Six seismic shifts CEOs must address

We are delighted to bring you the new digital economy report produced by Oxford and sponsored in part by PwC.

1. Global digital economy comes of age

  
The technology effect
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“The internet is triggering a third wave of capitalism that will transform business and government and lead to extraordinary wealth creation.”

John Sviokla, Partner, Strategy & Innovation

While the digital economy has been operating for several decades—few companies today operate without an e-commerce platform—our survey identifies four key technologies that are now bringing it into adulthood:

  • mobility
  • cloud computing
  • business intelligence and
  • social media
Figure 1: Digital metatrends

Figure 1: Digital metatrends

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2. Industries undergo digital transformation

  
Adapting to thrive
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The virtuous circle is not just restructuring the world economy; it is leading to a new phase of industrial transformation. Indeed, to compete on the global stage, and reap the benefits of the digital marketplace, executives agree that industries will continue to see sweeping changes over the next five years.

The report details how the digital marketplace will affect three key industries:

  • Media, entertainment and publishing;
  • banking; and
  • life sciences & healthcare.
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3. The digital divide reverses

  
Developing nations take the lead
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Across almost all measured indicators, our survey reveals that firms in emerging markets are more willing to adopt digital technologies than their counterparts in industrial nations.

What might such disparities look like?

  • Two-thirds of executives in emerging markets believe that mobile devices will become the standard for web applications over the next five years, compared with only one-half of execs in advanced economies.
  • Two-thirds of emerging market executives expect businesses to embrace social media and networking; just one-third of their industrial-market counterparts share this view.
Figure 1: Digital metatrends

Technology adoption in emerging vs. developed world

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4. Emerging-market customer takes centre stage

  
From glocalisation to reverse innovation
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Cash-rich from rapid growth and largely free of debt, many emerging markets are poised to become economic powerhouses. By 2020, the E7 will hold a greater share of world GDP than the G7, and a new tier of emerging markets will take off in their slipstream.

Image in a modal
Global GDP growth
Customers in emerging markets—including the consumer, business and government sectors—offer huge opportunities for Western companies that can adapt to their needs.
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5. Business shifts into hyperdrive

  
The need for speed
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Fifty-seven percent of respondents believe that business intelligence will be important to react in real time to market events, yet over one-third of companies still do not have the proper business intelligence tools to do so.

The risk of not having real-time tools to BI strategy
Figure 14: The importance of reacting to events in real time

The importance of reacting to events in real time

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6. Firms reorganise to embrace the digital economy

  
An organic,
market-like approach
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To operate in a fast-changing marketplace, where new rivals are unencumbered by rigid policies and thinking, astute Western firms are moving away from strict hierarchical decision-making and closer to a network structure that is more market-like and organic, not unlike the internet itself.

Figure 15: Obstacles to reorganizing operations
Two organisational forms are emerging as successful structures for the new digital playing field: globally integrated enterprises and edge-based organisations.
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Background

This report is based on a global online survey of 363 C-suite executives. It includes in-depth personal interviews and panel discussions with more than 35 senior executives, consultants and policy makers.

Over the next five years, firms will need to address six significant shifts that are transforming the global playing field.

Explore the survey findings above and download the report.

Contacts
Raman Chitkara
Global leader
Technology
Tel: +1 (408) 817 3746
Tom Archer
US leader
Technology
Tel: +1 (408) 817 3836
John J. Sviokla
Business leader
Strategy & innovation
Tel: +1 (312) 298 3920
 

The new digital economy: How it will transform business


Prepare for the East, but protect the West

By 2020, the E7 will account for a greater share of global GDP than the G7. However, emerging markets are not just a source of potential customer, but also of potential competitors who will be more nimble and responsive and able to deliver more affordable products and services than traditional, established companies in mature markets.

Remember that every company today can be a digital company

Advances in cloud computing have made technology far more accessible and on-demand computing has removed the cost of building propriety systems and with it the barrier to global market entry. Today, small companies in peripheral locations can compete on equal footing with large firms in developed markets. To compete effectively, large companies need to explore the cloud's potential for reducing costs, raising flexibility and improving data flow.

Make sure you have a forward-looking mobile strategy

In emerging markets, the smart phone is allowing consumers to move straight to the mobile internet, bypassing traditional PC-based web environments. Mobile marketing is becoming an essential revenue channel. Location-based services are an example of how mobility can connect to physical world.

Think innovatively about innovation

Consider reverse innovation—design products and services for poorer economies and then roll them out in developed markets. Also, shift focus from West to East to save costs and boost sales.

Anticipate global markets shifts—in real time

A by-product of the digital economy is the ability to gather a wealth of data. Utilize business analytic tools to identify market trends, test scenarios and predict results. Success depends on the quality and timeliness of data and the ability of your systems to cross-check.

Embed social media into all parts of your business

Do not think that social media is irrelevant to your business. Customers today follow online colleagues rather than corporate marketing.

Install safeguards to manage next-generation business risks.

Advanced markets are still struggling to avoid further economic slowdowns while emerging markets face the risk of overheating and asset bubble bursts A digital economy brings an escalating threat of breaches in cybersecurity. How safe is your company? What steps have you taken?