This is an era of disruption. Technology innovation, the intensifying march of digitization, and the cumulative effect of the "big exponentials" - the laws of accelerating growth governing processing power, storage, and bandwidth - are shattering, reshaping, and redefining economics in and across industries.
Companies in the technology, media, and telecommunications (TMT) sectors are in the vanguard, bringing these new opportunities to market - even as their legacy businesses are threatened by them. TMT companies have begun to engage in end-to-end digital transformation by digitizing the value chain in their core businesses and enter new disruptive businesses. Still, they are subject to massive dislocation and attack.
In this age of exponential growth, value creation remains the best metric of superior strategy, transformation, and execution. TMT companies have done a good job of rewarding their shareholders in the first half of this disruptive decade, returning 20% (Media), 14% (Technology), and 11% (Telecommunications) in median annual total shareholder return (TSR) over the 2011-2015 period, respectively.
To achieve breakthrough growth in the future, TMT companies need to make bold and disruptive moves. We have witnessed the building of a new, global digital ecosystem that is based on the exponential growth of smart devices, high bandwidth connectivity, data analytics, and cloud computing. This ecosystem is maturing fast and allowing organizations to benefit from many disruptive technology waves.
In their recent report, "Unleashing Technology, Media, and Telecom with Digital Transformation" , the Boston Consulting Group shines a light on three trends in particular: artificial intelligence (AI), the Internet of Things (IoT), and cybersecurity.
Understanding these trends may give companies in the sector a competitive advantage. AI can help companies automate their customer support or network operations. Internet-connected devices can help technology vendors improve business processes and increase efficiencies in manufacturing, transportation, logistics, and utilities companies. And a new focus on cybersecurity can help TMT companies prevent breaches, to which they are particularly vulnerable.
While AI, IoT and cybersecurity have not actively fueled growth for TMT companies in the past, they are all now active targets of venture funding and will undoubtedly shape future performance.
Venture Funding Has Stimulated AI, IoT and Cybersecurity
Using Quid, BCG shows specific areas within AI, IoT, and cybersecurity that have received the most venture funding.
Companies that transform their value chains to take advantage of AI will have a competitive advantage in improving business productivity and deepening customer engagement. AI applications under development will offer emotional as well as cognitive intelligence. They will be able to detect individuals’ moods, anticipate how people are likely to react in a given situation, and know how to motivate them to act.