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Ready or not: Digital disruption


By Flor G. Tarriela

When a new market of unserved customer needs is opened up by something simpler, cheaper and more convenient, disruption in business happens. Remember the horse carriage industry? It was disrupted not by faster horses but by automobiles, which changed how people moved around. Disruption is finding new ways to be more efficient that you can end up changing the process and its output completely. This is what digital age is doing but for ALL industries and ALL AT ONCE, said Winston Damarillo in his book “Ready or Not.”  He says “technology is no longer just helping us do the same things better, it is changing how we do things altogether.”

Winston says that “Digital transformation is about changing the core of how you do things, that has less to do with tactics and more to do with understanding – deeply, intuitively, even emotionally – what the future will look like.”  How would you like to:

  • Wake up to the voice of your house Artificial Intelligence (AI) telling the latest weather update, the news and your health status?
  • Go to work with cars that drive themselves. It’ll be clear commute without car fumes or billboard ads now migrated completely to phones.
  • Shop online for clothes from different designers, delivered by drones, within two hours to be returned by drones if they don’t fit.

In the book, Winston discussed about 6 disruptions, one of them is The Online Market Place disruption. Here he describes the Alibaba phenomenon. The traditional shopping experience was going to the malls. That is now changing with the Internet.

As Jack Ma, Alibaba founder says “The Internet levels the playing field and gives everyone – big or small – a chance .“

Do you know that Alibaba business-to-business market place now connects more than a million small businesses to buyers in 190 countries selling practically anything under the sun? How does Alibaba do it and keep its cost down?

1.Alibaba does not keep any physical inventory. It is an e-commerce platform that allows people to sell their goods on a “marketplace” they maintain.

2.Alibaba does not pay for the goods sold so its cost is low. Hundreds of millions of items are for sale in the website.

3.Alibaba has harnessed the Internet to shrink physical distance and thus bring the same inventory to much larger customer base, reaching customers across both urban and rural China, in the US and in the Philippines, etc.

Just like UBER. Uber as a platform employs no drivers, owns no cars but has thousands of cars that can get you from point A to point B as your own car conveniently.  And so with AirBnB which owns no hotel but rents out so many rooms.

Mr. Damarillo also said that companies can now “buy” services almost as easily as a person can shop for bags. The mainstreaming of e-commerce will help power the rise of what Winston call the indiepreneur:  small, independent businesses in food, art, fashion and music who are able to reach a bigger market through the Internet whether through their own online storefronts or through others.  The culture and experience of the everyday customer are shifting more and more towards digital.  Companies (e.g. newspapers, bookstores, Kodak, Radioshock) that fail to prepare for the borderless online marketplace will find themselves dying and fast.  They grew their inventory but got disrupted by someone who realized that the internet could take physical constraints out of the equation entirely.”

The key he said is that companies who understand what customers, (the DIGITAL customers) want will win the customers’ wallet and loyalty. In the new online marketplace, the digital relationship with the customer comes before everything else. He also said that the Philippines has 47 million internet users and 119 million mobile connections. 41 million of the mobile users are connected to social media. The average Filipino spends 99 minutes watching TV daily and 432 minutes looking at computers and mobile devices. GMA 7’s EAT BULAGA successfully used the power of social media around the virally famous ALDUB. And this is just the beginning as more than half of SE Asia is below 30 years old, growing in economic and political power. In the Philippines, many still have bad internet or no Internet at all. So we are re still in early stages. Yes, The Internet is ushering a new global economy. At the center of it are platform economies, a new breed of digital customer and the central role of data and information.

The FINEX Board (led by President Dick Du-Buladad) paid a courtesy call to BSP Governor Nesting Espenilla, with him were BSP officers Deputy Governor Chuchi Fonacier, Chief of Staff Mary Jane Chiongand Managing Director Lyn Javier.  Governor Nesting mentioned four (4) BSP reform priorities: Domestic Capital Market, Foreign Exchange Market, Digitalization and Financial Inclusion. On DIGITALIZATION of Financial Services, he mentioned the National Retail Payment System. He encouraged banks to use technology to further broaden customer base, meet customer needs, serve customers better, be more efficient to lower operating costs OR … lose out.

READY?  Ready or not, it’s closer than we think. Disruption is on the way. Better ACT now or be disrupted!!!


Ms. Flor G. Tarriela is Chairman of PNB and a Director of FINEX.  She was formerly Undersecretary of Finance, the first Filipina Vice President of Citibank N.A. and past president of BAIPHIL.

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