Frontiers of disruption: The next decade of technology in

Frontiers of disruption: The next decade of
technology in business
Introduction
Is technology-led innovation slowing down? Some observers consider this to be the case, believing that
technology advancements are not having the transformative effects on life and industry experienced
in previous periods.1 Business leaders beg to differ, at least when it comes to the changes they expect
technology to bring to markets and industries over the next decade. Having witnessed the profound
effects that the Internet, wireless communications, enterprise applications and other technologies have
recently had on organisations, executives might be excused for expecting a lull. Judging by the views
expressed in this Economist Intelligence Unit survey, however, technology is certain to be the source of
continued disruption to markets and industries between now and 2020.
Business leaders’ expectations include wrenching change to their vertical markets, a decisive shift
of power to customers, far-reaching decentralisation of management authority to the periphery
or organisations, and a much more virtual working environment. For many, technology will enable
significant leaps forward in terms of innovation, efficiency, customer relationships and many other
areas of competitiveness. Some, on the other hand, doubt their organisations will even survive by 2020.
Managing technology-enabled change in organisations will unquestionably remain a difficult challenge
for all.
Some executives wisely warned us that there is no way of divining what types of disruption are to
come—that technology is disruptive precisely because its effects are so difficult to predict. They took up
the challenge all the same, and we discuss below the major conclusions from the survey.2
See, for example, Michael Lind, “The Boring Age”, Time, March 11, 2010; “Are We Behind on Innovation That Matters?”, Paul Kedrosky
blog, January 4, 2010.
2
The survey results, along with insights from leading technology thinkers, business executives and other experts, will form the basis of an
Economist Intelligence Unit white paper to be published in early 2012. The findings will be discussed at “Technology Frontiers”, a major
pan-European event hosted by Economist Conferences in March 2012 in London, where experts and practitioners will share their ideas on
how technology can help people transform their business, social and economic fortunes.
1
Sponsored by
Economist Intelligence Unit 2011
Frontiers of disruption
The next decade of technology in business
About the survey
The Economist Intelligence Unit surveyed 567
executives in September-October 2011 on their
expectations of the future technology impact on
business. The survey sample is global, with 32% of
respondents based in Europe, 29% in North America
and 28% in Asia-Pacific. They hail from over 20 sectors,
with financial services, government and public sector
(including healthcare), education, professional
services, IT and technology, and manufacturing
especially prominent in the sample. The respondents
are relatively senior—46% hold C-suite positions—and
they work in organisations of different sizes, with 43%
earning annual revenue of US$500m or more. For more
information about the survey sample, please see the
Appendix.
Key findings
On the cards: significant disruption to markets and industries. In the past decade, technology-enabled
business model innovation has changed the face of the music, video, book publishing, travel and other
businesses. Other sectors will undergo similar change in the next decade. Nearly six in ten respondents
believe that the vertical market in which their organisation operates will bear little resemblance in 2020
to how it looks today. Not surprisingly, media and entertainment top the list of sectors executives expect
to undergo significant convergence with adjacent ones in the next ten years. Somewhat unexpected,
given its heavily regulated nature, is a belief that the banking industry is also in for far-reaching
restructuring. Respondents from the financial services industry itself are convinced of it: 70% believe
significant convergence with organisations from other industries is on the cards, compared with 45% of
respondents in the overall sample.
Share of respondents agreeing that "The vertical market in which my organisation operates will bear little resemblance in
2020 to how it looks today."
(% respondents saying "strongly agree" or "agree")
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
Total
Europe
Asia-Pacific
North America Financial services IT & technology
Manufacturing
Education
Relentless efficiency improvement and Big Data will heap pressure on competitors, margins and
business models. Supporting the prediction of continued disruption is the conviction that technology
will continue to afford organisations big opportunities to gain a jump on their rivals. For example, a large
majority (70%) of survey participants affirm that there remain plenty of gains to be made in improving
Economist Intelligence Unit 2011
Frontiers of disruption
The next decade of technology in business
operating efficiency (although education and public sector respondents appear far less convinced of this
than others). Executives also expect technology advances to deliver greater speed and responsiveness
toward customers and, through ever more sophisticated data analysis, the ability to tailor products and
services to an unprecedented degree. This combination means intensifying competitive pressures—
including price and margin reductions in many markets—faster change in business models, and thus
continued disruption to markets and industries.
Do you agree or disagree? "When it comes to improving operating efficiency, enterprise technology has reached a plateau—
there is not much more room for achieving efficiency gains."
