For most of modern history the pace of innovation has accelerated. It has now reached the point where companies and industries no longer have time to bed down or respond to one wave of change before the next arrives. Modern change is continuous. Because there is no sign of it stopping, the only sensible strategy is not to resist, but to embrace disruption and ride the wave.
Technology changes everything. When the first Deloitte Top 200 was announced 26 years ago in 1989, the internet was still embryonic. While America already had its first internet service providers, New Zealand's internet was restricted to academia and hobbyists dabbling at the fringes. Today modest homes enjoy better, faster digital connections than the links that connected the whole of New Zealand to the rest of the world in 1989. You can now have a faster connection on your mobile phone than scientists had back then.
Digital disruption means people live differently. We have changed how we buy and consume products and services, how we keep up to date with news, friends and family. We now have new forms of entertainment and education. We go to new markets when we shop, they can be on the other side of the world.
Above all, technology has changed the way businesses operate. Today no significant business can survive without a strong online presence. That's where the action is. It's also where the challenges and challengers come from.
Air New Zealand depends as much on its internet booking systems as it relies on airplanes. New Zealand's primary producers can now sell their products direct to the vast Chinese market through the Alibaba online market. Many of the fastest-selling and most lucrative products available today are virtual. They are made of electronics travelling through cables instead of atoms being shipped around the world in containers.
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In a generation, business has moved from needing to invest huge capital sums in enterprise computer systems, to using pay-as-you-go cloud services. The shift from capex to op-ex has a profound effect on corporate finance. It also means small start-up companies can have access to the same resources as multinationals.
That means your next competitor is likely to be someone you've never heard of, possibly a start-up. Technology removes barriers to market entry. This, in turn, makes it possible for a small team to form a new business from scratch, get it to global scale and take on the world. You can do that from New Zealand as easily from anywhere else. Just ask Xero, Vend or the Wynyard Group.
The best-known disruptors are international. Alibaba has come from nowhere to be the world's largest retailer, yet it has no stores and holds no inventory. Almost overnight Airbnb became the world's largest accommodation business without owning any real estate. In a couple of years Uber grew to become the world's largest taxi company. It doesn't own a single vehicle.
Disruption works both ways. Established companies can find new markets or new ways to address markets. They may discover new ways to differentiate their business from competitors. Thanks to the disruptive technology they can move quickly and relatively cheaply to become a disruptor. Many companies are setting up start-up like internal departments with a brief to upset the apple cart.
That was one of the first things Simon Moutter did when he took over as Telecom managing director.
His digital ventures group operates outside the core operation and aims to sniff out opportunities.
When Moutter spoke to journalists at a function earlier this month he talked of the waves of change sweeping through New Zealand business and how his company has refocused and rebranded to meet the challenge of digital disruption. The change is so profound that Telecom, one of the best known brands in New Zealand became Spark underlining its transformation to customers.
The message is clear: the company has moved on from being just a telephone network and now sells digital services.
Air New Zealand is hiring a chief digital officer. This is a senior level executive who will report direct to chief executive officer Christopher Luxon. The job will be to oversee the company's digital transformation and to work to increase its digital presence. At Westpac Simon Pomeroy was the chief digital officer, but is now chief transformation officer. Elsewhere similar roles are described as the chief values officer.
These job titles are not just window-dressing, they reflect the importance attached to having senior executives dedicated to dealing with and then exploiting disruption. In the past these roles would have been responsible for keeping information systems working, in effect looking after a company's digital plumbing. Today they are more business-focused.
One thing behind every company that successfully manages its digital transformation to become a disruptor and every disrupting start-up is a high tolerance for risk. The task requires innovative thought and a willingness to let go -- there's no place in the disruptive world for swimming to the side of the pool. Welcome to the brave new world.
