The words “disruptive technology” invoke thoughts of uncontrolled chaos and uncertainty with many organisations viewing it explicitly from a negative impact to themselves and their related industry.
By Pavana Ranjith
This view is supported by a recently released study on the state of innovation in South Africa by Accenture, which indicates that even though the majority of South African companies are expecting to be disrupted by innovations in their industries over the next three years, half of them are not prepared to cope with it.
Disruption creates opportunity. This is arguably best illustrated by those entrepreneurs and companies who have innovated out of the disruption created by the unprecedented and far-reaching consequences of the Covid-19 pandemic, by radically embracing or accelerating technological investments to remain relevant.
The longer-term impacts will become prevalent through entrenching of the move to virtual workspaces and practices; digitization as a key platform for learning and skills development; accelerated autonomous health, manufacturing and transport industries; and far more integrated, diverse and coordinated supply chains to name a few.
Risk management has a responsibility to guide executives and decision-makers in understanding the risks and opportunities presented by disruptive technologies.
Some of the key risks include the risk of being overtaken by competitors and new market entrants with cheaper and more efficient and effective business models, failure to meet the increased demands of clients, diminishing revenue channels and growth opportunities, inadequate talent pipeline, poorly-conceived responses to macro trends and changing consumer preferences.
Some of the key features of innovative companies that disrupt and innovate include:
Flexibility and adaptability: having the right technology with robust configuration or alternatively the practical strategies to move towards this. To illustrate this, some recent shorter term examples in the healthcare industry in response to Covid-19 include 3D printer technology used to produce airplane parts, now used to produce respiratory ventilators, drone technology to drop parcels and medication, and telemedicine with virtual visits and remote-patient monitoring.
Data analytics and capabilities: coupled with flexibility and adaptability is having the right systems to efficiently obtain and analyse data to inform disruptions and innovations.
Leadership and innovative culture: the above will not be successful without the innovative and delivery-driven leadership that understands that constant business change is part of the “way we do business”; a culture and organizational structure that supports, encourages and rewards innovation and creativity while supporting “quick fails” and a diversity of knowledge and skills to collaborate and implement robust solutions. We as risk practitioners are an integral part of this diverse workforce.
Do we practice some of the key ways of understanding the risks and opportunities presented by disruptive technologies?
The following are critical for the risk practitioner to consider helping broaden his/her understanding of these risks and opportunities:
- Scan the horizon consistently and continuously – proactively scan the environment and consider both the downside and upside of disruption;
- Scenario planning: consider how emerging trends and developments impact the business model, consumer trends and regulatory requirements and other key business drivers;
- Ask the right questions to provoke broader strategic-based thinking rather than silo-based operational approaches; and
- Be creative and innovative in solution-finding rather than relying on ready-made risk plans and templates.
Closer to home, we can expect that disruptive technologies will not just impact our organisations and stakeholders but significantly impact our roles as risk practitioners.
The nature of our own jobs will evolve as technologies such as AI (artificial intelligence) will replace the mundane tasks of number crunching and report writing and free up time for deeper and more proactive value-adding risk work.
Are we adaptable, flexible and appropriately skilled? Are we building the right data analytics now to ride the exponential headwinds of disruption and innovation?
Pavana Ranjith is an executive committee member of the Institute of Risk Management South Africa (IRMSA)