‘Internet Phase 2’ will have 10-15 times the impact: Cisco
When talking about the potential impacts from the acceleration of the digitisation wave or the age of the "Internet of Things", Cisco’s John Chambers does not give us much of a choice - "disrupt” or “be disrupted.
"If you watched what’s happened, the Stage 1 Internet age has created a lot of GDP growth. Phase 2 will have 10-15 times [more] impact," said Chambers, who served as chief executive of the network-equipment company for 20 years before taking on a new role as executive chairman in July.
"Key is, are you going to disrupt or be disrupted?" he said at his firm’s third annual Internet of Things World Forum held in Dubai early this month.
IoT and digitisation reached their "infection point" this year, considering the levels of interest of top executives and country leaders on the subjects.
IoT will not only generate US$19 trillion of economic benefits in the next decade but also transform every single business, every single city and every single country, Chambers said.
On the other hand, a country, individual or company that fails to reinvent itself to embrace digitisation will be left behind.
While 75 per cent of companies are moving to digital, only one-third of them will probably succeed, since most will fail to change their culture, reorganise, reward their people right, get into the speed, innovate, or become an outcome-based organisation, he said.
The Cisco executive has famously predicted that 40 per cent of firms will cease to exist in a meaningful way in 10 years.
Countries must re-skill their workforce, create a new generation of entrepreneurs and start-ups.
"The majority of job growth will come from SMEs, not the big companies any more," he said.
There will be a "brutal disruption" in every industry.
"Think about an insurance company, they won’t need an agent."
To embrace the digital transformation, companies should focus on competing against the market transitions, not their competitors.
"You don’t compete against your competitors but on market transition, and differentiate on that.
"If you compete against competitors, you’re looking at a rear view," he said, citing Nortel, a former Cisco competitor, as a case of a once-great company that failed because it missed a market transition.
The next important trend in information technology will be "everything as a service", he said.
Scott Brown, Cisco’s vice president for the enterprise segment in Asia-Pacific and Japan, said in Bangkok that digitisation impacts would "dramatically accelerate" during the next five to 10 years.
Part of the disruptions would be driven by start-ups.
"The top 20 start-ups in Asia have got $18 billion funding in the last six months and their market capitalisation is totalling $132 billion," he said, citing a recent Tech in Asia report.
These top start-ups are scattered all over the region – from GrabTaxi from Malaysia, Xiaomi from China, Flipkart from India, Lazada from Singapore, to Coupang of South Korea.
Equally, disruptions will come from incumbents that use digitisation to go across industry boundaries, such as retailers that have begun to offer banking services.
According to a study conducted by Cisco and IMD business school, in the incumbent cases, the healthcare industry is likely to be the most affected, while the media and entertainment industry is expected to be disrupted the most from start-ups.
