How do you survive a digital extinction level event? The average life expectancy of a Fortune 500 company has gone down from 75 years in the mid 20th century, to just 15 years today. At the current churn rate, about half of S&P 500 companies will be replaced over the next ten years. Why is this happening?
There is a global race afoot, amongst corporations desperate to avoid becoming digital dodos, to digitally transform. Investment in digital has been gathering pace for twenty years. Yet the vast majority of companies that have attempted transformation have achieved little.
In 2018 it was estimated that companies globally spent $1.2 Trillion on attempting to digitally transform their efforts and that figure keeps rising. The digitalization of the economy is being rapidly accelerated.
A Failure to Adapt
Corporations that refuse to adapt to meet the needs of the new digital world are doomed. This has been true of Blockbuster and Blackberry and will be true of corporations that fail to see the increasing digitalization of the economy. Their business models were steamrolled by more forward-thinking companies like Netflix and Samsung, who were willing to adapt.
“The failure of corporations to embrace technological advances as quickly as consumers has, in the past, led to what C3.ai CEO Tom Siebel calls a “mass extinction event”—the demise of businesses that couldn’t catch up to new demands in time.”(Fortune)
Even those companies that respond to market trends often fail to approach the digital world with a clear purpose. “Research shows that 70% of complex, large-scale change programs don’t reach their stated goals”(McKinsey).
To keep up with the times you have to do more than think differently. You have to act.
So how do you avoid extinction? “Many companies have taken a piecemeal, tentative approach to adopting digital technologies that might even be called “transformation theater.”(Fortune). But real substantive change is the only way to avoid a digital catastrophe.
Make convenience and cybersecurity a priority. The most successful firms know that investing in digital technologies is the best way to make their business efficient and safe. “86% of high-growth companies believe that having strong cyber security enables new business opportunities, compared to 57% of companies whose revenue shrank”(Vodafone). All businesses that hope to avoid digital extinction must shore up their cybersecurity and automate administrative processes.
Companies that will avoid the digital extinction are those who are taking their digital responsibilities seriously. “Digital access, digital availability and an ‘anywhere at anytime’ mentality must be the mantra of any organisation” (Fintechmagazine). You have to take a proactive approach in order to future-proof your organisation.
“If you’re running or working for a private equity firm and you haven’t taken bold steps to integrate the latest digital tools and data and analytics (D&A) technology into your business, you may be working with a built-in expiration date” – (KPMG)
The digital extinction trend underpins our new investment strategy. We recognise that that future is digital. We know that if you don’t adapt quickly you will be left behind.