Jan Bosch is research center director, professor, consultant and angel investor in start-ups. You can contact him at jan@janbosch.com or follow him on janbosch.com/blog, Linkedin (linkedin.com/in/janbosch) or Twitter (@JanBosch).

Opinion

How digitalization disrupts companies

Leestijd: 3 minuten

Although everyone talks about digitalization (software, data and AI) and the risk of disruption that this brings to companies, very few talk about how companies get disrupted in practice. Most treat it as an amorphous force that topples companies over like a force of nature that is unavoidable and where we are the victims. Of course, like you, I like to be in control of my own destiny and would like to better understand how digitalization causes such disruption in industry.

In our research, we have studied this question by working with a number of companies to understand how digital technologies are affecting their business. The generic mechanism can be summarized as shown in figure 1. The key concept in the figure is the notion of customer need. We distinguish between the real customer need and the expressed customer need. The expressed customer need is a function of three variables: the real customer need, technology capabilities and cost.

When incumbent companies started serving a certain group of customers, they were very much focused on the expressed customer need. Over time, however, the focus for most incumbents gradually shifts to product capability. A good example here is the automotive industry. The real customer need that people have is mobility. As the optimal balance of technology capability and cost the conventional expressed customer need was to own a car. As a consequence, automotive companies have focused on increasingly nice cars with better and better performance, ie on improving product capability.

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