Digital economy goes hand in hand with the overall economy and its growth depends heavily on whether SMEs will make good use of opportunities it presents. Whether they will or not, two founders of technology-based companies give their opinions for deliberation.
More than four billion people, to date, are currently connected to the internet and that’s more than half of the world’s population. Technology’s being used to solve global problems such as accessible funding and dissemination of fundamental information. Put simply, for businesses to flourish, it’s best for them to be digitally connected or risk being excluded from the global market and digital economy.
Aptly, a 2018 report by the International Monetary Fund (IMF) states that, digitalisation is both an enabler and a disruptor of businesses. It encompasses a wide range of new applications of information technology in business models and products that are transforming the economy as well as social interactions. The IMF report also affirms that, the absence of a definition of the ‘digital economy’ or ‘digital sector’, also the lack of industry and product classification for internet platforms and associated services, are hurdles to measuring the digital economy.
Therefore, we put down basic, literal term whereby digital economy is an economy that’s made up of digital technologies. Inevitably, in today’s increasing digitisation age, it’s in tandem with the overall economy, making it tougher to define. However, one thing’s for sure, it’s developing rapidly. Those knee-deep in the technologically-linked industries or businesses will admit to the digital economy being the fundamental driver of innovation and a well of opportunities for SMEs.
Innovate UK identifies a number of challenges that the digital economy in the United Kingdom faces, which includes, ‘skill shortages, the cost and sluggishness of protecting intellectual property, funding support from Government as well as investors, and investment in digital infrastructure and inclusion’. Mainly, these hurdles are due to slow resolve process that don’t keep up with the faster pace of development of new technologies and ideas.
At the end of the day, it all depends on whether those contributing to the digital economy choose to grab the opportunities and exploit technology for the greater good. Their decision imminently determines digital economy’s growth. The question is, will they? Here are two opinions from founders of companies that disrupt their respective traditional industries, on which to cogitate.
Shelby Clark on utilising digital for business
36 years old, Founder of Turo, carsharing company
United States of America
Our mission is to better utilise the world’s one billion cars. The average American car is idle 95 per cent of the time. Through Turo, we’ve created a marketplace to better utilise the idle capacity of cars.
Sometimes, you need to drive yourself in a car and for those trips we want to provide affordable, convenient access to a car. However, we also want to make it easier to live without a car and without relying on a personal automobile as the primary source of mobility. Thus, having access to a car makes that realistic. We believe that we’re an important part of a vibrant alternative mobility ecosystem.
For today’s businesses, ‘going digital’ or digital, shouldn’t be an initiative. It needs to be at the core of your business, as a primary way of connecting with customers, optimising your operations and speaking about what you do. A core aspect of this should mean that you’re generating data that allows you to better understand how your business is doing and where can you optimise, cut or focus.
The digital world is touching every industry in every economy. If your business has existed for decades and digital operations are not integrated into every part of your business, this is the time to start moving. Digital technologies make businesses smarter and more efficient. You can track where your customers are coming from, understand the effectiveness of a campaign and the best way to optimise a process.
It has been reported that there’s a high percentage of businesses connected to the internet but less than 30 per cent actually sell products online, globally. The reason for that, I feel is, it’s hard to change the way you do business, even if you understand what needs to be done. While many businesses understand the importance of a digital presence, many are still learning how to further integrate digital into their businesses.
As for the key trends that’ll mark the direction that the global digital economy will be heading towards in the next five years, well, the way we get around is going to change rapidly in the coming years. This may be a marker.
I’m most familiar with the new mobility space. The biggest trends in the area [the United States] are shared, autonomous and electric. These are what that have, and will further, change the mobility landscape. With the release of autonomous vehicles, improvements in battery technology and new technology breakthroughs on the horizon, such as autonomous ‘drones’ that carry people called eVTOLs (electric vertical take-off and landing), we all better fasten our seat belts for the wild ride!
Azran Osman-Rani on digital and the economy
47 years old, Co-founder & CEO of Naluri, digital therapeutics
I think there’s a danger in trying to simplify what ‘going digital’ means. It means different things to different people. I also think this is dangerous to start with technology – whether it’s calling it something as general with digital or something more specific like, artificial intelligence or machine learning, 3D printing, virtual or augmented reality, internet-of-things, or so many other digital technologies.
What matters is not whether businesses are adopting technology or ‘going digital’. That’s irrelevant. What matters is that businesses are identifying problems that customers face – whether existing customers or today’s unserved population that could become customers tomorrow. The technologies we adopt are only as good as whether they solve real problems that real people face.
When I was at AirAsia X, we introduced many innovations that had nothing to do with digital – such as Fly-thru Connecting Transfers, Quiet Zone, Assigned Seating or Empty Seat Option – each solved a problem that weren’t addressed by any other low-cost airline in the world at that time. Innovation is about solving problems and not about using technology.
What’s important to me, is not at an aggregate macro level, but what happens on the ground. There are many exciting solutions that happen even in countries that have weak overall digital infrastructure. For example, payment solutions in Kenya or animation in Vietnam. There are also a lot of bad solutions that don’t work in advanced digital economies like the United States. So, I don’t see a lot of point in looking at macro level perspectives, but focus on solving real problems for real people, in any country, advanced or not, weak or strong.
However, the contribution of digital technologies to the global economy is significant in that it creates value but only when it’s solving real problems for real people. For starters, why spend time and effort trying to promote digital technology for the sake of technology? Don’t force the adoption of artificial intelligence or hire data scientists for the sake of having data scientists. Identify real problems people face and then innovate with solutions that solve those problems. Some of the solutions may be digital and some are very low-tech, yet just as valuable.
Lastly, my five tips for businesses to be digital-ready are: listen to customers, observe their behaviours, identify the problems they face, come up with new ideas, and try it, if it doesn’t work, try something else and if it works, make it better.
Digital economy at a glance
1. In 2018, there are more than 4 billion out of 7.6 billion people are connected to the internet.
2. In 2016, the digital economy supported 5.9 million jobs, or 3.9 per cent of total U.S. employment.
3. In 2015, 69 per cent of the UK’s digital economy stemmed from computer programming, consultancy and related activities, compared to broadcasting industry at 1 per cent.
Main Photo by Álvaro Serrano on Unsplash