Frontiers of disruption the next decade of technology in business

Frontiers of disruption: The next decade of
technology in business
Introduction
Is technology-led innovation slowing down? Some observers consider this to be the case, believing that
technology advancements are not having the transformative effects on life and industry experienced
in previous periods.1 Business leaders beg to differ, at least when it comes to the changes they expect
technology to bring to markets and industries over the next decade. Having witnessed the profound
effects that the Internet, wireless communications, enterprise applications and other technologies have
recently had on organisations, executives might be excused for expecting a lull. Judging by the views
expressed in this Economist Intelligence Unit survey, however, technology is certain to be the source of
continued disruption to markets and industries between now and 2020.
Business leaders’ expectations include wrenching change to their vertical markets, a decisive shift
of power to customers, far-reaching decentralisation of management authority to the periphery
or organisations, and a much more virtual working environment. For many, technology will enable
significant leaps forward in terms of innovation, efficiency, customer relationships and many other
areas of competitiveness. Some, on the other hand, doubt their organisations will even survive by 2020.
Managing technology-enabled change in organisations will unquestionably remain a difficult challenge
for all.
Some executives wisely warned us that there is no way of divining what types of disruption are to
come—that technology is disruptive precisely because its effects are so difficult to predict. They took up
the challenge all the same, and we discuss below the major conclusions from the survey.2
See, for example, Michael Lind, “The Boring Age”, Time, March 11, 2010; “Are We Behind on Innovation That Matters?”, Paul Kedrosky
blog, January 4, 2010.
2
The survey results, along with insights from leading technology thinkers, business executives and other experts, will form the basis of an
Economist Intelligence Unit white paper to be published in early 2012. The findings will be discussed at “Technology Frontiers”, a major
pan-European event hosted by Economist Conferences in March 2012 in London, where experts and practitioners will share their ideas on
how technology can help people transform their business, social and economic fortunes.
1

Sponsored by

Economist Intelligence Unit 2011


Frontiers of disruption
The next decade of technology in business

About the survey
The Economist Intelligence Unit surveyed 567
executives in September-October 2011 on their
expectations of the future technology impact on
business. The survey sample is global, with 32% of
respondents based in Europe, 29% in North America
and 28% in Asia-Pacific. They hail from over 20 sectors,
with financial services, government and public sector
(including healthcare), education, professional

services, IT and technology, and manufacturing
especially prominent in the sample. The respondents
are relatively senior—46% hold C-suite positions—and
they work in organisations of different sizes, with 43%
earning annual revenue of US$500m or more. For more
information about the survey sample, please see the
Appendix.

Key findings
On the cards: significant disruption to markets and industries. In the past decade, technology-enabled
business model innovation has changed the face of the music, video, book publishing, travel and other
businesses. Other sectors will undergo similar change in the next decade. Nearly six in ten respondents
believe that the vertical market in which their organisation operates will bear little resemblance in 2020

to how it looks today. Not surprisingly, media and entertainment top the list of sectors executives expect
to undergo significant convergence with adjacent ones in the next ten years. Somewhat unexpected,
given its heavily regulated nature, is a belief that the banking industry is also in for far-reaching
restructuring. Respondents from the financial services industry itself are convinced of it: 70% believe
significant convergence with organisations from other industries is on the cards, compared with 45% of
respondents in the overall sample.
Share of respondents agreeing that "The vertical market in which my organisation operates will bear little resemblance in
2020 to how it looks today."
(% respondents saying "strongly agree" or "agree")
70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

0
Total

Europe

Asia-Pacific

North America Financial services IT & technology

Manufacturing

Education

Relentless efficiency improvement and Big Data will heap pressure on competitors, margins and
business models. Supporting the prediction of continued disruption is the conviction that technology
will continue to afford organisations big opportunities to gain a jump on their rivals. For example, a large
majority (70%) of survey participants affirm that there remain plenty of gains to be made in improving


Economist Intelligence Unit 2011

Frontiers of disruption
The next decade of technology in business

operating efficiency (although education and public sector respondents appear far less convinced of this
than others). Executives also expect technology advances to deliver greater speed and responsiveness
toward customers and, through ever more sophisticated data analysis, the ability to tailor products and
services to an unprecedented degree. This combination means intensifying competitive pressures—
including price and margin reductions in many markets—faster change in business models, and thus
continued disruption to markets and industries.
Do you agree or disagree? "When it comes to improving operating efficiency, enterprise technology has reached a plateau—
there is not much more room for achieving efficiency gains."
(% respondents)

