Digital Business in a Post-Digital Age (Part 1): Post-Digital Revolution
Connected artificial intelligence, online platforms, advances in data processing and cultural change lead us to a new business era. It has completely new rules that every company needs to respond to in order to survive. The series of articles entitled “Digital Business in a Post-Digital Age” aims to shed more light on the technologies, effects and systems that determine the new rules, as well as the necessary changes in the way companies think and act. This first introductory part looks at the essential characteristics of the fourth industrial revolution and the post-digital age.
Industrial revolutions
Today we are at the very beginning of a fourth industrial revolution, which is very different in character from the previous industrial revolutions. After the introduction of mechanical production facilities based on water and steam power (first industrial revolution at the end of the 18th century), the introduction of mass production with the help of electrical energy (second revolution at the end of the 19th century), the use of information technology and electronics for automation (third revolution in the early 70s of the 20th century, also called the digital revolution), the fourth industrial revolution describes the exponential changes in how people, businesses and systems interact through a comprehensive network of intelligent technologies. What is important here is the connection of technologies that enable systems to make more autonomous decisions using large amounts of data (“cyber-physical systems”).
This revolution will affect all industries and economies. While building on the computerization of the third industrial revolution — the digital revolution — it is considered a separate era in terms of speed, scale, and the impact of technology. The fourth industrial revolution is disrupting almost all areas almost everywhere in the world and is leading exponentially to massive change at unprecedented speed.
Fig. 1: Industrial revolutions
Postdigitalism
Today, we are talking about the post-digital age, which lies just ahead of us. The term “postdigital” does not mean in this context that digital technologies will not be relevant anymore, but that the new age will be based on the achievements of the digital revolution and that connected technical intelligence will be ubiquitous and normal. For example, same as electricity or water are today, digitalization will be so profound and omnipresent that it makes no sense to look at it separately from everything else. There’s no such thing as digital marketing anymore; it’s simply about modern marketing. There’s no such thing as online commerce: it’s about contemporary commerce. There’s no such thing as online banking anymore: it’s about banking, just like how it takes place today.
In a post-digital age, a chief digital officer makes as much sense as a chief electricity officer or a chief water officer. Almost everything will be digitally transformed and functioning, and so naturally that it will not be thought about anymore. Users move seamlessly between devices, networks and platforms. The perceived boundaries between online and offline are becoming increasingly blurred. Connecting to and in networks will be a permanent state for most people. Personalization, artificial intelligent virtual assistants and virtual reality will be normal in every area — whether in a professional or private setting.
Dealing with these circumstances and developments is fundamental to the survival of companies in all sectors. Businesses should stop adapting to the digital transformation, but reinvent themselves for an age in which everything is already digitized.
“Software is eating the world, in all sectors. In the future every company will become a software company”
Mark Andreessen, Founder of Netscape
New expectations, values and business cultures
Not only, but especially the younger generations of digital natives or millennials, the so-called generation Y (born about 1980–2000) and generation Z (around 1995–2010), who grew up in the internet boom and with digital media, influence the current change. The integration of digital technologies in their private and professional life changes the attitudes and the working behavior. The familiar and natural handling of digital media changes the expectations, behavior and procedures in companies.
Digital natives are increasingly getting positions in companies in which they have influence on decision-making processes and are increasingly demanding web-based solutions that enable them to act simpler, faster and more efficient. Time has become one of the most important values. Business activities that are more time consuming and take place “offline”, e.g. phone calls and long negotiations with potential suppliers, etc. are no longer desired for many, but increasingly avoided. This has a grave impact on the business relationship between companies.
Company decision-makers must realize that this is not a creeping, long-term change, but that their business situation and their relationships with customers can and will change abruptly with the change of people in the customer’s respective buying center.
Fig. 2: Half of B2B purchasers are millenials today
The age of data
With the increasing digitization of business activities, new sources of information and better, cheaper access to technology are also leading to a new era of data. One in which large amounts of digital information exist on almost every area of interest relevant to a business. Smartphones, social networks, e-commerce, GPS, connected machines, etc. are constantly producing data streams as a by-product of their regular function. Almost every person is now a running data generator. The available data is often still unstructured, but the relevant signals within that large data noise are there, just waiting to be released. Big data is easier, faster, and more powerful for businesses today.
That the big digital-born companies can accomplish things that “classic” companies of the old economy can only dream of is still a widespread belief. In fact, the use of big data can also transform traditional companies. In complex markets with complex products, it may offer them even greater opportunities for competitive advantage. The data volumes and tools available for processing and analysis in this latest revolution are far more powerful than the analytics solutions used in the past. Today we can measure and manage better and faster than ever before. We are able to make better predictions and smarter decisions with Big Data.
Since human existence, we have always had to make important decisions, often in groups. And mostly people have gone the same way: a selected group of wise decision-makers come together and everyone explains why this decision should be taken, and after some time, sometimes after discussion and argument, the final decision was left to the HIPPO.
HIPPO is an acronym that stands for the Highest Paid Person’s Opinion. This has not worked out badly for some decisions, but now we move from decisions made by HIPPOs to data-driven decision-making. Studies show that companies that make more decisions based on (digital) data are, on average, much more productive, more powerful, and more likely to succeed.
Fig. 3: Data-driven decision making vs. HiPPO driven decision making
The question of whether and to what extent and how reliably companies use data for decision-making thus has a massive impact on competitiveness and thus on the future existence of companies in their market.
Developments shaping the fourth industrial revolution and the post-digital age, with a particular impact on business models, marketing, distribution and customer interaction in traditional companies, are the wider availability of new or improved technologies, improvements in the processing of large volumes of data for better data-driven decisions, but also the changed values associated with cultural change.
There are a few key technologies and phenomena of current change in which the way companies handle them is a major factor in determining whether and which companies will be relevant in their market in the future. These are, beside data-driven decision-making, the ubiquity of digital platforms and the vast improvements in artificial intelligence. These phenomena and technologies become especially important when viewed in combination with each other. In my subsequent articles, I would like to shed more light on how these topics have an impact on the B2B business of tomorrow and how companies need to react to these developments.
In the next article of this series, I am going to focus more on the topic of digital platforms and their mechanisms, function and meaning for traditional B2B companies.
Christian Bürger, 2018/2019
