How industry incumbents are striking back

Seek and champion change even when the status quo is still working: that's one of the driving messages from IBM's "19th Global C-suite Study, Incumbents Strike Back"

The report shows that despite predictions that disruptors would take over the world, it is incumbents who are now leading the way. These supposedly lumbering giants have found surprisingly agile ways to navigate the new landscape and turn disruption to their advantage.

The comprehensive study developed by the IBM Institute for Business Value (IBV), draws from frank, in-depth interviews with 12,875 C-suite executives, from six C-suite roles across 112 countries and was released in full at the Mobile World Congress in Barcelona by Jesus Mantas and Saul Berman, both executives and long-time business consultants from IBM Services.

The IBV is IBM Services' internal think tank organization and is regarded as the world's top thought leadership source, according to Source Global Research, and this report builds on the culmination of 15 years of knowledge and research.

The study shows 72 percent of surveyed chief experience officers (CXOs) claimed that incumbent organizations — rather than new entrants — are leading the disruption in their industry. By comparison, only 22 percent say smaller companies and start-ups are leading disruptive change.

So, how did industry incumbents stage this remarkable come back? Re-allocation of capital was key.

"It's essential for leaders transforming their organizations to go beyond acquiring new skills: they need to create a continued learning culture in their organizations" says Mantas, managing partner, Cognitive Assets and GBS Ventures. By identifying smart new start-ups and being able to quickly invest in or acquire them, incumbents were able to own the disruption, and the platforms and data that came with them.

"""The trend favoring incumbents is about the rise of B2B in the era of digitization. The internet that B2B companies are building out internet business models upon is more AI, massive bandwidth, crypto-currency, security, cloud, and more. These didn't exist when Amazon started — but they are stronger building blocks used by incumbents to challenge the status quo and upstarts" -Matt Anderson, president & chief digital office, Arrow Electronics

The numbers are clear:

  • 28 percent of C-suite executives are reallocating some portion of their capital to build out platforms.
  • 46 percent of organizations are either investing in or considering the new platform business model -- the remaining 54 percent will need to leverage others' platform models.
  • 57 percent of the organizations with a strategy to disrupt are builders or owners of a platform business model. By orchestrating direct interactions between consumers and producers and gathering lots of data along the way, they are dominating their market segments and scaling in new ones with ease.
  • Future reallocation to platform business models are expected to approach an estimated USD 1.2 trillion in the next two to three years, up 174 percent from the approximately USD 420 billion reportedly already invested.
"""The future of our industry will be driven by the quality of the customer experience, not only the quality of products and services. Our customers are increasingly expecting to have the same kind of experiences in working with businesses that they have in the consumer space. With this in mind, at CEMEX we have teamed up with IBM to listen and better understand the needs of our customers and their markets." -Luis Hernandez, executive vice president of administration and organization of CEMEX

The Dollar Shave Club is a clear example. When this, and other, smart new subscription services entered the market, it created mass volatility. Unilever eventually stepped in and acquired Dollar Shave. Now many businesses offer subscription services, from retail and consumer products and even the auto industry.

This re-allocation of capital towards start-ups with innovative or disruptive technologies have enabled incumbents to buy the technology they needed to stay competitive. Other smart incumbents are allocating capital to build platforms of their own and leveraging that data to find new competitive edge. "Future economic returns and value will increasingly be driven by participation — or even better, leadership — in platforms" states Berman, partner, VP & chief strategist, IBM Services.

IBM's report says owning platforms and leveraging data is what will drive future innovation. "Data will be critical. Data is the new currency." The report goes on to say that "by remaining fluid, and able to adapt and change we remain most competitive in this new ever evolving environment."

"Only 20 percent of the world's data is public," says Mantas. "The other 80 percent is enterprise data. It's not searchable. It's behind the firewalls of organizations and institutions. It is infused with their deep knowledge, experience and expertise and the tools to harness this data are now available."

And that data is set to lead change and adaptability across all sectors.

A chief marketing officer from the energy and utilities sector in the United Kingdom puts it like this: "Our challenge is creating vast digital change on a short timescale; disrupting our sector without disrupting our current high service levels to our customers. We are investing in technology to become more agile and enable something closer to a state of continuous transformation."

At the launch of the Incumbents Strike Back, a lively panel backed up much of what the report reveals. Hosted by Mantas, the panellists included Luis Hernandez, executive vice president at CEMEX; Matt Anderson, the chief digital officer at Arrow; Joerg Niessing, affiliate producer of marketing at INSEAD; and Berman.

The panel discussed the need to find champion change-makers within the company with Joerg Niessing advising, "You must have the right culture and leadership in place." Arrow's Matt Anderson agreed, "I look for people to work with who are avid supporters of transformation and I guess I ignore the rest."

The panel also focused in on the incumbent advantage of having masses of raw data and combining that with smart platforms. "It's not that platforms that are winning, it's that platforms connected to competitive advantage are winning," said Anderson, "Arrow owns real assets, real expertise, real IOT developers, real raw goods, real franchises, and when we connect those assets to the platform - that's the magic."

Catch up on the launch of the C-Suite study at and Facebook.

IBM Services is the professional services arm of IBM, made up of business, technology and industry experts who apply advanced technology and help clients design, build and run businesses.

In an era of unpredictable disruption, companies need to do more than transform. You must fearlessly reimagine your business — to the core — designing and building the platforms necessary for growth. Protect and prepare for what’s next with IBM Services.

To learn more follow us @IBMServices and visit


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