As we enter 2016 with a relatively weak economic outlook, business and government leaders are increasingly turning to the digital revolution to secure faster growth. Digital transformation is the most important strategic challenge facing business leaders I speak with. It presents the most significant threats and opportunities any of us have faced in business. And yet, there’s a risk we are still underestimating the impact that digital will have on industry and wider society. Let me try to surprise you with three points of fact.
The digital economy is bigger than you think. In new analysis, we estimate that the one third of the US economy can be attributed to some form of digital capital, skills or intermediate goods and services. Certainly, much of these skills and capital need to be more advanced to support the most transformative digital business models. But at, approximately $6 trillion, it appears that the foundations of the digital economy are more pervasive than many might think.
A sizeable digital economy does not guarantee greater revenues or economic growth, however. While the good news is that many economies and companies have a large digital foundation on which to build, the bad news is that they’re often not using their digital assets effectively. By applying digital investments more smartly, they can generate significantly higher growth than they are achieving today. The U.S. could add almost half a trillion to GDP in 2020 through an optimal combination of digital adjustments to skills, capital and other accelerators.
The digitally-enabled platform economy is often cited as the greatest opportunity for growth, but one that is off limits to companies outside Silicon Valley. It is true that ‘born digital’ companies dominate platform business models today, offering new value by bringing millions of consumers and service providers together. They can act fast because their model doesn’t rely on owning assets or producing goods. However, we now see classic manufacturing companies exploiting the value of data and digital platforms to build similar ecosystems of partners and customers on top of their asset heavy business models. In healthcare, engineering, even agricultural equipment, long established brands are embracing digital disruption by creating entirely new services and streams of revenue.
The second surprise is that the workforce of the future is more optimistic about the impact of digital than you might think. By a ratio of more than five to one, employees believe digital will improve their job prospects and their work experience. While this does not mean that leading organizations through massive change will be easy, it does mean there’s one less excuse to hesitate transforming your business.
New technologies will create millions of new jobs in everything from network planning to pharmaceutical diagnostics. They will free us from process oriented work so that we can handle exceptions, spend more time with customers and devote more time to training our colleagues. Research by Accenture Strategy and the World Economic Forum estimate that in three industries (automotive, electricity and logistics) the net impact is positive: 2.1 million jobs created globally by 2025.
Finally, the societal benefits of digital are greater than you might think. That joint research shows that the gains for consumers, communities and the environment could be up to three times as large as those enjoyed by industry. For example, a shift to digital enabled circular economy models could unlock $4.5 trillion of growth globally by 2030 that will otherwise be lost thanks to today’s unsustainable business models. Digital could also reduce road fatalities by one million each year.
But to realize these gains, more needs to be done in concert with government to remove the obstacles that stand in the way. If telematics were standard in cars, for example, in-car insurance could incentivize safer driving habits. If the use of scarce resources was better regulated, greater gains could be made to the environment.
Most fundamentally, we urgently need to kick start a skills revolution, not only to fulfill the promise of new jobs, but to counter the inevitable dislocation to others that a new wave of automation will bring. Post-war computerization coincided with an extraordinary revolution in education that helped drive up wealth and social mobility. We need to replicate that achievement if the digital revolution is to transform our working lives, society and the environment for the better -- and we certainly need it if we want digital to drive higher rates of growth than we are seeing today.
