Today, many organizations are invested in adapting their existing business models to incorporate digital technologies. In doing so, they assume that certain foundational aspects of their businesses remain constant, such as the energy sources that power their operations or the transportation infrastructure that delivers their products to market. In other words, they’re transforming with an incremental mindset, digitalizing their business models on top of an Industrial-Age foundation.
It’s time to think about digitalization as a catalyst for something much bigger. We need a fresh, bolder mindset that is predicated on the rapid collapse of the resource constraints inherent in the Industrial Age infrastructure and on the accelerated shift of this infrastructure from analog to digital. This issue of Digitalist explores the next stage of digital innovation.
Jeremy Rifkin, an economic and social theorist, author, consultant, and lecturer at the Wharton School’s Executive Education program, believes that major increases in economic growth and productivity are possible only when big shifts occur around the same time in three infrastructure segments: communications, energy, and transportation.
Rifkin envisions a new economic foundation based on the digital integration of these three segments. So far, digital technologies have revolutionized communications by dropping the cost of production to near zero—what Rifkin calls zero marginal cost. Whether it’s a music video shot with an iPhone and uploaded to YouTube for millions to see or a self-published book that goes viral, creators are using cheap digital infrastructure to radically shift the cost structure of communications, hollowing out mighty publishing and entertainment empires in the process.
Soon, an Internet of Things platform that incorporates Big Data, analytics, and artificial intelligence will disrupt world energy production to favor renewable resources and transportation to promote driverless vehicles. This will create a new digitally enabled resource platform, one with the potential to disrupt the world economy and business as we know it.
If Rifkin is right (read our feature story “Tick Tock” to see if you agree), we must stop adapting to digital change and reinvent our businesses for an age when everything is digital. How do you manage your business in the post-digital age, when low-cost, digitalized infrastructure topples the barriers to entry across industries and drives profound innovation? Which companies are going to explore and exploit the power of the new platforms best?
Answering these questions requires rethinking how we plan for the future. Today we ordain a desired outcome, such as 10% revenue growth through 2020, then we marshal our existing resources to achieve it. However, as our feature “Back from the Future” explains, our plans must become oriented toward—and sourced from—the future, rather than being based on the past or the present.
Instead of choosing a goal first and developing scenarios to achieve it, we have to identify and plan for divergent futures. Companies need to determine several possible outcomes they want to pursue; analyze and assess the variables that impact each; and develop the agility to choose a new path as business conditions evolve.
Given the increased importance of digital technologies for infrastructure in the future, we need effective partnerships between government and the private sector. Public–private partnerships will become as important as they were during the era just after World War II, when countries invested hundreds of billions to create new transportation and energy networks, and business—and society—bloomed.
Today, government policies must support businesses as they capitalize on the intelligent, digitalized infrastructures that are coming. Yet as we discuss in our cover story, “More Than Noise,” there are dangers to society from increased digitalization that we need business and government to mitigate.
As our story outlines, many fears about digitalization are well founded, but we are less likely to find solutions if governments continue treating the internet as a foreign object rather than the foundation of our economic and societal future. Whether it’s finding ways to vet artificial intelligence so that it does not veer out of control or collaborating with businesses to relieve the destructive side effects of the attention economy, it’s time for governments to take a larger role in this new industrial revolution—just as they have in the major transitions of the past.
At the very least, governments need to work with businesses to better address the increasing risks of digital censorship and loss of privacy that we highlight. The old analog apparatuses for manipulating and controlling populations in police states—namely, huge numbers of secret police and informants—were porous and highly visible and imposed tremendous burdens on their economies.
Digital infrastructure makes control and manipulation much more cost efficient and concealable, while making privacy that much more precious. An entirely new, borderless Cold War is breaking out, one with armaments that are derived entirely from seemingly innocuous digital tools used every day by citizens and businesses—and the potential effects on democracy are chilling.
The infrastructure that all businesses depend on is changing, and the marginal costs associated with deploying it are falling. Companies have completely new ways to create and retain value. How will the post-digital age impact businesses and citizens? Read to find out.