BORN

TO BE
WILD

Are You Positioned to Shred the

Next Tsunami of Disruption?
PADDLE IN, POP UP AND
GET READY TO RIP
It’s coming. And it’s more than a wave. It’s a strategy-shifting tsunami.
Unless you know where you are, you’ll never know where to head next.
Unless you know what your competition’s strategy is, you’ll never know
how to get there first. And unless you start now, you’ll already be
behind.

In a recent Accenture survey of Chief Strategy Officers, the majority

agreed they would be disrupted at some point in the next five years —
only 20 percent felt they were well prepared for disruption when it hits.

BORN TO BE WILD | COPYRIGHT © 2018 ACCENTURE. ALL RIGHTS RESERVED. 2

HOW CLOSE ARE YOU TO THE
IMPACT ZONE?
The Accenture Disruptability Disruption is at the heart of the
software and platform business.
Index is created from analysis
It’s an industry where companies
of 28 indicators within 3,629 succeed by disrupting others.
companies across 80 countries But customer preferences,
and 20 industry sectors. company strategies, regulations,
Indicators represent measures industries and markets can change
quickly. So there’s never time to
of efficiency and innovation,
rest. Offense and defense are
barriers to entry, performance of equally important.
incumbents and the presence and
penetration of disruptors. To help companies better
understand their vulnerability
to disruption, Accenture
developed the ‘Disruptability
Index’ (see sidebar). The Index
helps pinpoint both current levels
of disruption and susceptibility to
future disruption. Management
teams can use the index to
gauge how exposed they are
today, understand where they are
specifically vulnerable and plan an
appropriate strategic response.

BORN TO BE WILD | COPYRIGHT © 2018 ACCENTURE. ALL RIGHTS RESERVED. 3

 The research identifies Each quadrant suggests a set of strategic actions to
take to manage and control the impact of disruption.
four quadrants based on
As an industry, software and platforms is in the
an industry’s current level Viability quadrant (Figure 1). Communications, media
of, and susceptibility to, and high-tech industries are also in the Viability
disruption: Durability, quadrant, having already experienced significant
Vulnerability, Volatility disruption. Most vulnerable to disruption are banking,
and Viability utilities, insurance, travel and healthcare – all of which
are already showing signs of disruption by new digital
entrants redefining how their industry works.

VULNERABILITY CARRIES THE GREATEST RISK

FIGURE 1.
VIABILITY VOLATILITY

1.00
MEDIAN: 0.57

0.90 SOFTWARE &

PLATFORMS

INFRASTRUCTURE &
TRANSPORTATION SERVICES
0.80
E&HT

NATURAL
CURRENT LEVEL OF DISRUPTION

0.70 RESOURCES
RETAIL
MEDIA AND
ENTERTAINMENT
POSTAL ENERGY
SERVICES
0.60

COMMUNICATIONS
AUTOMOTIVE TRAVEL
MEDIAN: 0.51
0.50
LIFE SCIENCES
CHEMICALS BANKING
CAPITAL
MARKETS
0.40
UTILITIES
CG&S
INDUSTRIAL
EQUIPMENT AND HEALTH
0.30 MACHINERY INSURANCE

0.20
0.40 0.50 0.60 0.70 0.80
SUSCEPTIBILITY TO FUTURE DISRUPTION
DURABILITY VULNERABILITY

COMMS, MEDIA AND TECH PRODUCTS RESOURCES

AVERAGE EV OF COMPANIES IN SAMPLE*
HEALTH AND PUBLIC SERVICE FINANCIAL SERVICES

Key to table above: Software and platform’s position on the Disruptability Index is based on its position along two dimensions:
level of current disruption and susceptibility to future disruption.
Sources: Accenture Research Disruptability Index
*Total sample = 3,629; sample sizes range between 555 and 21, with an average of 181 companies per industry

BORN TO BE WILD | COPYRIGHT © 2018 ACCENTURE. ALL RIGHTS RESERVED. 4

CURRENT
LEVEL OF DISRUPTION
Software and
FACTORS AFFECTING CURRENT LEVEL OF DISRUPTION
platforms is
the most highly DISRUPTORS PERFORMANCE

disrupted industry
today, followed by
electronics and
high-tech and retail.
The reason? Tech-propelled disruptors Profitability

