By Heather Clancy
July 7, 2015

Many business leaders view the rise of digital disruptors in their industry as a “sign of progress.” What’s more, at least one-third believe that seemingly invulnerable incumbents will lose stature or market share because of them.

Yet far fewer executives are taking a proactive approach to meeting that challenge, according to original research conducted by Cisco and the International Institute of Management Development, through the Global Center for Digital Business Transformation. The center polled 941 business leaders across 12 industries and 13 countries.

Here’s one of the more telling metrics from the stats-laden analysis of the results: only 44% of the surveyed executives indicated that they work for companies where digital disruption is a board-level concern. There are parallels to the rather blithe attitudes toward cybersecurity just a few years ago, before massive breaches like those suffered by retailer Target and insurer Anthem Health crowded into headlines.

That level of inattention holds true even for industries such as travel and hospitality where digital disruption is already happening quickly—courtesy of technology startups that rely heavily on mobile apps, the Internet of things and cloud services to facilitate transactions, such as Uber and Airbnb. The figure below shows the level of risk the survey respondents associated with each industry considered.

The center describes digital business models in three categories, based on where value across an industry is redefined: Cost Value (i.e., price transparency, buyer aggregation, reverse auctions, consumption-based pricing), Experience Value (customer choice, personalization, automation) and Platform Value (marketplaces, sharing economy, and data monetization).

The most successful disruptors of the past decade combine elements of the three models, the report suggests. For example, Uber is succeeding not simply because it offers a lower cost alternative to riding from Point A to Point B, but because it makes the process of completing a transaction via its mobile application so simple.

“Digital disruptors are particularly dangerous because they grow enormous user bases seemingly overnight, and then are agile enough to convert those users into business models that threaten incumbents in multiple markets,” notes the analysis, dubbed “Digital Vortex, How Digital Disruption is Redefining Industries.”

According to this particular study, the five industries most in danger of disruption are: technology products and services, media and entertainment, retail, financial services and telecommunications. Among the 12 industries studied, pharmaceutical companies were the least likely to be disrupted, according to the surveyed executives.

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