Vision for a Digital Economy
Submitted by steve_thomson 2010–07–14 08:30:27 EDT
Theme(s): Digital Infrastructure
Summary
Vision for a Digital Economy: Empowering Customers
To create Canada's digital economy strategy an explicit vision of a digital economy is required. While the Government of Canada consultation paper highlights a few of the productivity benefits of creating a digital economy in Canada, more can be done to articulate a vision that will guide Canadian policy development, not just for the three sponsoring ministries, but for all facets of the federal government.
A clearly articulated vision should benefit all 34 million Canadians including consumers, businesses, governments and non–profit organizations, and should apply across economic sectors and not just the digital producer segments like ICT, Media, the Arts and the Heritage sectors.
The following is one articulation of such a potential vision; derived from a personal view on how Canadians have already adopted Internet and now mobile ICT's over the past 15 years.
Vision: A Digital Economy is about Customer Empowerment
A digital economy is one that empowers customers by availing information and putting them at the centre of business models. A self–service economy; a digital economy is one where consumers transact any time of day, from any place in the world, using a multitude of channels. A digital economy is a consumer–pull society, rather than a vendor–push one.
An empowered customer strategy doesn't just apply to end–user consumers; it applies throughout the supply chain where each organization consumes goods and services from others. It also applies to employees, who are both internal consumers of information as well as producers.
To create a digital economy in Canada, the government needs to ensure that industry leaders continue to innovate, while it encourages laggard industries to adopt technologies and innovations proven by the leaders. When it comes to public policy, this means the government needs to provide the incentives (and remove the disincentives) for industries to adopt digital technologies while ensuring that it doesn't over–shield laggard industries that are protecting anachronistic business models.
Submission
Background:
As transformative innovations, digital Information and Communication Technologies (ICT's) enable business model innovations. It is business model innovations that create the disruptive productivity improvements and efficiencies necessary for Canada to not just compete globally, but to lead.
With the introduction of the Internet and mobile technologies, the traditional business constraints of geography and time no longer apply. Consumers have more choices available to them than ever before. Traditional delivery channels are shortened, either by new entrants who sell directly to the end–user or by incumbents who have streamlined and adapted their business models.
When it comes to accessing and consuming information, because of digital technologies consumers expect more than ever before. While they're willing to do more of the work in the transaction, they expect more information and more control over the experience. Consumers now expect more choice, they expect lower costs, and they expect immediacy and streamlined transaction processes.
Digital technologies are already affecting every industry to some degree. The degree of affect can be plotted on a traditional adoption curve from early adopters through to laggards. Some industries like travel and financial services have provided self–service technologies for over a decade such that their consumers never have to walk into a bank branch, or visit a travel agent to transact. Other industries, like the publishing industry and particularly the recording industry, have been dragged into the digital economies by their consumers who demanded new business models and flexibility through things like e–books and MP3's. These industries had the option to lead with digital technologies but chose not to in order to protect their outdated business models. Meanwhile, in other laggard industries like healthcare and education, few digital technologies have been deployed in such a fashion that they create truly empowered consumers.
To create a digital economy in Canada, the government needs to ensure that industry leaders continue to innovate, while it encourages laggard industries to adopt technologies and innovations proven by the leaders. When it comes to public policy, this means creating the right incentives to adopt technology while ensuring that it isn't over–protecting laggard industries that are defending anachronistic business models.
It is in the transfer of innovation from leaders to laggards where we see much of work and benefits of the ICT industry. Only a small percentage of effort in the ICT industry is actually focused on R&D–oriented technology innovation. The majority of effort and benefit of the ICT industry is the deployment of that relatively small amount of innovation across all economic sectors.
To understand the potential of a digital economy, we first need to look at the shifts that Information and Communication Technologies have already created:
New information repositories exist like Wikipedia and IMDB, the Internet Movie Database. As well, sites like TripAdvisorTM that provide information in the form of peer–ratings.
The move to Open Data and Linked Data are examples of the emergence of new information models. These models leverage the power of the Internet to integrate (mash–up) disparate data sources, often from different organizations, to create new information for analysts and consumers and new transaction capabilities. In many cases, these business models don't require any real technology innovation as the core technology was defined over a decade ago. However, it is in the application of the technology that the true innovation is occurring.
