Every business needs to “go digital.” Data about customers, competitors, suppliers, and employees are actually exploding. Ninety percent of all data were created in the past two years. By 2016, there will be 3 billion Internet users globally, and the Internet economy will reach $4.2 trillion in the G-20 nations.It appears that no company or country can afford to ignore this phenomenon. Scale and speed of change are altering industry structures and the way that companies do business. Farsighted companies, even ones in traditional industries, can separate the signals from the noise and create new sources of advantage by adopting digital strategies. For BCG, The “new” Internet is different in many ways from the old Internet. Here are 6 reasons followed by my comments
1-Its center of gravity is shifting. The Internet has become interactive and participatory. It is moving from fixed access to ubiquitous access. No longer limited to developed markets, it is growing by leaps and bounds in emerging markets, as well. And these countries are increasingly driving innovation.
Emerging countries are embracing digital innovations. A country like Kenya is a world leader in term of growth of the digital wallet.
2-It is now an “Internet of everything.” IBM predicts that 1 trillion devices will be connected to the Internet by 2015. The Internet of everything can radically change the ways companies interact with customers and run their supply chains. It also allows new entrants to attack the foundations of traditional industries.
It is a case of disruptive innovation as analyzed in the book Innovation Dilemma by Clayton Christensen.
3-It is about ecosystems. The Internet is increasingly being shaped by ecosystems orchestrated by companies such as Amazon, Apple, Facebook, and Google, but also by companies such as Baidu and Tencent in China and Yandex in Russia.
Complementors are increasingly important in the digital economy because of the presence of networks effects and switching costs. A good book on that issue is the Network Economy from Hal Varian and Carl Shapiro.
4-It is generating tremendous economic value. Across the G-20 nations, the Internet economy amounted to 4.1 percent of GDP, or $2.3 trillion, in 2010, larger than the economies of Italy or Brazil. In some leading economies, it is contributing up to 8 percent of GDP, powering economic growth and creating jobs.
The growth of the global ICT sector is one of the main drivers behind the growth in GDP of several economies
5- It has gone local. The Internet experience has become an ingrained feature of everyday life, reflecting national characteristics as well as economic, political, and social influences specific to individual countries.
In several countries mobile Internet through SMS, mobile app chat, smartphones, tablets and Wi-Fi has developed a culture of instantaneous conversation. Consumers and businesses are developing a dependency toward the mobile Internet. The negative aspect is that people expect rapid answers and decisions.
6- A new generation has grown up on the Internet. The “Millennials” have vastly different expectations as employees, consumers, and citizens. The Arab Spring protests and grass-roots “occupy” movements in the West are only the most visible manifestations of the power of the Millennials to shape society and commerce.
People less than 40 years old have grown up with several technologies: computers, Internet, video games, cellphones. For them these technologies are already user-friendly. A new generation of Internet entrepreneurs is growing quickly in emerging countries.
Consequences
BCG argues that these developments have four consequences for companies and policymakers alike.
1- Companies need to understand and strengthen their “digital balance sheets.” In an increasingly digital world, companies need to build their digital assets and reduce the digital liabilities, often organizational, that limit their ability to tap rich opportunities.
Companies must develop digital competencies to create new products and services.
2- Many companies require a digital transformation. Most will need to improve their people, processes, and organizational structures and adapt them to the digital world. Given the rapid pace of change and the intensity of competition, they will need to move away from long-term planning cycles and toward adaptive strategy setting.
Innovation is a main issue for many firms around the world. In order to create value, managers must use a good mix of internal growth and growth by acquisitions and incorporate a digital strategy in their business model.
3- Governments can help shape the digital economy. They can support policies related to investment, innovation, education, consumer protection, and privacy. In many areas, they should recognize that a hands-off approach is the best option.
Countries such as South Korea have largely promoted ICT and are now world leader in high-speed Internet
4- More than 15 years after the rallying cry was first heard, the Internet really is “changing everything.” As Walter Wriston, the legendary leader of Citibank, said in the 1980s, “Information about money has become almost as important as money itself.” That is true for every business today.
I can also add we now have an information overload. Analysts and web sites that help people to separate the wheat from the chaff in information are becoming more important than ever.
The growth
In the G-20 nations, the Internet economy will grow more than 10 percent a year through 2016, according to a new report published by The Boston Consulting Group (BCG) as part of its Connected World series.
In the developed markets of the G-20, the Internet economy will grow approximately 8 percent annually; in the developing markets, it will grow more than twice as fast—at an average annual rate of 18 percent. Argentina and India will grow the fastest, at 24 percent and 23 percent a year, respectively. The leading developed markets—Italy and the U.K.—will grow about 12 percent and 11 percent a year, respectively.
BCG projects that the Internet economy will contribute a total of $4.2 trillion to the G-20’s total GDP in 2016. “If it were a national economy, it would rank in the world’s top five, behind only the U.S., China, India, and Japan, and ahead of Germany,” said David Dean, BCG senior partner and a coauthor of the report.
Source : https://www.bcgperspectives.com/content/articles/growth_innovation_connected_world_digital_manifesto/
Louis Rhéaume
Infocom Intelligence
louis@infocomintelligence.com
Twitter: @InfocomAnalysis