3

Strongly agree
Agree

25

Disagree

45

Strongly disagree

25
2

Don’t know

The negative side of this is that organisations which cannot keep pace will suffer. This concern is
palpable amongst a significant minority of the survey sample. Over one-third of participants fear that
their organisation will be unable to keep up with technology change and will lose its competitive edge.
More than a few—13% of the overall sample, and as high as one-third of those from the IT sector—even
believe that their business will disappear within the next decade due to technology-driven business
model change.
Share of respondents agreeing that "I worry that my organisation will not be able to keep up with technology change and will
lose its competitive edge."
(% respondents saying "strongly agree" or "agree")
Total
38

Europe
38

Asia-Pacific
32

North America
41

Financial services
46

IT & technology
51

Manufacturing

35

Education
30

Government/public sector
29

Technology will shift considerably more power toward customers. Thanks to the Internet, social
media and other communications technologies, customers in both B2B and B2C markets have become
more adept in recent years at gaining leverage with their suppliers. Many executives in our survey
expect this shift in the balance of power toward customers to gain momentum over the next decade.
For example, increasingly sophisticated data analysis will certainly benefit companies looking to gain


Economist Intelligence Unit 2011


Frontiers of disruption
The next decade of technology in business

a deeper understanding of their customers, but customers will also gain from better, and much faster
access to, product and market data. One survey participant opines, for example, that “pervasive mobile
technologies will reduce the information asymmetry between vendor and customer. There will be nowhere
to hide for ridiculous mark-ups and prices.”
Customers will also enjoy a more direct influence on their suppliers’ innovation processes. When
asked which of various groups will be the main source of new product or service ideas in 2020, top of
the respondents’ list come customers and online communities, ahead of internal R&D and employees.
(Manufacturers are the most firmly convinced this will be the case.) More than eight in ten also believe
that internal project teams in 2020 will typically include representatives from customers, partners or

external communities. Among other activities, they will be advising firms on business processes: when
asked who will be the main source of new ideas for process improvement, almost as many executives point
to customers (18%) as to their own employees (20%). Better data and faster networks will clearly help
organisations improve how they innovate, but these findings suggest also that learning how to treat
customers as innovation partners will be at least as important.
What is the main source of new product or service ideas today, and what do you think it will be in 2020?
(% respondents)
Today

R&D

In 2020
38

18

Customers
21
30

Competitors
13
8

Employees (non-R&D)
12
7

Online communities
6

19

Emerging markets
5
9

Partners
4
6

Other industries
1
2

Other
1
1

Don’t know
1
1

Flatter structures, with more decision-making authority at the periphery. Our survey respondents
are undecided on how precisely technology change will impact on the organisation itself. For example,
just over half expect all of today’s familiar departments (eg, procurement, accounting, human resources)
to remain in existence a decade on, while others expect the responsibilities of some of these to shift
elsewhere. There is considerably more consensus, however, when it comes to the IT function: 62%
of the sample believe that in 2020, responsibility for delivery of most IT services will reside within
individual business units rather than a central IT function. And over three-quarters think that most of the


Economist Intelligence Unit 2011


Frontiers of disruption
The next decade of technology in business

organisation’s IT services will be delivered by external parties (eg, “cloud computing” providers).
Expectations of decentralisation extend beyond the IT function. A clear majority of executives believe
that technology change will lead to a “far-reaching devolution” of decision-making authority to the
periphery of organisations. Assuming decentralisation also means greater local freedom to design
individual processes, this may also explain why a majority (52%) of respondents believe that ensuring
good operational risk management and governance will be much more difficult in the future. An identical
majority also fear that compliance requirements will become so extensive as to discourage some firms
from implementing new technologies.
There may also occur a flattening of decision-making structures, as technology advances are expected
to reduce the ranks of middle managers.
Share of respondents agreeing with the following propositions about the organisation in 2020
(% responding "highly likely" or "somewhat likely")
Total

Financial services

Manufacturing

Education

Government/public sector

80

80

70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

0
Responsibility for the delivery of most IT services will reside
within individual business units rather than a central IT function

Most of the organisation's IT services will be
provided by external parties

(% responding "strongly agree" or "agree")
Total

Europe

Asia-Pacific

North America

80

80

70

70

60

60

50

50

40

40

30

30

20

20

10

10

0

0
Technology will enable a far-reaching devolution of business
decision-making authority to the periphery of organisations

