WHY DO BAD things happen to good companies? Over the past two decades, businesses have come to understand the challenge of digital disruption, the risk that their market position could be eroded—or entirely swept away—by new entrants utilizing digital technology.
Today’s technology has lowered the barriers of entry to new markets and made it possible to expand rapidly. Anyone can change an industry, and that change happens faster today than ever before. No surprise, then, that almost three-quarters of C-suite executives say digital disruption is a dominant factor keeping them awake at night.
“When companies react to disruption, they often do so out of fear,” says Marc Alba, President of NTT Disruption. He says that too many executives think they can hedge against disruption with incremental innovation, but instead they should focus their attention on radical innovation—solutions that completely change the way a problem is solved.
“If you are focused on the problem you are trying to solve, and on finding innovative solutions, then there’s nothing to be fearful of,” says Mr. Alba. He points out that 75 percent of business leaders say their motivation for investing in Big Data and artificial intelligence (AI) is fear.
“Companies should not be asking ‘What AI technology can I invest in?’ Instead, they should look for problems that could be solved by truly radical applications, such as relational AI, which is about creating a bond of empathy with the user and fostering trust.”
NTT, for example, is working with doctors on an AI character that they hope will reassure nervous children before a medical procedure. In tests, children appreciated having a companion and felt more positive. Similar work is being done with military veterans experiencing post-traumatic stress disorder (PTSD), whose symptoms can make relationships and talking about what they are going through difficult for sufferers. An AI-driven ‘agent’ that can empathize without judging, however, can help veterans to cope.
Mr. Alba says identifying radical innovations, the ones that will be truly disruptive, often requires a team working separately from the main company. That might involve moving people to a talent hub like Silicon Valley or other technology hubs, where they can draw on expertise from start-ups in a similar sector. Some companies have started competing brands, with a view to disrupting their own business, while others have partnered with academics.
For example, NTT partnered with Deakin University in Melbourne, Australia, to make a virtual reality (VR) firefighting simulator. The FLAIM Trainer includes a vest that tracks the trainees’ stress and fatigue levels, while a VR headset creates an immersive simulation that will train firefighters in a way that is safer, more cost-effective and environmentally friendly.
“What the smartest companies do is put the problem before the technology,” says Mr. Alba. He points out that it is vital to identify creative ways to solve problems, ones that radically change the way the problem is handled. Bringing that solution to life then requires the right technologies.
Sometimes the right technology is one that is already mature. What is different today, says Mr. Alba, is that five years ago businesses had only a few technology ‘levers’ with which to create solutions. Now, there are many more, including emerging technologies such as robotics, digital fabrication and the blockchain.
Having more levers available means that disruption often happens with a coming-together of technologies, says Mr. Alba, such as VR and smart clothing in the firefighting case. Another area where NTT is exploring the potential to solve problems by combining technologies is with ‘smart spaces’ that merge VR, augmented reality, AI, the Internet of Things and more to transform the world around us.
This could see retail being completely transformed. Fashion stores, for example, could offer interactive experiences, such as catwalk shows, with lighting and even smells constantly adjusted to transport shoppers away from the world of the humdrum shopping mall. VIP boxes in sports stadiums could include table-top 3D replays of the action and walls of stats and replays. Even meeting rooms could be re-thought, using AI to find and display relevant data and automatically transcribe the conversation.
The same confluence of technologies could disrupt real estate, the hospitality business and even home entertainment. Mr. Alba says he expects this kind of disruptive technology to launch in the near future. “We’re not doing R&D,” he says. “We’re working with real businesses.”
NTT is demonstrating that disruption need not be frightening; in fact, it can be a powerful force for good. Tomorrow’s successful companies will be the ones that embrace the opportunities of disruption.
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