WEDO TECHNOLOGIES WORLDWIDE USER GROUP & SUMMIT 2016: Digital services offer “a lot of opportunities for traditional companies” if they are able to make the most of the assets they have at hand, Sergio Osle, senior partner at McKinsey & Company, advised.

“Being a traditional company is a great starting point. Most start-ups would love to be in that position,” he said.

But this comes with a caveat: “We strongly believe that they only have two options: either they transform themselves and re-establish themselves as leaders in the digital world, or they are going to go bust.”

In markets which have already been disrupted by digitisation, established players have not always performed well. “We talk about Uber, the cool guys. Where are the incumbents, where are the traditional companies?”

Success stories
But Osle also pointed out a number of existing companies which have been able to benefit, such as Burberry, Nike and John Lewis in fashion/retail, The New York Times and Axel Springer in publishing, and industrial conglomerate General Electric.

The key tools incumbent suppliers have in their armoury are data, brand, relationships, talent, balance sheet and cash flow, he said, although “they need to be used differently”.

Businesses need to effectively use the data they have, transition brands for the digital world, and “repurpose” their workforces, he continued.

While many industries have already felt the impact of the internet, other sectors have so far not been affected in the same way.

“This is a new reality that we are facing, and this new reality is going to affect all industries. It will affect them at different times, we acknowledge that, but you can’t think that your industry is not going to be impacted,” Osle said.

“Once you reach the tipping point, if you aren’t prepared, the decline is going to come fast,” he continued.

A real challenge for a traditional business is making decisions which could impact their existing core businesses. “You have to be careful with your timelines because you don’t want to eat your own revenue, but you also have to assume that if you don’t someone else will.”

“We tend to use the story of Kodak. Kodak were they guys who invented digital photography. But they didn’t push it because it would cannibalise their photography business,” the consultant said.

And an example closer to home came in the form of the transformation in the messaging services space, where operators were slow to move their propositions forward from lucrative SMS offerings, only to find themselves being displaced in the value chain by “over-the-top” services.