Companies are rushing to digitize—or risk having the latest startup eat their lunch.July 06, 2015
Digitize or die. That's the clarion call echoing through the business world as the Internet of Things and its next phase, the Internet of Everything, gather steam. Companies of all stripes are rushing to get with the program—or risk having the next Uber or Airbnb eat their lunch. Cities, too, are moving to digitize more and more of their operations, from smart street lighting and parking to traffic lights.
But what does it take to digitize a country? What are some of the strategies that are yielding results? Certainly, there’s no instruction manual for the task—which many agree is a bewilderingly complex one.
Cities are the new laboratories of the 21st Century - Louis Zacharilla
“I don’t know how you physically digitize a whole country from the top down,” says Louis Zacharilla, co-founder of the Intelligent Community Forum (ICF), a New York-based think tank. “You can certainly digitize a federal government to provide effective citizen services. But do you want to go out to build a digitized nation the way you build a superhighway? It’s a complex undertaking and needs to be a collaborative effort, not a mega-project, because these technologies change overnight.”
Clearly, some countries have cracked the code. These role-model nations consistently rank high on indexes that measure countries’ digital performance. Denmark, for example, tops both the United Nations’ ICT Development Index (IDI) and the European Commission’s new Digital Economy and Society Index (DESI). Other leading contenders are South Korea and Iceland (ranked second and fourth respectively on the IDI), and a host of Northern European nations, including Sweden, Norway, Finland, Belgium, the UK and the Netherlands.
What are these countries doing right? According to the UN’s index, they are high scorers on 11 information and communication technology (ICT) indicators that map a three-stage evolution towards an information society. Those three stages are: readiness (reflecting networked infrastructure and access to ICTs), intensity (reflecting use of ICTs) and impact (reflecting the outcome of effective ICT use). Similarly, the European Commission’s index ranks digital performance based on connectivity, Internet skills, use of online activities, as well as digitization of businesses and public services.
Cities as Laboratories
The Intelligent Community Forum maintains that the challenge of digitizing entire countries is simply too complex for national governments—though Zacharilla says governments have a key role in providing access in underserved and rural areas. Instead, the group focuses on the local level.
“Cities are the new laboratories of the 21st Century,” Zacharilla says. “They know what they need better than the national government does.”
Each year the group names an “Intelligent Community of the Year,” revealing that it’s often relatively obscure, mid-sized cities that sparkle most when it comes to digital performance. Zacharilla says national governments would therefore do well to go to school at the feet of cities like Columbus, Ohio; Mitchell, S.D.; or Ipswich, Queensland in Australia—three of the seven contenders for this year’s award. Columbus has implemented six different broadband options, lowered the cost of access and has a supercomputer connected to 91 universities.
“That was all managed at the local level,” Zacharilla says. “If they’d waited for the state government—which is just now starting to talk about it—to go out and do that stuff, it would have taken a heck of a long time and a lot more cash.”
That said, a national champion of the digital cause—a rare thing, Zacharilla says—can get a lot done. Taiwanese President Ma Ying-Jeou (a former mayor who has worked closely with the ICF) launched a 12-point national plan that included activating intelligent communities throughout his island nation. His reasoning: that a significant cluster of intelligent cities will create a critical mass that will effectively result in an intelligent digital nation. The government’s role is that of enabler, helping digital transformation through investment and key decisions regarding logistics.
“Governments work together with cities, but at end of day it’s cities and their stakeholders that work out how broadband is going to be used to create wealth,” Zacharilla says.
France on the Cusp
France serves as an interesting case study for a country in the throes of digitization. The nation falls in the middle of the pack on the DESI—14th among the EU’s 28 member states. According to a recent study by consulting firm McKinsey & Company, France is strong in some areas, such as fixed broadband penetration, but it underperforms in others, including Internet speed and business usage.
According to the study, only 14 percent of French companies took online orders in 2013, compared with 26 percent of German companies. And only 65 percent of French companies have a website, compared with 89 percent in Sweden. Digital progress in France is essentially in a middle gear, the report says. But if the country shifts into top gear, it could reap an additional €100 billion (about US$112 billion) by 2020.
For that shift to occur, the researchers recommend closer collaboration between stakeholders—the government, institutions of higher learning, private companies and civil society. More specifically, they urge the government to galvanize French businesses by reducing the tax burden for digital investment, secure development for very-high-speed fixed and mobile broadband, and introduce creative digital curricula in schools.
The researchers also urge colleges to deepen research in sciences and things like data mining, artificial intelligence and robotics. And they recommend large organizations to serve as role models of digital transformation, partnering with smaller companies and investing in startups. Coaches, mentors and conferences also have roles to play in evangelizing digital transformation, the researchers say.
There’s some overlap here with what Cisco aims to accomplish in France. Early this year, the company signed a partnership with the French government designed to achieve three goals: the training of 200,000 people for digital network-based roles over three years; the launch of a smart-city pilot project in a French city; and investment by Cisco of $100 million in French startups.
“France is changing, and now is the time to invest," Cisco CEO John Chambers said of the partnership.
So what does it take to digitize a country?
The answer is not a simple one—nor simply a technological one. Perhaps, as Zacharilla suggests, an effective national digital strategy is collaborative in nature—consisting of local solutions in dense, urban areas, with a stronger government role in rural or underserved areas. And it won’t happen overnight.
“This stuff is generational,” Zacharilla says. “It takes a while to take root at the deeper levels where transformation produces change. Learning new habits is part muscle memory, and that is hard for a government to ‘digitize.’”
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