(% respondents)
3
Strongly agree
Agree
25
Disagree
45
Strongly disagree
25
2
Don’t know
The negative side of this is that organisations which cannot keep pace will suffer. This concern is
palpable amongst a significant minority of the survey sample. Over one-third of participants fear that
their organisation will be unable to keep up with technology change and will lose its competitive edge.
More than a few—13% of the overall sample, and as high as one-third of those from the IT sector—even
believe that their business will disappear within the next decade due to technology-driven business
model change.
Share of respondents agreeing that "I worry that my organisation will not be able to keep up with technology change and will
lose its competitive edge."
(% respondents saying "strongly agree" or "agree")
Total
38
Europe
38
Asia-Pacific
32
North America
41
Financial services
46
IT & technology
51
Manufacturing
35
Education
30
Government/public sector
29
Technology will shift considerably more power toward customers. Thanks to the Internet, social
media and other communications technologies, customers in both B2B and B2C markets have become
more adept in recent years at gaining leverage with their suppliers. Many executives in our survey
expect this shift in the balance of power toward customers to gain momentum over the next decade.
For example, increasingly sophisticated data analysis will certainly benefit companies looking to gain
Economist Intelligence Unit 2011
Frontiers of disruption
The next decade of technology in business
a deeper understanding of their customers, but customers will also gain from better, and much faster
access to, product and market data. One survey participant opines, for example, that “pervasive mobile
technologies will reduce the information asymmetry between vendor and customer. There will be nowhere
to hide for ridiculous mark-ups and prices.”
Customers will also enjoy a more direct influence on their suppliers’ innovation processes. When
asked which of various groups will be the main source of new product or service ideas in 2020, top of
the respondents’ list come customers and online communities, ahead of internal R&D and employees.
(Manufacturers are the most firmly convinced this will be the case.) More than eight in ten also believe
that internal project teams in 2020 will typically include representatives from customers, partners or
external communities. Among other activities, they will be advising firms on business processes: when
asked who will be the main source of new ideas for process improvement, almost as many executives point
to customers (18%) as to their own employees (20%). Better data and faster networks will clearly help
organisations improve how they innovate, but these findings suggest also that learning how to treat
customers as innovation partners will be at least as important.
What is the main source of new product or service ideas today, and what do you think it will be in 2020?
(% respondents)
Today
R&D
In 2020
38
18
Customers
21
30
Competitors
13
8
Employees (non-R&D)
12
7
Online communities
6
19
Emerging markets
5
9
Partners
4
6
Other industries
1
2
Other
1
1
Don’t know
1
1
Flatter structures, with more decision-making authority at the periphery. Our survey respondents
are undecided on how precisely technology change will impact on the organisation itself. For example,
just over half expect all of today’s familiar departments (eg, procurement, accounting, human resources)
to remain in existence a decade on, while others expect the responsibilities of some of these to shift
elsewhere. There is considerably more consensus, however, when it comes to the IT function: 62%
of the sample believe that in 2020, responsibility for delivery of most IT services will reside within
individual business units rather than a central IT function. And over three-quarters think that most of the
Economist Intelligence Unit 2011
Frontiers of disruption
The next decade of technology in business
organisation’s IT services will be delivered by external parties (eg, “cloud computing” providers).
Expectations of decentralisation extend beyond the IT function. A clear majority of executives believe
that technology change will lead to a “far-reaching devolution” of decision-making authority to the
periphery of organisations. Assuming decentralisation also means greater local freedom to design
individual processes, this may also explain why a majority (52%) of respondents believe that ensuring
good operational risk management and governance will be much more difficult in the future. An identical
majority also fear that compliance requirements will become so extensive as to discourage some firms
from implementing new technologies.
There may also occur a flattening of decision-making structures, as technology advances are expected
to reduce the ranks of middle managers.
