Monthly Archives: September 2019

Digital Economy Series: In a digital world does being faster, better and cheaper still count in business?

Achieving success today

One of the dominant narratives of the business world is that in order to succeed the products you provide either need to be cost competitive, be differentiated in some way, or you need to be quicker to market than others. Will this narrative hold as the economy turns fully digital?

vehicles on road between high rise buildings
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Consider what happens today. In order to maintain profitability an external improvement approach may be taken: variations of current products may be offered, or price discounting may take place to increase the quantity sold, or new markets might be opened up. Another approach would be to focus internally. That is to reduce costs and to streamline processes. And a third approach would be to go down the innovation route and develop new products for the same or for different markets.

All of these are variations on the faster, better, cheaper narrative. A narrative that holds true in an economy based on atoms, but does it hold for an economy solely based on bits?

Achieving success in a world of bits

We can gain some insights into this future state from the transition that is currently underway. This shift can be seen in the increasing proportion of business, of the economy, of even work itself being categorised as digital. Consider some observations. First, the marketing of goods and services. No longer does the maxim hold of “not knowing which half of the marketing budget is wasted”. For with the analytics available from advertising campaigns using social media channels and search engines the marketing budget can be spent more efficiently.

And second. What about the potential of big data, machine learning and the internet of things currently being brought to bear on say manufacturing processes, the logistics sector, and on agricultural practices? Finally, not forgetting consumers in all this data processing potential: we can find what we want or need more efficiently among the increase array of choices available to us.

Another insight from this transition is the merging of values with business activity. No longer can a company opaquely distance itself from that which is socially unacceptable. Today’s consumers, and even employees, increasingly call out participants in the local, national and global economies for lack of transparency and corporate behaviour at odds with forward looking standards.

A final insight is with respect to legal and political matters. Until recent times, the digital economy could be regarded as this anarchic wild-west frontier where the scale of profits was beyond comprehension and regulation was an anathema to the full gamut of stakeholders. But now we are seeing serious discussions concerning appropriate taxation regimes, effective safeguards of personal and private data for business use, and a range of attitudes of governments when it comes to how they use their citizens’ data.

Increasing efficiency and transparency

So, from one perspective digital technology is making the market more efficient. Perhaps even moving it toward that holy grail of it being a perfect market. Where there is perfect information, sufficient products are available for consumers, and where the lowest cost is the hallmark of all goods and services produced.

And from another perspective, digital technology is making the market more transparent. Where the ulterior motives of its stakeholders become clearer and the governance of data is weighted in the consumer’s favour. In other words, there is possibility that a defining characteristic of the market of the future is its integrity. That across the globe the economy operates with a high level of ethics.

A fully digital economy, then, has the potential to be described in terms of it being a perfect and ethical economy. And this potential will shape the current dominant “faster, better, cheaper” business success narrative. Where even if you are “faster, better, cheaper” due to the nature of perfect markets long lasting economic rents will be almost non-existent. Where even if your business succeeds by being “faster, better, cheaper” the rewards may well be short-lived if that path to victory was less then ethical.

The implication is that “faster, better, cheaper” is becoming “faster, better, cheaper, clearer”. For even if the systems involved in the current transition to an economy based on bits seem opaque, the potential is for all digital economy systems to be fully pellucid.

 


For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my IT Strategy blog, subscribe to my YouTube channel, or buy my ‘Jobs. Future. You.’ workbook.

Digital Economy Series: “Who and what is holding us back from a fully digital economy?”

Among many responses to the to the unfolding phenomena of a digital economy there are two that stand out. The first, is “yes, we will be enmeshed in a full digital economy by 2050”. The other, and more phlegmatic, response is “potentially, we could be enmeshed in a fully digital economy by 2050”. Upon examining the reasons for the less than full hearted second response, we reveal the forces arrayed against change. What follows is an assessment of the second response.

stop sign
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Consider the fields of human affairs in which we are experiencing change. There’s environmental change, shifts in international and domestic politics, technological advances and the constant innovation in the health and human services sectors. Let us not neglect the spheres of finance, education, and governance. The list goes on. Trends, change and drivers of change. All threads in the dynamic tapestry of early 21st Century life.

In among all of this we are examining the digital economy and who and what is stymieing what some would call progress to the realisation of a fully digital economy in the decades ahead.

Asking questions is the key to this examination. Questions like: who benefits from the status quo and who loses if we go fully digital? What are the social, political, economic, legal, environmental or technological barriers to realising a fully digital economy? Are cultural worldviews and belief systems the obstacles in the path to building an economy that is fully digital?

Turning firstly to the status quo. Benefiting from the status quo are those whose influence, power and profit are founded on the world of atoms. If these attributes of prominence do not translate to the world of bits change is resisted. Remember the retailers of a few years back? To them the internet was but a passing fad. They saw no need to embrace the digital economy.

Our reference point for an examination of the social barriers could be the introduction of Facebook. Once Metcalf’s law kicked in, ordinary people could see the inherent value in sharing their lives online and overcame their reluctance to enter their personal and private details into the Facebook database. Turning to one potential aspect of life that could be with us the time ahead: personal artificial intelligence assistants (we do have Alexa, Cortana & Siri now don’t we?). Our uneasiness with being second guessed ahead of time by artificial intelligence may be rendered moot because of the value and ease these new machines bring to our lives, relationships and careers.

And what of the governing class and the way political life is conducted. Is it because of the Machiavellian dictum “never attempt to win by force that can be won by deception” that political barriers will remain? For with this category of barrier the perspective that “a fully digital economy is equivalent to full transparency” may well be the non-negotiable impediment raised by its stakeholders. An anathema to the political class.

And what of legal barriers? Consider the difficulties presented by cryptocurrencies, the machinations we have with privacy in a digital world, and the conundrums with copyright. And let us not forget the implications of RegTech, the jurisdictional challenges faced by taxation authorities in this digital world, and the quagmire at the interface of human bodies and technology.

Finally, there is who we are as individuals, as members of families, communities, tribes and nations. All revealing a rich and complex global panoply of worldviews and belief systems. We can conjure images of dystopia and pockets of doomsday preppers as symbols of resistance to a fully digital economy. And similarly we watch the countervailing forces of progressives and conservatives. Progressives seeking a better way, conservatives seeking to only incrementally improve the way things are. And then we have the reactionaries who are bent on impeding any forward movement that the forces of improvement show.

Given all this, is it any wonder that we have so far been able to thread the needle of change. Is it any wonder that the quality of so many parts of our daily life for so many lives is better than what it was decades ago?

There is no single “who” or “what” holding us back from a fully digital economy. But what there is this: a multitude of challenges that are to be overcome on our collective arc of accumulation.

 


For more of what I have to offer, visit Dellium Advisory, follow on Twitter, connect using LinkedIn, review my IT Strategy blog, subscribe to my YouTube channel, or buy my ‘Jobs. Future. You.’ workbook.