You’ve always heard that the only thing that remains constant is change.
Well, that sentence effectively sums up the state of the world over the last few years.
All around us, groundbreaking innovations and technologies are being released daily. Finance as we know it is under a revolution and a decentralized economy is now a reality.
With the fast pace of technology development, the digital economy has moved beyond just the internet. The digital economy is a network of commercial, economic, and professional transactions empowered by disruptive technologies such as the Internet of Things (IoT), artificial intelligence, cloud computing, virtual reality, big data, and blockchain, among many others.
Now, considering the pace at which the digital economy is changing, speculations on what the future holds are at their highest peak.
In this article, you are going to learn from experts in the industry, Adam Maxwell, founder, and CEO, and Ken Van Ierlant, CDO and Digital Strategist, at Elevated. The two will weigh in their insights and experiences on key topics surrounding the future of the digital economy.
Let us get right to it.
Table of Contents
Disruption is the change that occurs after digital innovations or technologies alter the way existing goods and services function. Disruptions always come after digital innovations involving one or more of the emerging technologies listed earlier.
These innovations change the ways customers and society in general behave. Consequently, businesses have to adapt to the evolved behavior of their clientele. This causes an actual disruption or paradigm shift to the company. Possibly to the whole industry in question.
You find that only companies with the technological know-how to cause disruptions would succeed in the digital economy. As Ken put it, “…digitization is about disruption. It’s not about efficiency. Ten years ago, the big oil companies were leading the big 500 on the NASDAQ or the New York Stock Exchange. Today, we see that only technology gold companies are driving the rank. Today, it’s important to become a technology company.”
However, it is essential to note that consistency in innovation is also key to staying at the top. In the fast-paced technological world we find ourselves in, every second could be the moment another company develops a technology better than yours. Ken also agrees with this.
Using Tesla as an example, he says, “…they’re losing track because the incumbent players are catching up with providing new models and new technologies that are better than Tesla. What we see is that keeping up your position in the market is very difficult because it relies on the technology of innovation.”
Digital disruption would play an essential role in the future of digital economies. Companies investing heavily in research and development stand a higher chance to succeed in the very competitive market ahead. As Ken rightly says, “…It’s a continuous game where you can’t rely on the successes of the past because you can be disrupted tomorrow and be put out of the game very easily.”
Emerging technologies can be complicated to understand and engage with. However, at the core of the digital economy is decentralization. And the entire concept of decentralization is steeped in ensuring that controlling power doesn’t rest in the hands of a single authority. Instead, it is shared amongst every stakeholder involved.
Therefore to successfully decentralize the economy, infrastructure that can enable anybody to engage and interact with these technologies is necessary. Adam expounds on this when he says, “…Right now it’s very difficult to grasp, navigate and create value, due to the lacking interface. But we’re going to see incredible innovation, and it’s a case of having the infrastructure to facilitate those incredible developments at the market.”
Companies that pay attention to user interface, user experience, and personal computing will be at the forefront of the digital economy. This is because they are concerned with a significant characteristic of this economy- putting the customer first.
In the coming years, the culture of a company- its operating model- will matter more than its business model. This is because if the working model isn’t to the advantage of the customer, then the entire business will lose its relevance.
“We live in a customer-centric society, meaning that customers will determine who you are and what you will be in the next few years based on the service that you deliver,” Ken predicts. It is already playing out in these years where companies like Apple, Slack, and others have carved a niche for themselves through their customer-centric models.
At the core of disruption is change. Companies that are willing to adapt to game-changing innovations quickly would have a better chance to be part of the future of the digital economy.
Adam aptly defines disruption as destruction. He believes that it is to “… destroy or disrupt heavily, the incumbents who are placing barriers, manipulating markets, putting out propaganda, fear, uncertainty, and doubt to prevent or hold back the disruption.”
Many big companies that failed to embrace the digitization of the world have slowly petered out of existence. Now that the stakes are even higher and the pace even faster, this possibility is higher than ever before.
Even governments have come to realize that they need to get with the trends. However, concerning the Gaia-X move of the European community, Ken is unimpressed. “They’re going for a centralized economy… They’re implementing regulation; they’re fighting big tech. They’re politicizing the entire high-tech development.”