Self–Service: Through the use of Internet and Mobile technologies, consumers are reducing costs and creating new and better consumer experiences by taking–on more of the work themselves. Leaders in self–service can be found in industries like financial services, and travel and hospitality. While these industries first led with technologies that allowed consumers to engage with them over the internet, they are now becoming the leaders in mobile technologies that extend those business models further.
Even the federal government has even proven with the Canada Revenue Agency's NetFile service that you can take a negative experience like filing taxes and put it in a more positive light by giving consumers the tools they need to make the work easier.
Lower Transaction Costs: Digital technologies can reduce the costs of transactions such that consumers can be billed for smaller items more effectively. This change allows for a number of new business models to be implemented that weren't costs effective before. Most notable are the explosion of the downloadable application created by Apple's AppStore; the downloading of single music tracks through iTunes; and the ability for anyone to create simple advertising campaigns through channels like Google AdSense.
Time–shifting and Place–Shifting: Probably the most important ramification for a digital economy, Internet and Mobile technologies allow consumers (both end–users and internal consumers) to access what they want, when they want it, from where they want it. This change is probably most resounding to the traditional media and entertainment industries where consumers are increasingly expecting to 'TiVoTM#39; or 'PVR' shows or download television shows or movies to watch them at their leisure, commercial–free. From a policy perspective, it means that 'local' is less relevant or at a minimum is defined differently by consumers. Local no longer means where the consumer is now, but instead local is the place where the consumer is sourcing their information from at that moment.
Collaboration: Digital technologies enable consumers to come together productively in ways that they never could. In–line with the place–shifting phenomenon, digital technologies allow people to collaborate both synchronously in real–time and asynchronously. In colloboration, digital technologies allow individuals to be both consumers and producers of information.
While the federal government's online consultation is a great example of the power of digital collaboration, other new models include social media like Facebook, LinkedIn and Twitter that allow people to better connect with those around them; and new business models like Open Innovation which encourage 'outsiders' to contribute to the innovation that helps leading companies to grow.
Implications:
A consumer–focused strategy doesn't just apply to end–user consumers; it also applies throughout the supply chain where each organization consumes goods and services from other organizations.
A consumer–focused strategy also applies to the employees within organizations who are also both consumers and producers of information. Generally, within an enterprise, the more and better information at hand, the better the employees ability to solve their problems, whether the problem is a customer–service problem, where the tools are often Customer Relationship Management (CRM) and Sales Force Automation (SFA); business problems, where the tools are often Business Intelligence (BI), Enterprise Relationship Management (ERP) and increasingly collaborative tools; or a Research and Development problem where the solution may already exist elsewhere, or may exist in experts that reside outside of the organization.
To compete and lead globally all industries need to be digital industries: generating and consuming more information that improves decision–making, and reduces duplicating tasks while offloading other tasks.
Recommendations:
Encourage Business Model Innovation — Canada needs to stop supporting industries that cling to outdated business models. Instead the government should incent those industries being pulled into the digital economy to find new business models that allow them to transform from laggards to leaders.
Provide an Open Data Environment for Government Data — Canada should undertake an open data initiative now and make data currently warehoused by the government. Canadians have paid for the data and we should have access to it.
Canada needs to lead by example, and as the Consultation Paper suggests, become a model user of digital technologies. By making data more readily available across the enterprise of government, an open data policy can break down the silos that exist between departments and ministries and improve internal policy analysis and decision–making.
At the same time, an open data policy will allow private sector organizations to also mash–up the data to create new applications that provide utility for Canadians.
With a considerable amount of data tied–up at each level of government, municipal, regional, provincial and federal levels — not to mention school boards, health districts and NGO's, the Government of Canada can truly lead the world by example by encouraging its city and provincial partners (and funded NGO's) to also publish their data openly.
Therefore, it is further recommended that the federal government encourage all of its transfer–fund partners to adopt complementary open data policies to encourage cross–jurisdictional mash–ups for even greater analysis and utility. Of course, all data should be de–identified to protect personal privacy, and reviewed to ensure that its release does not have national security implications.
Prepared by:
Steve Thomson
Principal Consultant
Thomson & Associates
2403–1228 Hastings Street West
Vancouver, British Columbia
V6E 4S6
Telephone: 778–371–8963
Fax: 888–869–8963
Email: Steve Thomson
