Nations need to adopt digital transformation to boost economy, productivity
Digital technologies, in particular, have the potential to transform entire industries as we have seen in sector such a retail with the growth of e-commerce providers, hospitality and transportation with the growth of the sharing economy. In this regard we have seen the emergence also of entirely new business models and the growth of platform-based competitors, typified by companies such as Uber, Lyft, AirBnB and SAP.
Economists consider productivity to be a nation’s long-run growth engine. At the same time, almost all economists agree that digital technologies are a necessity in order to achieve permanent increases in the productivity of a nation. For example, according to a study by Accenture, technology innovations have the potential to increase labor productivity by as much as 40% in 2035. Indeed, a government which effectively uses digital technologies is able to progress faster, compete better and in the long run, become more prosperous.
For a nation, some examples of ways by which digital technologies can help it transform are:
- Technology can enable faster and highly efficient communication. The use of email and video calling can transform the pace at which work is undertaken
- Technology can enable collaboration. When teams in different locations are able to discuss, plan, execute, and track work all in one place, it saves both time and money and allows them to focus on simply getting the job done
- Manual tasks which are automated enable significantly higher quantity and quality of deliverables. It also allows promotion of higher-value work.
Milestones
An in-depth study undertaken by MIT Sloan Management Review and Capgemini Consulting finds that companies all experience similar milestones in their digital transformation journey.
Some of these are as follows:
Customer experience
Digital transformation has helped organisations build positive relationships with their consumers massively, which in turn boosts brand loyalty.
Operational excellence
The first impact of digital transformation is almost always on operational efficiencies.
Business model change
We have also seen the emergence of new operating modes and platform-based competitors which have radically disrupted a wide range of industries from transportation, retailing through to hospitality.
Role models
In Dubai, the first ICT strategy was announced in 1999, followed by the launch of Dubai Internet City, Dubai e-government, Dubai Smart Government and the Smart Dubai initiative. Several digital transformation initiatives have improved the quality of life in all aspects. Dubai Police uses a digital solution that allows citizens to pay fines, report crimes and traffic accidents.
We have also seen the first smart police stations win areas such as Dubai Silicon Oasis, which are completely enabled by technology. Petroleum giant ENOC offers an RFID-enabled fueling system for cashless and cardless automated payments. And the Smart Dubai 2021 vision aims to make Dubai the happiest city on earth by embracing technology innovation in areas as diverse as smart buildings, smart roads, smart energy, smart justice and more. These developments are underpinned by the use of disruptive technologies such as AI, Blockchain, AR and VR.
There are several examples of countries which have transformed themselves into rich and industrialised nations as a result of digital technologies.
As the third biggest economy globally, Japan always embraced technology and has pioneered several disruptive innovative technologies such as pocket calculators, the Sony Walkman and LED lights. The nation has successfully used tech in several ways to become one of the most industrialised nations in the world.
The Chinese government places great emphasis on science and technology as a fundamental driver of the nation’s growth. Digital transformation has ensured its place today as a world leader.
For most of the 20th century, Germany has won more Nobel Prizes in the sciences than any other nation. The country’s focus on digital transformation has made Germany a world leader in innovation with several science and technology feathers in its cap.
UAE was ranked the first in the Arab region and 12th globally among highly competitive countries in the IMD World Digital Competitiveness Ranking 2019. The nation is a great example of how progress can be achieved through the use of technology. The UAE is widely held to be one of the world’s most advanced digital economies. This was born out in a recent Fletcher School, Tufts University Digital Planet report.
Challenges
Some of the most common challenges faced by nations are as follows:
There is substantial investment which needs to be made in upskilling and process innovation. Past best practices suggest that every dollar invested in ICT should be matched with a $4 or $5 investment in process improvement and training.
The digital technology ecosystem is highly interdependent and includes numerous strands such as digital platforms, communication, digital economy skills, cyber policies and much more. There should be equal focus on all aspects in order to reap benefits.
Digital transformation cannot happen without leadership and institutional capabilities. These capabilities are crucial to bring about a shared vision, mobilise commitment and bring about change.
Digital transformation requires cultural change as well as technology implementation. Indeed, there is significant evidence to suggest that the latter is the most important of the transformation process.
Digital transformation always needs to be accompanied with upskilling. For technology to succeed, the workforce needs to be able to harness it effectively.
A McKinsey Global Institute report states that 62% of executives believe they will need to retrain or replace more than a quarter of their workforce between now and 2030 due to automation and digitisation.
Key takeaways
- According to a study by Accenture, technology innovations have the potential to increase labor productivity by as much as 40% in 2035.
- Germany has won more Nobel Prizes in the sciences than any other nation.
- Japan always embraced technology and pioneered several disruptive innovative technologies.
- Digital transformation cannot happen without leadership and institutional capabilities.
- Digital transformation requires cultural change as well as technology implementation.
- Digital transformation always needs to be accompanied with upskilling.
- A McKinsey Global Institute report states that 62% of executives believe they will need to retrain more than a quarter of their workforce.
Dr Paul Hopkinson, Associate Head of Edinburgh Business School, Heriot-Watt University Dubai.
