Future of Business-Digital Economies

Technology's promise is not only to automate processes but to open paths to new ways of doing business.

Background 

Digital technologies accelerate business and create new value propositions that enhance awareness and create solutions.  To succeed in a digital economy,  one has to convert digital value propositions into revenue-generating enterprises.

The Discussion 

Jayant Patil, Whole-time Director & Sr Executive Vice President, Defence,  L&T-NxT reinforced that in this world of disruptions, private enterprises have to create their future. They must always be on a thinking curve to remain relevant and grow at least 15% or run the  risk the possibility of being rendered irrelevant

India missed the industrial revolution but can ride on this boom.  The question is, how will human element remain relevant in this new economy? Manual work will be mostly done by AI and robotics, rendering human being free to pursue other things. 

Industry 4.0 is going to be entirely digital. High tech products like missiles demand a very high degree of accuracy and therefore,  intricate coordination is required between the design and manufacture stage, which is only possible through AI to eliminate inaccuracies. But Jayant injected a note of caution stating that since it would be humans who programme the machines, so any inefficiency in the programming will be replicated by robotics.  

Industry 4.0 will also see the Internet of Things (IoT) where all activities will also be done remotely through the internet. This technology can be adapted in manufacturing also, especially in companies involved in high tech processes, to convert old ‘dumb machines’ into ‘smart machines’.

Digital industry sets very high standards and does not come cheap.  The government has to support this concept and revamp its procurement processes. The current government procurement system of ‘L1” may not work in the new environment- the cost in case of failure of that component must be considered rather than just its base cost.

Prasad Chandran, former Managing Director & Chairman BASF, explained how it is important to use the resources in an effective manner so that the business is accountable to their capital.  For the build-up to a $ US 5 trillion economy, the effort has to be private sector-led.    

R& D is critical in the new economy.   R&D has been revolutionised by digitalisation as information on all possible subjects is easily available instantaneously.  What used to take researchers a year to achieve can now be done in a day or two.   

Digital manufacturing techniques have changed the human-process interface. For example, in cancer drug manufacture, the raw material has a high cyanide toxic chemistry. Robots cut down on the number of steps, drastically reducing the cost of manufacturing, resulting in cheaper drugs.

Gaurav Gupta, Secretary GoI, said that the government is doing all it can do to encourage business start-ups in IT, biotech and Space.  Phenomenal changes are taking place in several fields- agriculture, health, education. Apps based business ideas are disrupting the business world and cover areas like cancer detection, new drug discoveries etc. Advantage of start-ups is that they adapt to the new technology very fast.

Karnataka has some of the largest development centres in Karnataka.  A start-up has created human cornea through 3 D printing. Hospitals that are working closely with start-ups-anticipate and adopt changes and are able to compete in the medical care industry.

The government has to act as the enabler, encouraging global funding and connecting start-up with potential investors.  The government, with its vast outreach, must identify areas which are of common interest and cooperate with like-minded countries for mutually beneficial interactions.

Gopi Hanumanthappa, Managing Director Thyssenkrup Aerospace India Gopi Hanumanthappa, explained how digital economies are expanding global margins. The operating environment has changed from what was local to a global one. This global environment has been complicated by the unprecedented influx of technologies, investor activism, rising digital convergence and economies, new definitions of risks and more importantly, the changing behaviour of consumer dynamics.

The digital economy has two aspects - the good aspect where you have an opportunity to redefine efficiency, scale skills and work around time-space expansion and contraction; thin your organisation and integrate it to the system, reduce it with knowledge and skill, which can be very inclusive, if done well. The real challenge is that close to a billion, the bottom billion, still remain excluded from the digital economy.

New risks are emerging in terms of regulations, cybersecurity, fake news, the question of who is going to own the data across the supply chain ecosystem and who has the rights over it.  Also, there is the impact of socio-economic algorithms which were developed somewhere in California but are deployed into geographies which very rarely have a similar socio-economic construct. 

In all this, the key is obviously to understand how organisations actually assimilate this influx of technology in a sustained manner. More importantly, how do they enable employees and co-workers to learn and unlearn at a pace which is going to be very, very demanding. 

At the policy level, he emphasised the need for industry, academia and policymakers to collaborate. The key is to enable local industrial development within the digital framework.  There are two areas for focus - create your own technology-based upon open art or collaborate and take a licence.  

Assessment

  • Transformation disruption is being caused by the fourth industrial revolution.  By  2022, over 60%  of global GDP will be digitised and about 70% of the new value created over the next decade will by through digital platforms
  • Digital information and physical resources will be merged in new ways to generate value and revenue.  Enterprises seeking a digital edge will exploit digital connections between systems, people, places, and things and create new business models.
  • Digital technologies, as core to the innovation-driven economies of the future, will also set to create an economic paradox.  On the one hand, productivity, wealth and profits are at a record high, but on the other, a majority are unlikely to share in its gains.
  • The gap between evolving technology and the slower pace of human development will grow quickly in the coming decade as exponential improvements in artificial intelligence, robotics, networks, analytics and digitisation affect more of the economy and society. Organisations and skills have to keep pace.
  • As the industry becomes dependent on digitisation, architectural security of IoT is required to ensure a secure digital environment or else all initiatives will fail.

 

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