Accenture unveils ‘disruptability index’

Industry disruption is already a reality for most large companies globally, according to a study by Accenture, which has come up with a “disruptability index” to help analyse the risks.

Accenture argues that the study shows that, rather than being a random event beyond business leaders’ control, disruption has a pattern that can be identified, understood and prepared for.

It analysed more than 3,600 companies with annual revenues of at least US$100 million in 82 countries along two dimensions: current level of disruption, and susceptibility to future disruption.

It found that almost two-thirds of companies currently face high levels of disruption, and two-fifths how severe signs of susceptibility to future disruption.

The “disruptability index” takes into account the presence and market penetration of disruptor companies as well as incumbents’ financial performance, operational efficiency, commitment to innovation, and defences against attack.

The analysis looks at four periods of disruption:

Durability: Disruption is evident but not life-threatening; incumbents still enjoy structural advantages and deliver consistent performance. One-fifth (19 per cent) of companies – including those in the automotive retail and supply, alcoholic beverage and diversified chemicals industries – fall into this period.

Vulnerability: The current level of disruption is moderate, but incumbents are susceptible to future disruption, due to structural productivity challenges such as high labour costs. One-fifth (19 per cent) of companies – including those in the insurance and healthcare industries and the convenience retail sector – fall into this period.

Volatility: Prominence of violent, sudden disruption; traditional strengths have become weaknesses. Companies in this period (25 per cent of companies studied) include those in the consumer technology, diversified banking, advertising and transport services industries.

Viability: Disruption is a constant; sources of competitive advantage are often short-lived, as new disruptors consistently emerge. More than one-third (37 per cent) of companies – including software and platform providers; telecommunications, media and high-tech companies; and automotive manufacturers – fall into this period.

Omar Abbosh, Accenture’s chief strategy officer, said: “Business leaders need to determine where their company is positioned in this disruption landscape and the likely speed of change. The more clearly they see what’s changing around them, the better they can predict and identify opportunities to create value from innovation for their business and rotate to the ‘new’.”