The high (Incumbents growing fast

or disrupting other segments)
(5-yr EBITA CAGR
and consistency)
concentration of
market players
ready to take
your place.
Start-up penetration Growth

(Presence and valuation of given (5-yr revenue CAGR

start-ups in the industry) and consistency)

The sector’s ability to

attract enormous amounts
of venture capital creates
an endless flow of start-ups
that compete with incumbents. Venture capital Volatility

However, incumbents’ revenue (Value of VC capital flows (5-yr corporate

into the industry) bankruptcy rate)
growth within all segments
across the sector has also PRESENCE AND PENETRATION
ABILITY TO OPERATE EFFICIENTLY
been spectacular. OF DISRUPTORS

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SUSCEPTIBILITY
TO FUTURE DISRUPTION
Looking forward, the software and platforms industry is secure against future disruption.
Why? Other industries must pivot to a digital platform or fade to a ripple in the pond.
Ongoing, significant investment in R&D and new technologies contribute to a high rate of
innovation and consumer demand. In other words, platforms are here to stay.

FACTORS AFFECTING SUSCEPTIBILITY TO FUTURE DISRUPTION

EFFICIENCY* INNOVATION DEFENSES

Transaction intensity Investment in R&D Brand dominance

(COGS/Revenue—avg. & variance) (R&D/Revenue; (Prominence of incumbent brands;

R&D investment per patent) Customer acquisition)

Asset intensity Investment in new Openness

(CAPEX/Rev.; Revenue /Invested digital technologies (Concentration of market share;

Capital; PP&E/ Rev.—avg. & variance) (Spending on IoT, Cloud, Analytics) Regulatory environment)

Labor intensity Positioning for the future Value creation

(Labor cost portion of GVA) (Future Value proportion) (Proportion of companies

with Trapped Value)

ABILITY TO PRESENCE OF BARRIERS

PURSUIT OF INNOVATION
OPERATE EFFICIENTLY TO ENTRY

* For each of the efficiency measures (other than labor intensity) we create scores based on both the industry average and the variance in industry performance. This is to
account for structural differences between industries. For example, the score of an industry with high capital intensity would be offset if there was limited variance in capital
intensity between companies in the industry, and vice-versa.

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HOW CAN YOUR COMPANY
SHRED THE TSUNAMI?
It starts with spotting the
wave. The Index allows every
business to understand their
own position. But they can
also use it to spot potential
opportunities in adjacent VIABILITY VOLATILITY
industries and clarify Grow the core Pivot wisely
CURRENT DISRUPTION

the picture of competitors’ Remain in the constant Decisively change course,

state of reinvention repositioning the business
strengths and weaknesses.
For example, the travel industry
is moderately disrupted and
highly susceptible to future
disruption. A travel company
could address its structural
DURABILITY VULNERABILITY
challenges by innovating or Transform the core Scale the new
repositioning the business to Build and sustain sources of Address structural
create barriers to entry. But for competitive advantage productivity challenges

those that don’t take such

actions, a platform business SUSCEPTIBILITY TO FUTURE DISRUPTION

offering new travel-related

services may well take
their place.

Software and platform

companies can also use the The Index’s granular focus on
index to examine individual specific areas helps companies
businesses within their
determine the right actions to
portfolio. While the company
may be viable overall, an secure their viability.
individual business, product or
service line may be vulnerable.

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 WHAT’S NEXT?
RIDE IT.

The blistering pace of innovation in the industry

gives companies a strong position relative to
disruption. But they can’t stop innovating.

You can’t wait until the crest is conversion to a SaaS business

already on top of you. History model and Netflix’s emergence
shows that complacency is as the ubiquitous platform for
dangerous. And you don’t have streaming videos, including its
to look hard for examples where own high-quality content.
failure to innovate has seen a once
ubiquitous product or service Leaders like these continuously
rapidly lose its market. If users reinvent themselves. And they
and customers lose interest in a do it by adopting the values of a
platform it very quickly becomes Living Business. They find success
vulnerable to others offering more in continuously evolving with the
innovative products and features. needs of customers and executing
In contrast, constant reinvention along three lines: they find new
keeps businesses strong. Look, markets for existing products,
for instance, at how Microsoft bring new products to existing
reinvented itself from a PC markets, and expand aggressively
software business. Or Adobe’s into adjacent markets.

