At the annual World Economic Forum under way right now in Davos, Switzerland, the agenda typically vacillates from human rights topics to environmental concerns to financial polemics. But there's no stopping progress, and increasingly, the new economy revolves around technology, and what it means to be digital.
This was the subject of a panel discussion on Wednesday broadly called "The New Digital Context." Among other topics, commentators including John Chambers, the chairman and CEO of Cisco Systems; Max Levchin, co-founder and former CTO of PayPal; and Pierre Nanterme, chairman and CEO of business consulting giant Accenture, offered ideas on how the global economy could transition into a "digital economy."
Here are the three biggest takeaways from their wide-ranging discussion:
1. Disrupt or be disrupted
"If you don't transform, your industry will be transformed," said Robert F. Smith, the founder and CEO of Vista Equity Partners, who also served as the event's moderator. "We're living in a world where the largest taxi company in the world doesn't own a vehicle. The largest book seller doesn't actually have a bookshelf."
"In short," added Chambers, "what you're going to see is every company, every country, every citizen, every home, every car, every wearable item become digital." He estimates that 40 percent of today's enterprise businesses will not survive through the next decade. That means that companies that don't reinvent themselves may get left behind during the rapid market transition to "digital first."
2. Data is the new currency
"The interesting thing about traditional companies versus the disrupters is that traditional companies already have mountains of data, and there's a lot to lose by misusing or exposing the data by doing something it wasn't meant to do," said Levchin, who is today the founder and CEO of Affirm, an alternative lender catering to the mobile, Millennial consumer. "On the other hand, disrupters, like yours truly, have nothing to lose."
According to Levchin, the industries being disrupted are those that still rely on point-to-point data communication (i.e., health care and finance). Health care, Levchin said, is falling behind due in large part to heavy data regulation, and disruption in the industry could prove a step in the right direction.
"Now that every thermometer is going to be network-connected, it's going to be completely different," he noted.
With finance, on the other hand, data is already thought of as a currency, though access to financial data has historically been limited to a very small number of people.
"The company that is today a lot like [what] the future looks like for many finance companies is Bloomberg," Levchin said. By essentially building what Levchin calls a "data store," Bloomberg has succeeded in knowing more about those using the company's data than the users know about themselves.
3. Make technology work for you
Indeed, businesses that enable new digital services and embrace business models based on intelligent connected devices and machines could contribute $6.1 trillion to the U.S.'s bottom line and $14.2 trillion to world output by 2030. That's according to Nanterme from Accenture, which just released a new report on the subject.
According to the report, just 7 percent of companies have developed comprehensive strategies to prepare for such changes. Seventy-three percent have yet to commit to using digital technologies at all.
The trouble for most of these companies lies in turning the investment in digital technologies into revenue streams. You shouldn't let that stop you, said Chambers. Instead of burying your head in the sand, you might work with competitors, form partnerships with other industries, and/or invest in new skills and talent.
To this end, Nanterme suggests many companies venture into higher education and create their own curriculums. For its part, Accenture is partnering with Massachusetts Institute of Technology and other universities to cultivate emerging talent by enhancing STEM (science, technology, engineering, and mathematics) programs. The company is also piloting curriculums that specialize in creating the algorithms used in "big data' mining. Accenture wants to create "the kind of education the public sector is not providing," he added.