Share of respondents agreeing with the following propositions about the organisation in 2020
(% responding "highly likely" or "somewhat likely")
Total
Financial services
Manufacturing
Education
Government/public sector
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
Responsibility for the delivery of most IT services will reside
within individual business units rather than a central IT function
Most of the organisation's IT services will be
provided by external parties
(% responding "strongly agree" or "agree")
Total
Europe
Asia-Pacific
North America
80
80
70
70
60
60
50
50
40
40
30
30
20
20
10
10
0
0
Technology will enable a far-reaching devolution of business
decision-making authority to the periphery of organisations
As enterprise technologies advance in sophistication and speed,
the middle management layer will be vastly reduced in organisations
A more virtual working environment, but what does this mean? There is agreement with the notion
that the working environment will be substantially changed in a decade’s time thanks to technology
Economist Intelligence Unit 2011
Frontiers of disruption
The next decade of technology in business
advances. For example, eight in ten survey participants are certain that “virtual working” will be the
norm thanks to more secure mobile technologies and cloud computing models. This will not necessarily
translate into widespread teleworking, however: more disagree than agree with the proposition that most
employees will work from home rather than the traditional company office. It does, however, point to a
vast reduction—possibly even the disappearance—of “non-digitised” information used by employees. It
also suggests that most employees will conduct all their communications and electronic work using just
one device.
Technology advances are rightly viewed by many people as liberating, but views of the future working
environment emanating from this survey are not uniformly rosy. A majority of executives are convinced,
for example, that they will be working more hours on average than they are today, and also more years
on average—views no doubt coloured by today’s economic doldrums and the growing threats to pension
funds.
Do you agree or disagree with the following statements about business and work in 2020?
(% respondents)
Strongly agree
Agree
Disagree
Strongly disagree
Don’t know
The majority of employees will work from home rather than from a traditional company office
8
40
44
61
Employees will work more hours on average than today
8
55
33 1
3
The working environment will become ‘virtual’ thanks to more secure mobile technologies and cloud computing models
14
66
16 2 2
The concept of non-digital information will be utterly foreign to most employees
9
50
33
6 2
Conclusion
Thinking about technological progress often brings forth a sense of optimism about the future. This
research is no exception, as the executives in our survey see significant opportunities for technology
to improve not only how they conduct business but also to provide solutions to challenges in areas as
wide ranging as energy conservation and poverty reduction. However, their optimism is tempered by
recognition of the related challenges and risks ahead. As the survey suggests, many organisations
will not be able to keep pace with the changes to come. As new business models take shape thanks to
technology advances, older ones will wither, and companies’ ability to survive will rest on their capacity
to adapt. Rather than slowing down, as some experts believe is happening, this process of technology-led
innovation if anything is likely to accelerate.
Polling executives provides just one prism through which we can glean the future impact of technology
on organisations and industries. Other perspectives are needed to gauge the likelihood that the former’s
visions will become reality, and to offer alternative outlooks. In a report to be published in early 2012,
the Economist Intelligence Unit will offer different scenarios of future technology disruption based
on discussions with some of the world’s leading technology and business thinkers as well as with
practitioners.
Economist Intelligence Unit 2011
Frontiers of disruption
The next decade of technology in business
Appendix: The survey sample
In September-October 2011 the Economist Intelligence Unit conducted a survey of 567 executives from
across the world. Our sincere thanks go to all those who took part.
In which region are you personally based?
(% respondents)
North America
29
Western Europe
28
Asia-Pacific
27
Latin America
6
Middle East and Africa
6
Eastern Europe
4
What is your primary industry?
(% respondents)
Government/Public sector
19
Education
15
Professional services
15
Financial services
13
IT and technology
8
Manufacturing
5
Healthcare, pharmaceuticals and biotechnology
4
Energy and natural resources
4
Construction and real estate
3
Entertainment, media and publishing
3
Consumer goods
2
Chemicals
2
Telecoms
2
Agriculture and agribusiness
1
Retailing
1
Transportation, travel and tourism
1
Logistics and distribution
1
Automotive
0
Economist Intelligence Unit 2011
What are your company's annual global revenues in US dollars?
(% respondents)
Frontiers of disruption
The next decade of technology in business
$500m or less
57
$500m to $1bn
13
$1bn to $5bn
10
$5bn to $10bn
4
$10bn or more
16
Which of the following best describes your job title?
(% respondents)
Board member
3
CEO/President/Managing director
28
CFO/Treasurer/Comptroller
2
CIO/Technology director
2
Other C-level executive
11
SVP/VP/Director
16
Head of business unit
6
Head of department
17
Manager
11
Other
5
Economist Intelligence Unit 2011
What are your main functional roles? Select all that apply.
(% respondents)
Frontiers of disruption
The next decade of technology in business
General management
49
Strategy and business development
39
Operations and production
28
Marketing and sales
20
Finance
18
IT
16
Customer service
14
R&D
11
Risk
11
Information and research
10
Human resources
8
Procurement
6
Supply-chain management
6
Legal
4
Other
4
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