RIPE FOR DISRUPTION

RIPE FOR

U I

O

by Laurie McLaughlin

Blockbuster and Borders are dead. Amazon’s market cap exceeds Walmart’s. Apple® is the most valuable company in the world. Yet, many companies still don’t see the need to embrace the digital age.

Now that we are well into the “digital age,” it may come as a surprise that many CIOs still say their companies do not view digital transformation as critical to their businesses. In fact, 44 percent of CIOs polled in a recent survey held that view.

Vijay Gurbaxani, founding director of the Center for Digital Transformation and Taco Bell Professor of Business and Computer Science, who conducted the survey and co-authored the report with Debora Dunkle, director of research at the Center.

VISION COMES FROM THE TOP NEW PLAYERS DISRUPT THE OLD GUARD

While we can learn from the misfortunes of others, according believe that digital transformation is a critical mandate.

coming from the top of the organization?

Is the CEO involved, knowledgeable and an active champion of transformative digital initiatives?

the CEO down, embracing innovation and risk-taking? There are plenty of well-established industries that did not prepare for the digital age. For example, the app-based rideshare service Uber has traditional taxi services in a jam. “Uber is only possible because of widespread distribution of “Some companies smartphones. Uber saw a huge opportunity don’t see an and built a sophisticated platform for riders and drivers to connect. Their ingenuity immediate threat, and insight opened the door to an entirely but disruption is new world,” said Gurbaxani. “A very young company, Uber is now reported to be doing often closer than they think.” in San Francisco alone. Taxicab revenues,

the most skilled talent? million.” What this demonstrates is that there was massive demand for service that

leveraging an ecosystem? GE, for example, has partnered with Frost Data Capital, an incubator and venture capital years. These companies will help GE meet its business must evolve,” said Gurbaxani. “Very few companies can go it alone.” the transportation sector. In a similar fashion, Airbnb, an online service, are challenging and changing the established hotel and supermarket industries, respectively. These sharing-economy companies are taking the under-utilized capacity—of our cars

Vijay Gurbaxani, Taco Bell Endowed Professor of Information Systems and Computer Science; Director of the Center for Digital Transformation

to catch up? Gurbaxani said there are many possible reasons. is often closer than they think. Take the slow-moving health care sector. Leap, a new healthcare company, offers house calls by physicians within an hour for $99. Who would have predicted digital initiatives but business reinvention. Third, the dynamics of competition are different. Traditional companies are used to perfecting a product before putting it on the market. Within the tech world, products and services are frequently released when they are minimally viable and improved later. “There is often

THE RISK-AVERSE MAY BE LEFT BEHIND

Established corporate cultures can squash innovation and risk-takers—especially if they put the current cash cows at risk. the fax machine, despite the many and various articles, statistics and cautionary tales their business leadership consumes. This reluctance is shaped by a number of factors:

leadership and stockholders are reluctant to cannibalize digital for uncertain future gains. example, traditional sales channel managers were hostile to online sales, because it cost them sales and reduced commissions,” said Gurbaxani.

on the cycle of technological innovation, no matter how building a self-driving car,” said Gurbaxani. “How many disrupting themselves?”

Vijay Gurbaxani is the Taco Bell Endowed professor of Information Systems and Computer Science and director of the Center for Digital Transformation (CDT) at The Paul Merage School of Business at the University of Californina, Irvine. His research, teaching and consulting interests are at the nexus of business strategy and information technology (IT). He focuses on analyzing how emerging information technologies enable business model innovation, on developing and evaluating business-driven strategies for the sourcing of information services, and on valuing IT investment. His approach is distinctive in its use of economic principles as the lens with which to analyze strategic

The study, “Time for a Reboot,” was issued at the “Road to Reinvention: Leadership in the Digital Age” conference presented by the Merage School Center for Digital Transformation in March 2015. The respondents were anonymous and represented a cross-section of industries. To view the report, visit centerfordigitaltransformation.org/assets/Time-For-a-Reboot-Digital-

Readiness-Survey-Report-from-Center-for-Digital-Transformation-at-UC-

Irvine.pdf.

THE DIGITAL JOURNEY CONTINUES

“Digital technologies are fundamentally changing the underlying economics of all industries. Businesses are facing new and unexpected competition and must continuously reinvent themselves,” said Vijay Gurbaxani, director for the Merage School Center for Digital Transformation (CDT). “This transition will require a new mindset. Smart business leaders understand this and are moving ahead of their competitors. Our evolving digital world.”

conference, Road to Reinvention: Leadership in the Digital Age. Structured as a one-day forum, the conference provided a sophisticated understanding of the key elements in a senior management agenda for business reinvention and included guests from companies like Marriott, Walmart, United Healthcare, Edmunds, Trulia, Cognizant, Instacart, OpenTable, Digital Transformation, were provided to conference participants.

to undertake a profound and systematic rethinking of how their companies will compete,” said Gurbaxani. “Through our annual signature conference, we will continue to examine how businesses can leverage the different economics of an evolving digital world and build successful digital enterprises.” The second signature Road to Reinvention conference is slated for

The Center for Digital Transformation works to advance the competitiveness and productivity of businesses in the digital economy. Guided by a distinguished and talented external advisory board, we provide executives with a better understanding of the dynamics of the digital revolution and what these forces mean for their industries and organizations. For more information, go to merage.uci.edu/go/cdt.