Why Companies Don’t Respond to Digital Disruption

Knowing digital disruption is happening and doing something about it are two entirely different matters. The philosopher William James noted that “thinking is for doing,” meaning that the purpose of us knowing things is to enable us to act in accordance with that knowledge. You might expect, consequently, that every organization has a well-developed strategy and action plan for responding to disruption. But the reality is quite different, just as homeowners in disaster-prone areas often seem caught off guard when an actual hurricane or cyclone strikes.

In MIT SMR and Deloitte Digital’s research on digital business, we asked survey respondents, “To what extent do you believe that digital technologies will disrupt your industry?” The great majority (87%) of executives surveyed indicated that these technologies will disrupt their industries to a great or moderate extent. Only 3% of respondents believed that digital technologies were likely to have no impact on their industry (we didn’t ask this 3% when the last time was that they read a physical newspaper, installed software from a CD, or booked a trip through a personal travel agent). We also asked survey respondents whether their companies were adequately preparing for the digital disruption their industries were likely to witness. Only 44% said their companies are doing enough.

The gap between the 87% who say digital disruption will affect their industry and the 44% who say their company is adequately preparing is, in a word, staggering. The majority knows digital disruption is happening. Yet, only a minority report that they are doing enough to respond effectively. Why aren’t companies responding with greater urgency to the threat of digital disruption?

Why Aren’t Companies Acting?

It may be that executives don’t understand enough about technology to make the changes or understand the urgency necessary. It may be that board members and investors care more about short-term profits than long-term viability.