Australian business strategies - disruptive digital technology

The Australian Institute of Company Directors (AICD) completed its annual Directors Update series in the last quarter of 2016 providing an opportunity to hear what strategic priorities, challenges and forward focus, company directors should monitor in the year ahead. Of particular importance was the high level of attention paid to disruptive digital technology and what is termed the 'Fourth Industrial Revolution'  (best described as the increasing and rapid convergence of digital, biological and physical technologies).

Examples of the new technologies include:

• sensor technology and the internet of things: such as drones, satellites and home objects,
• big data and real-time mobile access to information: such as online advice and rating of health providers, wearable in health insurance,
• platform businesses which directly link providers and consumers such as Airbnb and Uber,
• cognitive computing and artificial intelligence (IA),
• automation and robotics: driverless trucks and cars,
• virtual reality (VR) technologies which use interactive computer graphics to create user perceptions of virtual worlds. A corresponding development is augmented reality (AR) technologies which can be applied through a smartphone,
• advanced machine learning (AML) which enables computers to discover insights and patterns from data using sophisticated algorithms,
• industrial analytics which use sensor data across a range of applications to improve efficiency and responsiveness.
• blockchain distributed database technology which creates the capability to record transactions between parties without third party involvement.

All of these changes however are moving faster than adjustments to the governance and oversight functions necessary to provide confidence to the wider community that sufficient safeguards exist. For example, privacy concerns and protection of personal information remains vulnerable with the new data sharing. Risk management systems currently used are poorly equipped to measure and mitigate business risks where the systems themselves are not fully understood. Related to this aspect, the level of expertise required to understand the functionality and operational impacts of the new technologies is not widely held by a large number of people. In short, these are but a few of the main concerns yet available solutions remain limited. The reliance to date, on proof-of-concept appraisals prior to adoption of a new technology is an insufficient process and Australian businesses would do well to devise strategies which encompass a greater risk evaluation framework.