-generation technology companies across industries who are becoming software driven businesses and are giving new entrants a run for their money!
Want to learn more about how our Software 4.0 methodology is paving the way for industry giants to reclaim their share of the market and their space on front-page news? Let’s talk!