How you know when your company is being disrupted

Reinvention and resilience are key to the success of any business. Look no further than the implosions of Borders Books, BlockBuster, Kodak, or any of dozens of other once seemingly impregnable or too-big-to-fail companies that have tanked in the past decade, to remind us that companies that fail to notice and adjust to change – and to see opportunities to innovate – are effectively digging their own graves.

So, amid today’s accelerating technological change and the resulting hyper-connectedness, how do we recognize when our own company is vulnerable – when we’re facing our own Kodak moment? I’ve pulled together the seven major disruptive forces that have overturned and redefined the way business is done today.

The Google Effect: The separation of humans and information

The last time you Googled something, did you stop and think, “Hmmm, I wonder if these results came from a database in Oregon, Georgia or Virginia, or maybe from The Netherlands or Australia?” Of course not. Through the Google Effect, information and physical location in our personal lives have been fully virtualized and dematerialized.

So why in many organizations are the two (often very expensively) still forced to be co-located?

The Skype Effect: Free communications, death of distance

Remember yesteryear, when the physical distance of a long-distance phone call really mattered? When a call of 10 miles was significantly cheaper than a call of 1,000 miles, and an overseas call was a true luxury? Today, internet -based communication platforms have cost and usage bases that are completely disconnected to distance; speaking to someone around the world via the internet is the same as calling across the street.

So why mandate that employees travel to their knowledge work, when instead the work can go to employees?

The Facebook Effect: The virtualization of human relationships

Fundamental to Facebook’s immense popularity is that it allows you to maintain and enhance personal relationships even without regular physical presence.

The same intimacy is available to corporations, where working relationships based on capability and mutual trust no longer need to be physically proximate. So why stick to the high-maintenance, time-consuming and costly methods of the past?

The LinkedIn Effect: The virtualization of specialized knowledge

LinkedIn allows us to map our professional networks, and then to quickly locate trusted expertise. Why can’t organizations work in the same manner? The LinkedIn Effect provides a map of our personal networks; when brought to business, this capability enables the virtualization of expertise, allowing the right person to be brought to the right task at the right time.

The Amazon Effect: The virtualization of customer experience

Amazon knows you better than the manager at your corner store. Yet, when was the last time you met anybody from Amazon? This virtualization of customer intimacy is led by (but not the sole domain of) new market leaders like Amazon, Netflix and Apple. Yet it is a viable option available to all organizations.

The Pandora Effect: Algorithms building customized products

“How did they know that?” If you’re a Pandora customer, you’ve probably asked that question. You provide Pandora with your favorite artist, or a few songs you like, and suddenly hours of music you truly enjoy is produced. It’s not magic; it’s Pandora’s algorithm at work.

This algorithm, finely honed by reviewing massive amounts of data, creates remarkably accurate musical taste profiles. In knowing just a few things about you – the first few dots if you will – the algorithm connects the rest of the dots to create customized play lists.

From such experiences, consumers are beginning to consider all their other business relationships: “If Pandora figured this out about me so quickly, why is my bank still so clueless? After going to the same ATM for 10 years, it still asks me what language I speak!”

iPhone Effect: The experience is more valuable than the physical product

Customer value is no longer confined to the physical manifestation of a product. Instead, it’s often found in the software. This was central to the recent transition in the mobile phone industry. Ten years ago mobile phone providers competed on hardware attributes – remember the famous Nokia ringtones, or the form factor of the Motorola flip-phone? That was the basis of competition.

Today, winning iPhone and Android models differentiate on the experience delivered chiefly by software. Most of the physical attributes of a mobile phone are now commodity. The experience has usurped the widget.

These seven effects are working together to alter the competitive fundamentals of many industries. With game changers like these, the cost of adhering to an industrial business model is significantly greater than moving to something new.

Malcolm Frank is Executive Vice President of Strategy and Marketing at Cognizant Technology Solutions, a global provider of IT, consulting and business process services based in Teaneck, N.J.

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