The potential of digital transformation to turn anyone into competition, and the threat this poses to established companies, was raised recently at the CIO Summit event in Auckland by one of the keynote speakers, Jonathan Reichental, CIO of the City of Palo Alto.
In his talk, Reichental discussed the ease at which anybody with access to banking and the internet can start up a business. Thanks to advances in technology over the past decade or so, traditional barriers to entry in many markets have been drastically reduced. This has led to an influx of new companies which impact on almost every sector. This is particularly true in the private sector but can also be applied to the public setor.
Companies which fail to keep up with the latest developments lose out to ones that capitalise on new opportunities, with Reichental giving an example of how Tesla has risen to become the prominent automobile company in the US when Ford and GM were so established. Reichental explained that this meant technology, and therefore the focus and importance of the CIO’s role, is becoming increasingly important. He described the CIO as moving from behind-the-scenes to become an important part of the executive team, anticipating market challenges. Moreover, Reichental was of the opinion that it was the job of everyone to push for innovation as it is such a vital area. Speaking from his own experience, Reichental described the constant efforts of Palo Alto to implement technological improvements. The city focuses on developments that can improve customer or community experiences or replace manual processes with digital options.
Just as the proliferation of the internet has enabled greater opportunities to start-ups or individuals looking to start their own businesses, so too will newer developments such as blockchain, AI and IoT. Using blockchain could give access to a near-instant, essentially free method for payments – especially to billions of people who currently have no access to banking. AI could search through thousands of alternatives to an established company to find the best deal. IoT may provide unprecedented level of data for potential businessmen and women to identify opportunities from.
Of course, established companies also stand to benefit from the same advantages of these technologies – by expanding potential customer bases, reducing costs or otherwise improving eficiency; however, it may take a longer time and more effort for a larger firm to instigate and leverage these opportunities. In the meantime, smaller, more nimble companies may capitalise on this to carve out their own niche of the market. This is already happening as start-ups provide targeted goods and services, with the impact they are having on traditional business being noted by more than just Reichental.