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FINDING
NEW MARKETS
FOR EXISTING PRODUCTS

Having already made deep is partnering with Nestlé to

inroads into their primary markets, create a “nutrition assistant” that
many platform companies are offers customers recipes and
avidly searching for expansion nutritional information.1
opportunities. Google and
Facebook, for example, receive Others are expanding to new
65% share of global digital ad geographic markets. That requires
spend, excluding China. OTT a robust operational framework
Video Platforms now reach most to manage multiple languages,
internet users in their respective tax and regulatory requirements,
markets. Expanding their user base payments in various currencies,
for existing products requires a and content hosting. Marketing,
well-conceived and well-executed sales and customer support need to
platform adoption strategy. be localized to provide a consumer
experience that fits with the global
Companies form innovative brand. Products and services may
partnerships to help them expand. also require customization to reflect
In China, JD.com, maker of digital local market needs and deliver
voice assistant LingLongDingDong, relevant functionality.

As platform businesses aspire to scale products and

services globally, they must ensure that the costs of
doing so don’t grow at the same rate.

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NEW PRODUCTS IN
EXISTING
MARKETS
As companies flourish, their base markets
become saturated. That means simply acquiring
new customers won’t be enough to grow the core.
Another option? Offer new products and services to
existing customers who know and trust the business.
Many of the industry’s titans already operate such
diverse business models to generate multiple
sources of revenue:

Artificial
Tencent draws revenue from intelligence (AI)
advertising, media and more
has a key role
to play here.
As it gathers and
analyzes more and
more information
Apple is in devices,
about customers,
services and media AI will provide
the insights to
drive real-time
changes, develop
new products
Amazon’s core is ecommerce but makes
and services, and
significant revenue from media, advertising deliver engaging
and the cloud with Amazon Web Services
growing at 45% year-over-year experiences.

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AGGRESSIVE
EXPANSION
INTO ADJACENT MARKETS
A third path to growth is to
disrupt other sectors. The most
direct route is to apply core
competencies in new ways to
adjacent markets. Take Amazon’s
purchase of Whole Foods.
It’s a move that many investors
believe will help Amazon
harness its distribution
strengths to compete in home
delivery of groceries. Or
what about Uber? In 2016 the
company launched UberEATS,
using the original Uber app’s
back-end technology and
existing network of drivers to
enter the food delivery sector.
In April 2018, Uber acquired
bike-sharing start-up Jump, These moves into adjacent
and will use its existing markets may look simple. But to
infrastructure to help rapidly succeed, they require a thorough
scale this adjacent business.2 analysis to determine which
potential markets are a strategic
fit with the core business.

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EMBRACING
EPIC DISRUPTION
“Sink or swim” is the new normal. Disruption will always exist. It’s
the underlying reason software and platform companies have been
so successful. Start-ups and platform giants redefine customer
experiences and change how entire industries operate.

But disruption is not uniformly distributed. Accenture’s Disruptability

Index shows that disruption has a pattern. And that discovery enables
management teams to understand their position, identify where they
are specifically vulnerable and take action.

To thrive in a disruption-defined industry, software and platform

companies must remain in a constant state of reinvention. They
need to unceasingly enhance capabilities that support what
they do best, apply their strengths in new and different ways and
invest in aggressive expansion.

Companies must approach disruption like they have

nothing to fear and only have opportunities to gain.

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AUTHOR SOURCES
1 Brosgill, Richard, “Western vs Chinese voice
ROBIN MURDOCH assistants, who will have the last word?,” The
Drum, November 27, 2017, http://www.thedrum.
Global Industry Managing Director
com/opinion/2017/11/27/western-vs-chinese-
[email protected] voice-assistants-who-will-have-the-last-word

2 Dickey, Megan Rose, “Uber acquires bike-

PAUL D. JOHNSON sharing startup JUMP,” Techcrunch, April 9,
2018, https://techcrunch.com/2018/04/09/uber-
Research Manager
acquires-bike-share-startup-jump/
[email protected]

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Visit us at www.accenture.com.

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performance. Delivered.
are trademarks of Accenture.

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