We are witnessing one of the most remarkable periods in human history. Are we, however, genuinely conscious of how quickly things are changing?
As digital business specialists, we frequently see companies that undervalue the significance of technology development or fail to comprehend where this change is leading us, failing to adapt. Regrettably, change will only accelerate in the coming years.
But what causes change to speed up this fast, and what are the consequences? Moore’s Law has been explicitly linked to the acceleration of technological progress in specific ideas, but this only applies to the growth in computing power and decreased cost of microchip technologies. Others, such as Kurzweil’s Law of Accelerating Returns, suggest that this pattern has been observed in a wide variety of evolutionary systems throughout history, allowing for a more comprehensive examination of technological change.
At KingEclient, we think that human needs drive socioeconomic change in the end. The need to meet these demands drives technical breakthroughs that keep pace with computational power (exponentially, Moore’s Law).
The convergence of technical breakthroughs allows for creating new, disruptive business models that alter customer behavior.
Other external constraints, such as regulation or the geopolitical climate, can slow down change, but it still accelerates exponentially in the end.
Throughout history, there have been several examples of technology innovation causing socio-economic dislocation. The crucial question, however, is:
Can businesses or people avoid change?
The answer is clear; they can’t.
The steam engine addressed the challenge of efficiently powering mechanical tools, laying the groundwork for an industrial revolution that transformed civilization altogether. Between 1815 and 1830, anti-industrialization groups such as the Luddites in the United Kingdom attempted but failed to stop mechanization.
Refrigeration cooling systems and ice manufacture quickly ended the natural ice trade in the early 1900s. As a result of the rapid growth in competition, some genuine ice traders invested in their own fake ice facilities, while others purchased new ice cutting machines to speed up extraction, assuming that buyers would not prefer artificial ice to natural ice. On the other hand, the latter was unable to adapt to change and eventually went out of business.
The internet has set the pace for the global society we live in today, solving the need to communicate and share information better than any prior technology. The music and film industries, for example, have fought unsuccessfully to restrict file sharing on the internet. Companies as large as Blockbuster have gone out of business due to their failure to embrace change and understand their customers’ requirements.
Another significant upheaval was brought about by the iPhone, which radically changed the way consumers interacted with businesses and made it possible for companies like Uber and Airbnb to exist. Again, we’ve seen sectors like the taxi industry try to fight the disruption, but they’ll fail in the long term unless they adjust to the user’s desires for a better service experience.
Change is unavoidable at this point, but in certain businesses, such as the financial sector, there is another factor pressing for it. Following the 2008 financial crisis, regulators upped their pressure on financial markets to avoid wrongdoing and foster competition. Banks and financial institutions, particularly in Western countries, are being driven to lower entry barriers by pushing new technology and exchanging data through initiatives such as Open Banking.
So, if change is inevitable and many examples prove it, why are there companies that still believe they don’t need to prepare for digital disruption?
As we have already established, change grows exponentially, but it does not happen simultaneously in every industry.
Because of the varying rates of change across industries, some businesses may misjudge digital technology’s disruption. Some industries are still in the early stages of transition. For many companies, failing to recognize the potential impact of digital and failing to prepare for upheaval might be disastrous.
Companies are highly likely to be left with no time to adjust due to the exponential acceleration of change. If this is the case, new competitors and firms who have prepared for disruption will earn a significant amount of market share, edging out unprepared firms who were not able to adapt to change.