He explains that there is a very lengthy, complex process awaiting the community before Gaia-X can be fully functional. And that would still not guarantee its success because fundamentally, going in the opposite direction of innovation is not a good idea.
Another point to note is the speed at which a company adapts to disruption in its industry. According to IDC, 85% of stakeholders believe that they have only two years to adapt to a change in their sector before their company falls behind others.
Concerning certain big companies, Ken points out that “…what we see is different speeds in society. We see that young new companies are reaping the benefits and building platforms that can generate a lot of value. While the incumbent players of industry 1.0 are lagging behind. And they’re all suffering from the legacy systems in the past. It’s Newton’s law; when it’s very big, it’s very slow.”
As seen over the years, individuals and companies that embrace emerging technologies in their early stages quickly become critical players in the economy of things. IBM was quick to acknowledge the potential of blockchain and invested heavily in the technology. Now, it is actively developing blockchain initiatives to solve crucial problems in society.
The data-centric approach is not the same as data-driven. Many companies claim to be data-centric because of the large amount of data they amass and how it is pivotal to their services. However, when you carefully look into their model, the most crucial aspect of their operating model is the application that processes the data.
No matter the many claims, the data-driven approach is very application-centric. Application-centric practices collect a large amount of data but use only about 18% of it for business processes, leaving the remaining 88% unstructured and unused. This simply shows that data is not the principal asset in this model.
Also, application-centric models are very complex. This is because, for this approach, you create data models for each data set. So you find that “…if you want to connect them, and if you want to use AI, … or emerging technology, you will not reap the benefits for the simple reason that you don’t have one single truth in your company,” Ken states.
On the other hand, the concept of a data-centric industry is simple. Data is the permanent and principal feature, while applications last as long as they are relevant. In this approach, the architecture of your business is built around the data available.
This approach is beneficial in the sense that all applications and processes necessary for your business will function with one integrated data model. All adaptations, developments, and suggestions will also be sent back to the model and acknowledged across all platforms.
Ken states that “data-centricity provides you adaptability, flexibility and the opportunity with no-code platforms to build functionality that will create value.” It’s the future of the customer-centric digital economy that is upon us.
A data-centric future also promises enhancements in the forecasting abilities of businesses. Consider this:
“Data is information… and the present state of the universe is an effect of the past and a cause of the future,” as Adam succinctly states.
Therefore a data-centric model that utilizes every data available to it will be able to forecast the future of a market to a reasonable extent, simply based on the cause-effect principle.
Adam ends with this, “…it is misguided to think that anyone can see very far into the future. But we absolutely have objective measurements through which we can forecast in the short term with the aim of ultimately enhancing this user experience. It’s a never-ending process of incremental improvement to forecast, measure, revise, and repeat.”
Data-centric systems are built from customer choices and preferences, and by analyzing these preferences, businesses and designs would be able to influence choices to create real value.
Adam explains that this analysis would change “… how people are engaging, how people are using systems. The market provides the feedback as to what is successful, what is a good decision.” He says that this would effectively drive these processes “…towards equilibrium, away from inefficiency, thus reducing the free energy in the chaotic system.”
Technologies composed of data obtained from consumers would be widely used in the future. According to Adam, “Blockchains are generally public and immutable. It is public distributed ledger technology, which means that it’s a very efficient means of storing, managing and therefore, analyzing and utilizing data.”
Getting organizations to embrace this data-centric approach might prove challenging, however. As Ken rightly states, “…if you build your company on SAP, for example, for the last 20 years, you can imagine you have built a pyramid of applications, but also 1000s of jobs with it. People rely on the complexity of the environment, and their existence will rely on that complexity.”
The shift to a data-centric model is a necessity. However, your business has to consider multiple consequences of that shift and handle it as seamlessly as possible.
It’s evident that no matter the facet of life you’re concerned with, one way or the other, these changes are headed your way.
We live in an age where information is power, thus an insight into the direction of the digital economy is critical to your business’ success. Be sure to work on implementing these trends and predictions. You’ll need a lot of patience because they wouldn’t be easy to integrate into your existing models. There might even be certain systems you will have to remodel from scratch.
As Adam rightly said, “…the great financial reset will produce polarizing outcomes for those who are prepared versus those who do not see it coming.” You have to ensure that you are ready for the future of the digital economy.