Study: Nearly two-thirds of large firms face high levels of disruption

A new study from tech giant Accenture has found that industry disruption is already a reality for most large companies globally.The study showed that, rather than being a random event beyond business leaders’ control, disruption has a pattern that can be identified, understood, and prepared for.

The study analyzed more than 3,600 companies with annual revenues of at least $100 million in 82 countries along two dimensions: current level of disruption, and susceptibility to future disruption.

Among the key findings: Almost two-thirds (63 percent) of companies currently face high levels of disruption, and two-fifths (44 percent) show severe signs of susceptibility to future disruption.

Industry disruption is already a daily reality for the majority of companies globally, according to Accenture’s new “disruptability index”

As part of the research, Accenture developed a “disruptability index” by dissecting disruption into its key components. The researchers took into account the presence and market penetration of disruptor companies as well as incumbents’ financial performance, operational efficiency, commitment to innovation, and defenses against attack.

Accenture said business leaders can use the index to understand where their industry is positioned and why. It allows them to identify risks and opportunities – and then prepare the right strategic response, it added.

Accenture applied the index to position companies in 20 industry sectors and 98 sub-segments across four periods of disruption:

• Durability: Disruption is evident but not life-threatening; incumbents still enjoy structural advantages and deliver consistent performance. One-fifth (19 percent) of companies — including those in the automotive retail and supply, alcoholic beverage and diversified chemicals industries — fall into this period.

• Vulnerability: The current level of disruption is moderate, but incumbents are susceptible to future disruption, due to structural productivity challenges such as high labor costs. One-fifth (19 percent) of companies — including those in the insurance and healthcare industries and the convenience retail sector — fall into this period.

• Volatility: Prominence of violent, sudden disruption; traditional strengths have become weaknesses. Companies in this period (25 percent of companies studied) include those in the consumer technology, diversified banking, advertising and transportation services industries.

• Viability: Disruption is a constant; sources of competitive advantage are often short-lived, as new disruptors consistently emerge. More than one-third (37 percent) of companies — including software and platform providers; telecommunications, media and high-tech companies; and automotive manufacturers — fall into this period.

“Disruption is continual and inevitable — but it’s also predictable,” said Omar Abbosh, Accenture’s chief strategy officer. “Business leaders need to determine where their company is positioned in this disruption landscape and the likely speed of change. The more clearly they see what’s changing around them, the better they can predict and identify opportunities to create value from innovation for their business and rotate to the ‘new’.”

Comment on this post