In digital economies, the new business models of companies – and the associated value proposition for clients – will be more important than the underlying technology that is driving digitalisation, says World Economic Forum (WEF) Global Information Technology Report (GITR) editor and Insead global indices executive director Bruno Lanvin.
All industries will transform as the length of the path from supply to demand is shortened and companies must act accordingly to remain relevant. Lanvin refers to the “überisation” of all industries, in which on-demand services will increasingly be accessed by a massive number of people and companies, requiring new business models.
He points to the music industry in the mid-2000s, which was trending downward before multinational technology company Apple’s iTunes enabled consumers to buy single pieces of music on their devices, which led to the so-called “long tail” phenomenon taking effect. This led to a shift that saw music consumed through digital channels and a mini-boom in the music industry, which led to the music industry changing its business models.
“We need banking . . . but do we need banks?” Lanvin asks, pointing out that many industries could be “überised”, as was happening in the taxi and hotel industries. Even with incremental innovation, a basic service that is widely consumed can induce a change in industry business models.
The GITR 2016 titled ‘Innovating in the Digital Economy’ measured 139 countries around the world on their enabling environments for information technology (IT), their readiness and IT infrastructure, their use of IT systems and the impact of these systems over time.
The report looked at the amount of digital innovation produced by each country, typically in the form of patents and licences, and then at the potential opportunity for innovation that each country’s profile indicates.
Noting that innovations are, predictably, realised mainly by wealthy countries, Lanvin emphasises that the potential for innovation was remarkably similar across the spectrum of developed and developing countries, but realising that potential is associated with an enabling society.
Enhancing the capacity of and support for innovators to innovate, specifically supporting small and medium-sized enterprises through enabling IT infrastructure and access, and advanced, aggressive IT policies will translate into more digital innovation.