By Youngjin Yoo, xLab faculty director
In January 2022, the combined market capitalization of Apple, Google, Microsoft, Amazon and Meta was over $6 trillion, each boasting over $1 trillion market valuation. At that time, these digital disruptors seemed unstoppable. Now, their gravity-defying growth has ended. Bitcoin came down from its all-time high of $68,000 in November 2021 to $35,000. Meta lost more than three-quarters of its value. Amazon laid off over 10,000 employees and warned that more would come next year. Google announced cost-cutting measures for the first time in its history. It is not just these big digital platforms that were disrupted. Terra, Celcius, Voyager and FTX––though not exactly household names––are major Web3 companies that lost billions of dollars this year. Bitcoin is now traded for around $16,000. The year 2022 will be remembered as the year digital disruptors were disrupted.
As we prepare for 2023, we must reflect on what we have seen over the last decade and separate the real from the hype. Here are some of the key observations:
First, the era of endless pilots is now over. It is time to get serious about digital innovations. Sticky notes on the wall, personas, customer journey maps, and wireframes are not enough. In fact, they were never enough. But you could hide behind the urgency of doing something. Anything. Now, it is time to build real market offerings to meet the real unmet needs of real customers.
Second, using digital technology to create customer value is important but not enough. Firms must figure out a way to capture value as well. Digital innovations must produce not only the top-line growth but also contribute to the bottom line. This means those who work on digital innovations must have financial discipline. Make digital innovation boring.
Third, the era where firms can promiscuously collect and use personal data is over. Privacy, ethics, and responsibility in digital innovations cannot be an afterthought. Digital innovations must be architected responsibly and ethically.
Newer and more powerful technology will continue to arise: more inventive digital products and services will be created: and novel business models might continue to emerge. However, the disruption of the digital disruptors in 2022 shows us that only those who build the fundamental discipline in digital innovations would likely benefit from the continuing development of digital technology.