Disruption Communications: Treating Technology-Driven Industry Change As An Opportunity, Not A Threat
November 7, 2016
How Is It That The World’s Five Most Valuable Businesses Are All Technology Companies?
Ten years ago, the world’s largest companies were a mix of industrial conglomerates, oil & gas companies and global banks. A shift is occurring, where businesses in all industries are under pressure from investors to innovate, to differentiate and in some cases to survive by adopting disruptive technologies.
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Amid this momentous shift, management and Boards of all companies will be challenged on how they are addressing technology-driven disruption to their industries. FTI Consulting surveyed global institutional investors, with combined total assets under management (AUM) of over $10 trillion, to ask what investors want to see from companies when approaching the topic of technology adoption and wide-spread disruption across industries.
85% of investors want businesses to treat technology-driven change in their industry as an opportunity, rather than a threat.
The Financial Services industry was found to be most susceptible to technological change, with 79% of investors believing the sector will be disrupted by technology over the next 5 years. Other industries expected to face further disruption include Media (66%), Retail (64%), Healthcare (57%), Professional Services (46%) and Energy (45%).
73% of investors think technology has had a positive effect on the companies they are invested in, compared to 27% seeing a negative impact.
77% think that their portfolio companies are not acting quick enough to benefit from disruptive or enabling technologies.
So What Do Investors Want To See Businesses Doing In An Era Of Disruption?
Assess the changing landscape. 83% of investors surveyed strongly believe that companies should be more vigilant monitoring the potential impact of technology on their industry, with 69% of investors believing that their portfolio companies are underprepared and do not fully understand the potential for disruption.
Invest in R&D. Investors highlighted the importance of R&D with 46% advising companies to build R&D centres to address disruptive technological changes affecting their industry, and a further 35% stressing the importance of collaboration with other companies – namely major technology brands – on new projects.
Acquire strategic technology capabilities. Don’t acquire scale to see-off a disruptive threat. 43% of investors suggested that large businesses should be looking to acquire the technology disruptors affecting their industry. That compares with just 6% of investors who thought it would be wise for large businesses to consolidate for market share gains to see-off technological challenges.
Hire senior tech talent. 52% of investors believe it would be particularly effective to hire a technology leader to the executive team or Board of Directors to address the potential impact of disruptive technology on the company and the industry.
Train existing employees in new tools and technologies. 57% of investors think training existing employees is a particularly important measure large business should undertake to prepare for disruption. Importantly, 78% advised against trying to attract new techy employees through unconventional working practices or staff perks.
Demonstrate Skills And Forget The Frills
What resonates with investors when communicating an approach to disruption?