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Competing Against “Digital Invaders”

Irving Wladawsky-Berger


Last year, IBM’s Institute for Business Value conducted a C-suite study aimed at identifying the key disruptive trends that will likely impact companies around the world over the next three to five years, as well as what their senior executives are doing to better prepare their organizations for the expected disruptions.  The study surveyed over 5,200 CEOs, CFOs, CIOs, CMOs and other C-suite executives across 21 industries in over 70 countries, – most of them in face-to-face interviews.  After analyzing the survey data  – including the use of Watson Analytics to extract inferences from open-ended responses – IBM published its findings in Redefining Boundaries: Insights from the Global C-suite Study.

To better understand the traits of the most successful enterprises, the IBM study also asked CxOs to rank their companies based on their innovation reputation and their financial performance over the previous three years. After analyzing their responses, it identified 5% of companies as Torchbearers, the name given to those companies enjoying both a strong innovation reputation and an excellent financial track record.  At the other end of the spectrum, 34% of enterprises were identified as Market Followers or laggards in both innovation and financial performance.

The report organized its findings and recommendations into three main areas:  Preparing for digital invaders; Creating a panoramic perspective; and Be first, be best or be nowhere.  Let me briefly discuss each.


Prepare for digital invaders

Industry convergence was found to be the overriding concern of most senior executives.  As boundaries continue to erode, previously separate industries are being brought closer to each other.  “A few years ago, CxOs could see the competition coming…”  They could generally fend off competitive threats “by improving or expanding the range of products and services you offered, or getting to market more efficiently and imaginatively.  Today, the competition’s often invisible until it’s too late.” 

Competition can now come from different directions, including newly formed or adjacent industries and so called digital invaders with totally different business models.  Digital invaders can be giants with highly sophisticated platforms – like Google, Amazon and Alibaba – or focused, agile startups unencumbered by legacy infrastructures.  These invaders typically target profitable areas of the value chain, often looking to seize control of the customer relationship and relegate incumbents to less profitable back-end support services.

This competitive shift is caused primarily by rapidly changing technologies and markets.  CxOs recognize that greater efficiency alone is not sufficient to fend off digital invaders;  much bolder approaches are required. Most anticipate that they must transform the way they engage with customers, including more digital and personalized interactions.  More than half agree that innovation increasingly comes through collaborations with external ecosystem partners.

While nearly two thirds of CxOs plan to enter new markets, they will largely do so by sticking to their areas of experience and expanding into new demographic segments and geographies.  But, the best performing companies, the so-called Torchbearers, are bolder and more likely to enter both adjacent and totally new markets.

The report offers three recommendations to help fend off digital invaders: listen to the people closest to your customers and rely on them for all but the most important decisions; form new partnerships and share key resources with allies; and develop online platforms forums where buyers and sellers can trade and share information.


Read the full blog, posted on Oct. 4, here.