Characteristics of a new digital world
The world is changing rapidly and becoming digital. Digital technologies fundamentally change how we live, work and interact and will also transform the basis of competition in most industry. This can make “the physical world better, worse, or just different”, as Eric Schmidt and Jared Cohen describe it. What are the characteristics of this new digital world? We can observe three major trends which will be laid out in more detail during the next paragraphs. The physical world is becoming rapidly more instrumented and interwoven with the physical world. Having all the information about the world digitized allows computers to analyze this data with speed, precision and context-awareness, providing a new source of intelligence and automation. MIT researchers Eric Brynjolfsson and Andrew McAfee have announced the second machine age: “Now comes the second machine age. Computers and other digital advances are doing for mental power – the ability to use our brains to understand and shape our environments – what the steam engine and its descendants did for muscle power”. As a large proportion of the whole planet will be equipped and interconnected with smartphones and integrated mobile computing devices at home and everywhere else in the not too far off future, this new intelligence will be fully integrated into our lives.
When I talked to top executives of incumbent leaders in traditional industries such as banking, insurance, consumer products and manufacturing, they all admitted that their biggest threat for their companies future they see are digital savvy companies like Google, Facebook, Amazon and Apple and new technology startups from Silicon Valley and other innovation hubs. CEOs have carefully observed how new digital players have exiled established players in the retail, music and TV industry and they fear that the same will happen to them. The new wave of digitization does not stop at the online channel. It includes every part of our lives through the new mobile channel, social media and the Internet of Things (sensors and chips hidden in traditional products).
Companies have entered the digital race
Data and digital technologies are becoming the new major source for productivity, competition and innovation. Collecting, combining, analyzing and using the large volumes of data available to us can provide companies with such valuable insights that it can be a true game changer in nearly any industry. But real change comes only, when the new data and insights are fully integrated into the business processes of the company, and when customer experiences and the underlying business models are redesigned. So, if you take away only one thing about the digital world that is evolving, this should be it:
The most important imperative for business leaders is that data will be the basis of competitive advantage across all industries and that companies need to digitally transform to reap the benefits
Naturally, data driven innovation and digital transformation get a lot of C-level executive attention today. Many companies are embarking on a journey to transform their core business processes with data and digitization. It is not enough to simply set up a single project that looks at disruptive technologies to compete in this brave new world. Leading companies have started to re-think their entire business.