Image courtesy of NASA’s Hubble Space Telescope and Wikimedia Commons

So now everyone knows that digital technology creates disruption within industries.  Yawn.  What’s interesting now are the increasingly blurred lines between industries.  Drawing industry boundaries has always been somewhat subjective, but rapid technology advances are making it nearly impossible now (and increasingly irrelevant).  Competition across industries (and by extension – convergence of previously distinct industries) is now more important than familiar rivalries within old, established borders.

The most obvious example of this continues to play out in the consumer tech sector.  Think back to the days when Apple, Microsoft, Amazon, and Google were clearly aligned with hardware, software, ecommerce, and internet services respectively.  Now these previously distinct “industries” have converged, and the four tech giants are battling it out to deliver experiences that incorporate and seamlessly integrate hardware, software, services and commerce.

This example is obvious because we’re talking about technology companies – of course digital technology creates disruption across technology-driven industries.  But similar dynamics are playing out in less obvious ways elsewhere.  Here are a few examples:

• Mobile payments: Interested parties here include financial institutions (CapitalOne, Chase, American Express), telecom carriers (Verizon, AT&T, T-Mobile), technology companies (Google, Apple, PayPal, Microsoft), large payment networks (Visa, MasterCard, Discover), and retailers themselves (Walmart, Target).  Competition in this still-emerging area is playing out as a battle between competing technology standards (e.g. NFC, Apple’s iBeacon…QR codes anyone?) and strategic partnerships (PayPal/Discover, Isis, MCX, etc.).

• Digital fitness.  Who knew digital gadgetry and old-fashioned physical exertion could go so well together?  In a subsector barely on the radar ten years ago…this holiday season we can sign up for offerings from apparel makers (Nike’s Nike+ and FuelBand, Under Armour’s MapMyFitness), device makers (Jawbone UP), and of course startups (FitBit, Movimento).  As the value of the avalanche of data from all these devices becomes increasingly obvious, can health care companies and insurers be far behind?

• Professional services.  As all facets of business become increasingly technology- and experience-driven, traditionally separate services fields are stomping all over each other’s territory to provide truly integrated thinking and tangible solutions.  This is most obvious if you look at M&A activity.  Deloitte created Deloitte Digital and is acquiring creative agencies like Ubermind and Banyan Tree.  Accenture purchased design agency Fjord, while PwC (traditionally an accounting firm) just bought BGT Partners (an experience design agency).  Meanwhile traditionally “creative” companies are investing in technology capabilities: witness WPP’s recent acquisition of Salmon (an ecommerce consultancy) and a minority stake in Globant (technology delivery services).  When ad agencies are worried about technology platforms and accounting firms need design expertise, you know things are getting complicated.

All of this means that strategists and strategic planners need to think much more broadly about competition.  If your firm is still narrowly focused on stealing market share from its historical archrival, you’re almost certainly missing the bigger picture.  Even thinking about “substitutes” in Michael Porter’s terminology is too narrow (although still important).  Substitution suggests an increase in customer choice (and therefore maybe a decrease in a firm’s aggregate demand) – but not a fundamental realignment of industry boundaries and competitive dynamics.  To boost your odds of long-term success, you need to be worried about the permanent convergence and restructuring of industries – not just shifting demand within the industry you know best.

To put it another way: this isn’t a Coke vs. Pepsi world anymore.  It’s a national-grocery-chain vs. Walmart vs. your-local-CSA vs. Amazon’s drones kind of world.

Happy holidays everyone.