Category Archives: Governance

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.

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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.

Digital Economy Series: In a fully digital world will companies still need to account for the environment?

There are a number of ways in which companies account for the environment. Including a seasonal perspective in terms of the variations in goods and services brought to market, another is from an environmental perspective in terms of energy usage as well as production and packaging materials, and a third is from a shareholder and stakeholder perspective in terms of statutory requirements.

person on a bridge near a lake

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In recent years the triple bottom line reporting framework has made its way into corporate practices. Where companies, for reasons due either to regulatory compliance or enlightened executives, report on profit, people and planet. That is, in addition to their standard financial statements organisations are reporting on metrics related to their staff and their impact upon the environment.

Building on the acceptance of reporting on more than one performance parameter, there is a nascent movement to embrace the quadruple bottom line. Where this fourth performance parameter is “purpose”. Defined as the ethics, culture and desires of the organisation.

The implication of the preceding is this. The administrative policies and processes that are established by government bodies, and are used to govern companies and organisations, change over time. Long gone is the notion that business reputation is solely built on a profit and loss statement.

So, into this governance implication let us now draw two threads from previous articles and elsewhere: the structure of business and the changing environment. Firstly, we know that the processes business engage in to make a profit will change in the decades ahead. Pervasive digitisation will drive an increasingly ubiquitous phenomena of process automation and forms of cognitive processing. Limiting the typical set of tasks available for the human workforce to those requiring people skills and/or thinking skills.

Secondly, while this trend of digitisation gathers apace the climate and natural environment in which business and the digital economy is beholden to will still be changing. There are two responses to these macro changes. The first, described as a pathway of current and common ambition, is to succeed in humanity having a light footprint on the environment. On the other hand, the pathway of lackluster ambition necessarily leads to outcomes that are less than optimal for all life forms.

Now, there is currently a broad acceptance of the concept of a global carbon budget. Therefore, one can envisage that, over the course of the time horzon for this series of articles, this principle of a global budget being established in corporate governance practices. Where economic entities are given a “profile” to work within. Thus, realising a transition from triple bottom line reporting through quadruple to quintuple. That is adding “profile” to the currently recognised profit, people, planet and purpose.

With respect to the triple and quadruple bottom line reporting the sense is that these governance outcomes are the result of internal motivations. The result of what the business decides to do. With the “profile” metric, the sense is that the reporting is on the outcomes with respect to the environmental budget that any business is given to work within.

This “profile” metric, a response to a set of imposed environmental limits, is relevant to both climate outcomes. Through either an enforced collaboration upon all businesses to ensure a continued light footprint, or a set of rules to limit the damage upon our common habitat.

The image of this future for business, the government and the economy is this. It is where the operational milieu of business is characterised as an expanse of intensely interconnected entities that are data and computationally rich. Where the description has morphed from being called a digital economy into an intelligence economy. Where the wisdom of the quintuple bottom line enforces the boundaries of all behaviour.

In a fully digital world companies will not only need to account for the environment they will be required to.

 


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.