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What is the likely impact of digital disruption caused by The Fourth Industrial Revolution on business models?

24Jan Posted by Jonathan Jordan

Digital disruption refers to the rapid changes Artificial Intelligence (AI), machine learning, mobile/cloud computing and other ‘Fourth Industrial Revolution’ technologies are having on business models and the value propositions of companies. This revolution is transforming how we live our lives and is providing us with a wide new range of choices on how we can specify products and services to be more aligned with our individual needs.

Alongside these new capabilities, digital disruption often promotes a higher degree of transparency, which is heightening the expectation of enhanced behaviour in every area of business practice: sustainability, finance, government relations, corporate governance, and diversity and inclusion. This is set against the traditional short-term outlook for continuous growth and profitability every quarter.

Disruptive threats
In the long term, digitalisation has the potential to reconcile these objectives, but the immediacy of the implementation period has and will continue to cause problems for business. Companies naturally want to position themselves as thought leaders in this new era, which leads to a lot of ‘noise’ as businesses across sectors compete for share of voice, but some run the risk of stretching the perception-reality gap to breaking point as they fail to deliver meaningful change.

With innovation and disruption becoming so high on the business agenda, leaders in each industry need to become more proactive in identifying the disruptive threats they may be facing, and quantify their impact by sharing data and evidence. Increasingly they need to anticipate the cynicism of audiences by providing real examples of what they are doing and secure appropriate endorsement from collaborators and influencers.

The trust problem
The algorithms that power individual newsfeeds on social media can serve to reinforce and amplify pre-existing perceptions and fears. In a world where politicians and business leaders are already starting from a low base in terms of public trust, this trend reinforces the ‘trust deficit’. Compounding this, the decline of traditional media contributes to a need for sensationalist headlines which accentuate the negative, minimise the positive, and lead to the widening of the gap between what an organisation does and how it is perceived.

Add to this cocktail, the ‘fake news’ phenomenon where many are increasingly unable to distinguish between true and false news stories, and you have a recipe for extreme volatility in the field of corporate reputation.

Prepare to win
All businesses have to recognise the digital disruption that is occurring in their ecosystems, and actively engage stakeholders to address concerns and provide long-term, as opposed to short-term, solutions. This requires effort and collaboration, and more than ever, win-win strategies have to be developed to achieve sustainable outcomes.

Proactive forward planning, including a robust scenario planning exercise can help develop these strategies and prepare a business for the most harmful effects of a reputation crisis. Other actions include proactive (social and traditional) media engagement and investing in developing spokespersons’ skills so they can engage audiences, strengthen relationships and build reputational resilience.

The trust deficit can only be bridged by communicating the responsible initiatives that are being taken and having trusted third parties endorse these actions. Visibility in this respect is vital, and moving to a new model of communication means making better use of a range of assets, including infographics, video vignettes and microsites – which accentuate the human element of the story.

Every challenge can be an opportunity and the businesses that master disruption and showcase their innovation with positive visibility, and earn endorsement though collaboration from industry bodies, relevant media and NGO groups, will certainly gain a comparative advantage over those who merely react.

This article was originally published on PR Moment on 22nd January, 2018.

Jonathan Jordan
Jonathan Jordan

Jonathan Jordan is Senior Partner and Founder of Sermelo. He has over fifteen years of experience in helping companies anticipate and respond to changing market dynamics, be they driven by technology, digital, shifts in consumer attitudes and behaviours, or new regulations or globalisation.

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