Digital economy and how it transforms the world

1. Digital Economy

2. Overview of Digital Economy
• Every January, the World Economic Forum (WEF) brings together
2,500 top business leaders, international political leaders,
economists, and journalists to discuss the most pressing issues
facing the world.
• In 2015, it identified one of those issues as digital transformation:
how the lower cost and greater access to new technologies are
redefining what customers expect, how businesses deliver
products and services, and, as a result, how people live and work.
• And it launched its Digital Transformation Initiative, a study of 13
industries involving interviews with more than 300 executives. A
report summarizing its findings makes an interesting starting
point for our discussion.

4. Five Cross Industry Themes
• Digital consumption
• Digital enterprise
• Platform economy
• Societal implications
• Unlocking digital value to society

5. Digital consumption
Digital consumption explains how the rapidly changing expectations of digital
customers are driving companies to reinvent themselves. The key ideas here are:
• the transition from offering products and services to creating experiences. Consumers
are looking for specific outcomes that enhance their satisfaction and their lives.
• the focus on hyper-personalization. Consumers are looking to control and customize
their products, services, and experiences; businesses are looking to provide these
more relevant interactions by learning as much as possible about their customers.
• the transition from ownership to shared access. Consumers are increasingly
interested in having access to what they want, when they want it, without the costs
associated with maintenance, storage, or downtime. The result is a growth in
collaboration, which improves resource efficiency and unlocks value in underused
assets.

6. Digital enterprise
Digital enterprise looks at how companies can rethink every aspect of their business to
succeed in the digital era. The main points to consider are:
• which strategy—build, buy, partner, invest, or incubate/accelerate (or a new model that
doesn’t yet exist)—will yield the most effective digital business model for the company.
• which operating model—customer-centric, extra frugal, data-powered, machine-driven, or
open and liquid—will allow the business to remain quick and agile in the digital economy
while best meeting customer needs and expectations.
• which digital talent and skills—from employees to leadership to ways of working—will
best prepare the company to compete in a fast-moving, ever-changing digital economy.
• how to best use digital metrics— scale, active usage, and engagement—to measure and
increase digital traction.

7. Platform economy
Platform economy focuses on how companies that work with other digitally enabled
companies can achieve the scale, scope, and speed that lead to success in the digital era.
The principal ideas are:
• how this type of business-to-business collaboration and competition drives the
companies involved to transform their organizational structures and business
models to find greater value.
• how this type of interdependent economy helps business ecosystems to expand by
sharing the rewards among all participating companies.
• how both industry and society benefit when companies work together to create value
for customers and offer solutions to problems they could never have tackled alone.

8. Societal implications
Societal implications look at the impact these new digital business and operating
models are having on society. The key areas of debate are:
• whether digitization is creating or eliminating jobs.
• whether digitization is adding to or reducing the environmental and social impacts of
economic growth.
• whether the increasing acquisition and use of personal data is making the digital
economy more equitable or leading to an erosion of trust and a breach of ethical
boundaries.

9. Unlocking digital value to society
Unlocking digital value to society assesses quantitatively what impact digitization is
having on businesses and on society. Two ideas are especially important:
• The value-at-stake analysis quantifies the value added by new products and services
and the value that will move from one area to another due to digitization between
2016 and 2025. It is equally a measure of the cost to industries, customers, society,
and the environment that is at stake if the digital value is not unlocked.
• The digital value to society (DVS) framework quantifies the impact of digitization on
health and safety, employment, the environment, and customers over the same
period. It includes measures such as lives saved, time saved, and jobs created.

10. To Summarize
• The bottom line is that new technologies have the potential to grow the economy and
make society more equal and inclusive.
• At the same time, limiting regulations and innovation and adopting technology in
some parts of the world but not others can all undermine these opportunities.
• These are the questions all companies—and all individuals—face right now. The
digital future is in our hands.

11. Class Discussion
• According to WEF, seven main technologies—artificial intelligence,
autonomous vehicles, big data analytics and cloud, custom
manufacturing and 3D printing, Internet of Things (IoT) and connected
devices, robots and drones, social media and platforms—are expected
to have the most impact on the way we think about business.
• Can you discuss and find
• which of these you believe will have the most impact and why.
• Is there another technology not on this list that you think is more important?

12. Question 1

13. Question 1

14. Question 2

15. Question 2

16. Question 3

17. Question 3

18. Question 4

19. Question 4

20. Factors affecting Digital Transformation
• We know that digital business transformation occurs at the
intersection of three laws:
• Moore’s Law,
• Metcalfe’s Law, and
• Bandwidth Law.
• Put differently, we’re talking about using the combined
powers of computing, connectivity, and cloud.