The New Digital Business Economy

man watching many tv screensInternational leaders face an era of unprecedented change. The recession and financial crisis that ended in 2009 caused a seismic shift that has reshaped the global business landscape. The world economy is now characterized by sluggish growth in the West, a shift in power to the East, and value-driven customers and rising risks everywhere. At the same time, the downturn has hastened the adoption of key technologies—mobility, cloud computing, business intelligence and social media—that are transforming businesses and sparking a new wave of wealth creation, particularly in the emerging world.

Economic growth and technology are inextricably linked. Current economic conditions are fostering investment in technology as emerging markets ramp up their demand for technology to fuel growth, and advanced markets seek new ways to cut costs and drive innovation. This becomes a virtuous circle as digital technologies drive consumer income and demand, education and training, and efficient use of capital and resources—leading to increased economic growth, particularly in emerging markets.

Executives must be aware of the new challenges facing their firms as market momentum accelerates. Rising middle classes in places like China and India offer extraordinary potential for companies that understand their needs. Emerging markets are also spawning rivals that are unencumbered by legacy systems and corporate bureaucracy—with their sights set on advanced economies.

Against this backdrop, there are potentially several significant shifts companies will need to address
over the next five years:

1. The global digital economy comes of age.
2. Industries undergo digital transformation.
3. The digital divide reverses.
4. The emerging-market customer takes center stage.
5. Business shifts into hyperdrive.
6. Firms reorganize to embrace the digital economy.
7. Restoring trust

Research has shown that an emphasis should be placed on reducing the level of organisational complexity and enhancing the ability to move quickly and effectively in following new opportunities or countering threats.

The sharing economy, collaborative economy and crowd business models are all variations on a theme. A clear strategy on how to engage with and profit from this trend is key.

The new mobile and social business models bring myriad challenges and contradictions, notes Wharton management professor Harbir Singh. “Most businesses today understand that they need to exist in an ‘ecosystem’ that includes other companies, some of their competitors. “ He advocates careful monitoring of what it being yielded, vs expenses put into, such models. He also advocates opening up of products/services to create a platform that others can contribute to.

Executives should have a forward-looking mobile strategy for emerging markets, where the phone is the primary means for internet access. At the same time, they must consider how to improve data analytics to anticipate rapid global market shifts. Remember that in a fast-moving world, the threat of security breaches increases; companies must build stronger safeguards into their operations.

Trust is also a huge subject in companies, there are two avenues of restoration that businesses need to consider, the first relating to employees’ trust and the second consumers’ trust. Business must show that it has a broader skill set and can execute on engagement and integrity-based attributes , which can involve a complete overhaul of the company culture, ethic, moral and humanity based issues in business.

Finally, while emerging markets are growing quickly, companies should remember to protect market share in their home countries—rivals in emerging markets will be looking to play in your backyard

What do you believe companies should change in 2014?