As enterprise technologies advance in sophistication and speed,
the middle management layer will be vastly reduced in organisations

A more virtual working environment, but what does this mean? There is agreement with the notion
that the working environment will be substantially changed in a decade’s time thanks to technology


Economist Intelligence Unit 2011


Frontiers of disruption
The next decade of technology in business

advances. For example, eight in ten survey participants are certain that “virtual working” will be the
norm thanks to more secure mobile technologies and cloud computing models. This will not necessarily
translate into widespread teleworking, however: more disagree than agree with the proposition that most
employees will work from home rather than the traditional company office. It does, however, point to a
vast reduction—possibly even the disappearance—of “non-digitised” information used by employees. It
also suggests that most employees will conduct all their communications and electronic work using just
one device.
Technology advances are rightly viewed by many people as liberating, but views of the future working
environment emanating from this survey are not uniformly rosy. A majority of executives are convinced,
for example, that they will be working more hours on average than they are today, and also more years
on average—views no doubt coloured by today’s economic doldrums and the growing threats to pension
funds.
Do you agree or disagree with the following statements about business and work in 2020?
(% respondents)
Strongly agree

Agree

Disagree

Strongly disagree

Don’t know

The majority of employees will work from home rather than from a traditional company office
8

40

44

61

Employees will work more hours on average than today
8

55

33 1

3

The working environment will become ‘virtual’ thanks to more secure mobile technologies and cloud computing models
14

66

16 2 2

The concept of non-digital information will be utterly foreign to most employees

9

50

33

6 2

Conclusion
Thinking about technological progress often brings forth a sense of optimism about the future. This
research is no exception, as the executives in our survey see significant opportunities for technology
to improve not only how they conduct business but also to provide solutions to challenges in areas as
wide ranging as energy conservation and poverty reduction. However, their optimism is tempered by
recognition of the related challenges and risks ahead. As the survey suggests, many organisations
will not be able to keep pace with the changes to come. As new business models take shape thanks to
technology advances, older ones will wither, and companies’ ability to survive will rest on their capacity
to adapt. Rather than slowing down, as some experts believe is happening, this process of technology-led
innovation if anything is likely to accelerate.
Polling executives provides just one prism through which we can glean the future impact of technology
on organisations and industries. Other perspectives are needed to gauge the likelihood that the former’s
visions will become reality, and to offer alternative outlooks. In a report to be published in early 2012,
the Economist Intelligence Unit will offer different scenarios of future technology disruption based
on discussions with some of the world’s leading technology and business thinkers as well as with
practitioners.



Economist Intelligence Unit 2011

Frontiers of disruption
The next decade of technology in business

Appendix: The survey sample
In September-October 2011 the Economist Intelligence Unit conducted a survey of 567 executives from
across the world. Our sincere thanks go to all those who took part.

In which region are you personally based?
(% respondents)
North America
29

Western Europe
28

Asia-Pacific
27

Latin America
6

Middle East and Africa
6

Eastern Europe
4

What is your primary industry?
(% respondents)
Government/Public sector

19

Education
15

Professional services
15

Financial services
13

IT and technology
8

Manufacturing
5

Healthcare, pharmaceuticals and biotechnology
4

Energy and natural resources
4

Construction and real estate
3

Entertainment, media and publishing
3

Consumer goods

2

Chemicals
2

Telecoms
2

Agriculture and agribusiness
1

Retailing
1

Transportation, travel and tourism
1

Logistics and distribution
1

Automotive
0



Economist Intelligence Unit 2011


What are your company's annual global revenues in US dollars?
(% respondents)

Frontiers of disruption
The next decade of technology in business

$500m or less
57

$500m to $1bn
13

$1bn to $5bn
10

$5bn to $10bn
4

$10bn or more
16

Which of the following best describes your job title?
(% respondents)
Board member
3

CEO/President/Managing director
28

CFO/Treasurer/Comptroller
2

CIO/Technology director
2

Other C-level executive
11

SVP/VP/Director
16

Head of business unit
6

Head of department
17

Manager
11

Other
5



Economist Intelligence Unit 2011


What are your main functional roles? Select all that apply.
(% respondents)

Frontiers of disruption

The next decade of technology in business

General management
49

Strategy and business development
39

Operations and production
28

Marketing and sales
20

Finance
18

IT
16

Customer service
14

R&D
11

Risk
11

Information and research

10

Human resources
8

Procurement
6

Supply-chain management
6

Legal
4

Other
4

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