How Will the Digital Economy Revolutionise Business by 2030?
We are now entering the most technologically important era since the industrial revolution. This is due to the convergence of three major social and economic trends relating to the accelerated use of advanced technologies, the move to hybrid ways of working and a call for greater inclusivity, equity and social justice. These trends represent a major opportunity for leaders to understand the way in which digital technologies such as AI can help amplify the internal qualities of their organisations, in order that their value and impact be scaled through new platforms externally, across ecosystems and the new patterns of production and consumption of the digital economy.
The two clear leaders in this emerging digital economy are the US and China. Their current dominance in platform-based enterprises means that they are the most prepared for the forthcoming wave of disruption, which is due to their ‘platform vision’, i.e., their understanding of the underlying logic and digital architectures of the new digital economy. China especially is demonstrating long-term strategic thinking with considerable investment and technology partnerships in other countries.
The impact of the digital economy is the result of two major disruptive innovations—platform-based business models and deep technologies such as data analytics, blockchain, quantum computing and advances in the life sciences such as nanotechnology. In order to understand how digital technologies are already revolutionising business, leaders need to develop an organisation-wide platform vision to overcome the conceptual confusion that often exists between digital businesses, systems and platforms.
These differing concepts can be best understood by looking at how the digitalisation of business evolved. At the start of the first internet wave in the early 1990s, companies started to build portals that provided new channels to market, powered by the first e-commerce technologies. Online portals such as AOL and CompuServe, and then mobile portals such as British Telecom’s Genie Internet, created unified customer experiences by integrating information such as news, travel, weather, sports, and entertainment with the first generation of online shopping services.
As web technologies and digital user experience design practices developed, portals brought new channels, media, interfaces, processes and technologies into the economy. Following this phase, we learned to create new digital systems. A digital system is an integrated set of digital components, service interfaces and computational infrastructure that is highly scalable, available, and economically efficient. Some examples are customer relationship management (CRM) systems, learning management systems (LMS), and content management systems (CMS).
Our personal and professional lives will be changed dramatically with the introduction of virtual worlds called ‘metaverses’ – digital worlds which blur the distinction between our real-world and virtual lives with social media becoming more of a gaming experience.
In the following phase of digitalisation, these systems were integrated to create digital solutions capable of producing or augmenting critical business capabilities. An example is a multi-channel marketing solution that can send a range of messages such as emails, SMS messages and which defines rules, business logic, and market segmentation on communications workflows. So a digital solution contains multiple digital systems and critically impacts on one or more business capabilities.
Digital solutions usually have an internal perspective rather than user-centric platforms and are based on niche business capabilities. They are always created in a closed manner, meaning they cannot scale and extend to new markets and value propositions. Today, many modern startups are closed digital solutions rather than being built on an open platform logic. However, this does not stop these solutions from being positioned as platforms, resulting in conceptual confusion for leaders who are not fully digitally literate.
This architectural misunderstanding can present significant challenges for businesses that wish to transform digitally through acquisitions. Purchased businesses can often be challenging to integrate into holding companies because their digital systems are not interoperable. Digital solutions can be evolved into platforms through architectural re-engineering, a process that requires the various digital components to be made open for extension, evolution and reconfiguration.
Platform-based business models can be understood by categorising the way in which people interact with them in three core ways:
1) Core interactions
Relatively simple fundamental interactions which reinforce the core value proposition.
2) Volume functions
These allow a platform to increase the number of people who use it.
3) Exchanges of value
The access offered by a platform in return for users sharing personal information and content.
When these different forms of interactions are explicitly understood, organisations are then able to build platforms flexibly, meaning that they can be opened up with extensions to create new solutions created by external partners. It is this aspect that is transforming the very structure of our global economy, where the focus is no longer on single businesses but whole ecosystems. Today, for example, Instagram is not just a platform. There is an entire ecosystem of solutions that utilise the platform’s functionalities.
While at present digital technologies are behind the drive towards digital transformation, it is the flexibility and extensibility of platforms that is facilitating the next wave of innovation, allowing businesses to grow by rapidly customising the way in which they deliver value to customers and extending their offers into new markets and sectors.
Our personal and professional lives will be changed dramatically with the introduction of virtual worlds called ‘metaverses’ – digital worlds which blur the distinction between our real-world and virtual lives with social media becoming more of a gaming experience. While Facebook recently announced its new name Meta to reflect its new focus on developing its own metaverse, other innovative virtual worlds have already started to capture people’s imagination. Developments such as NFTs are now allowing digital-only fashion houses such as The Fabricant to work with brands such as Adidas, Puma and Tommy Hilfiger to produce highly desirable fashion that only has a digital existence.
The vision of metaverses being the experiential basis of the digital economy will be made possible through the breakthrough advances in quantum computing now being achieved. A team of scientists in China led by quantum physicist Pan Jianwei recently announced that their new Jiuzhang 2.0 quantum computer was 10 billion times faster than its previous version, meaning that it can solve a problem in one millisecond that the world’s fastest supercomputer currently takes about 30 trillion years to solve.
While practical and commercial solutions are still a few years away from being realised, leaders need to start understanding the implications for quantum computing now, in order to ensure that they are fully prepared for those specific areas in which this type of technology is suitable for. Extremely large data sets will be searchable almost instantaneously, and real-world complex problems that were previously intractable will soon become solvable, such as computation in physics, chemistry and cybersecurity and providing optimisation solutions such as Volkswagen Group are developing in transportation and JP Morgan are developing in financial services.
Society is now at a bifurcation point, and we do not yet fully know which new order will emerge from the current chaos and complexity. Many people are now sensing dangers from having a Meta/Facebook level of monopoly in the digital economy due to the controversies that have recently come to light. But at the same time, we should not allow these understandable concerns to stop our most creative designers and entrepreneurs to discover new ways of connecting, relating, transacting and being in the digital economy, elevating humanity and amplifying our impact in the digital economy of the future, whatever form it may take.
Simon Robinson is the Global CEO of Holonomics and co-author of Deep Tech and the Amplified Organisation: How to elevate, scale and amplify your business through the New 4Ps of platforms, purpose, people and planet,
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