Six common shifts resulting from digital disruption across industries.

1. Customer expectations are rising for a better experience, necessitating a radical relook at the existing offerings and processes that serve them: FAANGs have completely changed consumers’ experience, whose expectations from other industries have also changed as a result. In a McKinsey survey, 80 percent of customers said that they want a Netflix-style experience everywhere.
2. Disintermediation in industries as direct channels to end-customers (D2C) are gaining higher share: We have already seen the biggest shift in the media and entertainment, and retail sectors with Netflix and Amazon, respectively. Many other sectors are also experiencing such disintermediation; for instance, the payments, travel and hospitality sectors. The Direct-to-Consumer Purchase Intent Index has forecast that more than 80 per cent of end- consumers are expected to make at least one purchase through a D2C brand within the next five years.
3. Value chains across industries are also changing as boundaries are blurring: Digital giants like Google and Tencent today have multiple businesses spanning several verticals. They have been able to enter many new areas because of their customer access and/or data and technology capabilities. This is forcing traditional enterprises to defend their businesses very well and also to invest in new ventures to retain their customers and grow their wallet share.
4. New competitors are emerging – 50 per cent of S&P 500 companies will be replaced in the next decade, says Innosight research.3 New-age companies are solving customer problems that have not been addressed by traditional enterprises all these years. Additionally, they are leveraging emerging technologies like cloud, AI and automation to deliver a seamless customer experience that helps them win over traditional enterprises.
5. Consumers have wider choice as there is a proliferation of products, leading to relatively shorter cycles. Businesses today move through their life cycles twice as quickly as they did thirty years ago. Enterprises that deploy data science and build infrastructure to seamlessly integrate their business functions are able to realize the maximum lifetime value (LTV) from customers.
6. Pricing pressures are mounting on businesses as both customers and regulators are asking for more transparency. This is further accentuated by the increased proliferation of products and shorter business cycles in the digital age. A McKinsey report says the bottom quartile of players who do not respond to digital natives in their industries face ~3x higher reduction in revenues than the top quartile.

As a result of these shifts, every business is now becoming a direct- to-consumer business. Thinking from the end-customer perspective is, therefore, the key to success. I see this shift happening in the most traditional of industries.‘Customer-centricity’ is perhaps the most important implication of the digital age across industries.

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