Running a business is difficult. 85% of new enterprises fail within the first five years. And this is not only true for small ones but massive organizations like Nokia – who couldn’t ride the touchscreen wave, kodak who got killed by digital in favor of film or blockbuster – video on demand destroyed the DVD market. While there are many reasons including management conflict, market demand shifts, insufficient funding – technology disruption has come up more and more.
Since the beginning of personal computers in the 1980s to the dot.com bubble in the 2000s followed by world-wide emergence of mobile applications and affordable smart devices making asset-sharing models of Uber, Airbnb ubiquitous – the disruption gaps are getting shorter and shorter. As of today we are at the forefront of Generative AI (which has gained increased momentum by the launch of ChatGPT by OpenAI which is rapidly changing the way tech stacks are being built and businesses operate. With the launch of Deepseek at a lower price point – Gen AI technologies is on a path to become more affordable to a wider user base.
So what does it mean for companies? Traditional businesses have now been disrupted for a while. The banking sector has been disrupted by digital financial solutions – starting from PayPal in the US to M-Pesa in Africa to PayTM in India to Bkash in Bangladesh. In emerging economies consumers are not only leapfrogging desktops and going to smartphones directly but they are leapfrogging banking systems and going to mobile financial solutions directly and staying there. The century old hotel and taxi industry have gotten disrupted by Airbnb and Uber. With the emergence of GenAI (with the innovation cycles becoming shorter) – we are set to see much more rapid disruptions.
So what are some of the industries these disruptions are set to happen first ?
- Service Delivery: Starting from call centers to more specialized services like accounting, legal or healthcare – AI is already transforming service deliveries. For now in many cases AI is more of an augmenter but we are seeing more of autonomous platforms. For example for legal we are seeing Perplexity drafting legal contracts, Midjourney creating images from reports to advertisement materials to AI companies like Hisab replacing call center agents in Bangladesh. As Gen AI becomes more powerful, affordable and wide-spread we expect to see increased efficiency gains and human-machine collaboration leading to part of many service industries automated if not fully autonomous.
- Manufacturing and Logistics: Robotics are increasingly becoming part of mainstream manufacturing. Till now the applications were mainly in more capital intensive processes for example in automobiles. However technology is replacing assembly line parts in labor intensive industries as well. For example in garments & textiles (which is labor intensive and is one of the export mainstays for emerging economies like Pakistan, Bangladesh, Vietnam) – part of processes like quality control are increasingly becoming machine driven. With the advent of affordable AI – a lot more of manufacturing is set to become automated. Using technology like “digital twins” factories will become much better managed, resources consumption optimized while at the same time pre-detecting unwanted accidents. While fully robot driven industries may still take a bit of time – the existing growth can potentially displace a large number workforce.
- Education and Learning: Technology has already added many flavors to education – with distant learning, flipped classrooms, MOOCs (Massive Open Online Courses) giving affordable alternatives to mainstream learning systems. With AI we are looking into more possibilities with learning co-pilots, customized learning programs for each student as well as customized instructors and automated feedback loops. While we still need to figure out in student assignments what is AI augmentation and what is plagiarism – the industry in itself is changing rapidly and the traditional schooling system is getting disrupted.
So what can companies do in a world where the phrase “change is the only constant” not just a new meaning but is the truth !
- Take R&D and Innovation as a mainstream function: While companies over the years have incorporated functions like HR, sales, marketing, finance as must have – innovation / R&D often remains a niche area which stays in the sidelines. While I understand investing heavily in R&D is not always plausible – innovation should be a key area that should have a designated team who rallies organizational resources and makes sure the company stays relevant. The innovation team not only looks inwards but also looks outwards and tracks market movements and see if there are important trends the firm is missing out on.
- Understand and ingrain agility and ability to pivot: In this new era businesses will need to be agile. Processes will often be iterative rather than derivative. If things change too rapidly in the industry the business will need to change course quickly and pivot. That is why it will be important to build teams and resources who can go through these movements. Startups find it easier and hence often disrupt the market. Established companies will need to retrain resources to be able embrace change when necessary.
However, as businesses embrace technology we must also make sure to up tier our human capital. Private and public sectors must work together to make sure there is skill building and employment creation so that any displaced workforces do not get sacrificed as a lost generation.
The pace of change is accelerating. The real question for businesses today is simple: Will you drive innovation—or will innovation drive you out?
Author
Bijon Islam is the CEO of LightCastle Partners who is trying to figure out how to build a more inclusive economy in frontier markets and enjoys reading Sci Fi books.
WRITTEN BY: LightCastle Analytics Wing
At LightCastle, we take a systemic and data-driven approach to create opportunities for growth and impact. We are an international management consulting firm which creates systemic and data-driven opportunities for growth and impact in emerging markets. By collaborating with development partners and leveraging the power of the private sector, we strive to boost economies, inspire businesses, and change lives at scale.
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