Digital Disruption – Opportunities for Innovation and Growth
Speech by the Reserve Bank of Australia’s Chief Information Officer to the Committee for Economic Development of Australia (CEDA) Adjusting Australia Series, June 2014
Traditional business models across many sectors are being disrupted by competitors offering new digital technologies and applying digital technologies in new ways. Earlier this year (June 2014), in a speech to the Committee for Economic Development of Australia, the RBA’s Chief Information Officer, Sarv Girn, warned executives and directors about the risk of not doing anything in response to digital disruption.
Mr Girn described the speed of change in the business environment as a consequence of digital technology as “unprecedented and in most cases unpredictable”. He stated:
“the way you deal with digital disruption is more critical now than ever before; do you see it as a risky threat or an innovation opportunity, and what questions must you ask to ensure you don’t become extinct? Surviving with a status quo mindset may not be enough when challenger business models are thriving in this digital age.”
Mr Girn suggests three “golden rules” for executives and directors to consider when it comes to digital disruption:
- Have a clear and conscious strategy regarding your digital direction.
- Create a culture that fosters innovation in your organisation.
- Determine the collaborations that you will need to be successful.
A recent article in the Company Director Magazine titled “Proceed with caution” considers technological disruption from a board perspective. The article outlines some approaches that boards of traditional businesses may take to tackle disruption. For example, a key advantage that disruptors enjoy over traditional businesses is greater freedom and flexibility. Accordingly, boards need to consider how to bring a culture of greater flexibility into traditional businesses. A strategic question that might arise is whether a traditional business should try to re-invent itself or, alternatively, look for a mutually beneficial way to partner with a disruptive business.
The article also considers some of the common characteristics of boards of disruptive technology-based companies, as well as some of the challenges that those boards face.