The digital economy

Digital in today's world is characterised as innovative and cutting edge technologies that businesses use to address specific problems, transform existing/traditional business models, and streamline processes. And the economic activity that gets generated from the everyday digitised information is referred to as a digital economy. 

As the digital economy emerges, organisations such as Amazon and Uber are bringing changes across a wide range of human activities; how we socialise, communicate, commute, etc. And this digital world becoming even more vital as our global community tackles the social-distancing challenges of Covid-19.

Early adaptors

The first AI-Powered Education platform in China, Squirrel is one of the success stories of the digital economy that transformed the traditional education system in addressing global education challenges of equitable access and learning. It disrupted the ecosystem by bringing personalised learning based on pre-assessed student's IQ level and capacity, matched with required resources including teachers breaking the geographical and time barriers. 

Further to the quality of education, the growing rate of unemployment has created a socio-economic crisis globally while organisations, on the other hand, are struggling to fill up open positions. Platforms such as Upwork and LinkedIn are some of the digital ecosystems that have managed to minimise the inefficiency in the labour market by simple linkage of opportunities with talent.

Across the value chain, you will also come across MPesa that is pushing localised payment mechanisms by enabling the channel for the unbanked to move money by simply using their mobile phones, addressing financial inclusion.  

These marketplaces are also facilitated by the continuous evolution of the underlying infrastructure economy including Cloud computing enabling ease of access to storage, minimising cost of ownership and scalability as well as Edge computing bridging latency between sensors (internet of things) and central storage.

Beyond Cloud and Edge computing however, the biggest technology/infrastructure breakthrough is Blockchain, addressing the biggest society pain point of ‘trust’. Blockchain is seen as the next phase of the internet in transforming the trust mechanisms and social scalability, consequently reducing the cost of ‘intermediaries and concentrated power’.

Digital currency, Bitcoin is the first beneficiary and adopter of Blockchain and gradually Blockchain is estimated to host more than 60% of the global economy (including the Space economy). 

Sustainability challenges of a digital economy

With the acceleration of digital platform innovation and adoption, the ecosystem is also confronted with the following sustainability challenges: 

• Inequality and misuse of Public Goods

As the digital economy accelerates, keeping up with the pace to enable society with equal access to technology and digital skills along with a regulatory framework to protect public goods (i.e. data) will be the primary challenge in order to avoid further societal inequality and misuse of power.  

While the impact of Deepfake is yet to emerge, we can't avoid the linkage and threat to the political and financial system which will have an effect on society and identities as a whole. Deepfake is a form of disinformation that uses machine learning techniques to create copies of people's faces, voices and writing styles powered by unethical use of digital media and big data. 

• Economy of Scale and Environment Sustainability 

Platform economy heavily depends on storage and computing power which requires extensive amounts of electricity and cooling. Digital systems currently are estimated to account for about 3.6% of global electricity demand (more than the entire United Kingdom) and 1.4% of carbon emissions (approximately similar to global air travel). 

Annual Electronics waste is estimated to be close to 50 Million tonnes, worth over 62 Billion USD of which only 20% are recycled. 

The trend poses a question on the compatibility and alignment of two fundamental Global Economies: the green and digital economy. 

• Maintaining the ‘human’ touch 

The digital world has connected people across the world making virtual networking reality, as we have seen demonstrated recently as companies move to remote working during the current pandemic. As communication and collaboration get cheaper and faster with the digital age, it has also created a reliance on technology diminishing the intrinsic value of face-to-face interactions. This will ultimately have an impact on effective communication and the required soft skills in business context especially in the era of ‘AI Enabled Work environment’ where man will have to compete with machines. 

As communication and collaboration get cheaper and faster with the digital age, it has also created a reliance on technology diminishing the intrinsic value of face-to-face interactions.

Tackling these challenges

In closing, the world is faced with tremendous challenges with nearly a billion people still below the poverty line, one-in-seven people globally suffer from some sort of mental disorder, and climate change affecting livelihoods. The digital economy has proven to address and transform these societal issues, and if we have to harness the full value, there needs to be system-wide change to minimise the negative effect of digital causing further inequality, disorder and its threat to our planet and the livelihood of future generations. 

My hope is to see collective actions to foster system-wide responsible platform leadership: from education reforms fostering horizontal cooperation among disciplines as well as a transdisciplinary approach to STEM framework, conglomerates pushing solution-oriented portfolios to the market, and government orientation and focus towards collective societal problems (i.e. instead of talking about the Automotive/Transport industry perhaps mobility as a whole). 

Coordinated action and integrated approach among stakeholders will ultimately play a vital role in designing and developing digital systems to help address societal and environmental challenges towards sustainable development. 

Professional background

Tom is an innovation and strategy consultant with over 20 years’ experience of bringing applied creativity to blue chip businesses and global brands - helping them to build innovation capability and develop new products, services, propositions and business models. Formerly Director and Head of Idea Development at innovation and growth consultancy Fahrenheit 212, and Strategy Director at creative agency Imagination, Tom completed his MBA at Imperial College Business School in 2015 with a final thesis that focused on the role and value of innovation labs within the creative industry.

Tom takes pride in his association with Imperial and our alumni network.

"The Imperial alumni network has given me a huge number of opportunities in my career. It is great to be able to get back in to touch with faculty, researchers, the School and other alumni. It is great to be able to support alumni and get support back from them," he said. 

Professional background

Sheridan is an experienced senior executive, and has worked at PwC for nearly ten years. Over this time she has developed a deep expertise in technology and innovation strategy, and developed a passion for ensuring the responsible, ethical and equitable development and use of new technologies to improve productivity and the quality of life. Her current role as Innovation Lead at PwC (UK), working for the Board member responsible for Technology and Investments includes leading the innovation strategy, building technological and innovation capability and supportive culture, assembling and sustaining collaboration amongst diverse sets of people and organisations in evolving innovation ecosystems. She also founded the ground-breaking initiative Tech She Can, which has brought together 115 companies and institutions to work together to create a long lasting impact on the societal-wide level issue of too few girls and young women pursing technology subjects and careers.

Sheridan is a proud and active member of the Imperial alumni network.

"Being part of the Imperial alumni network is really important to me. The people I did the MBA with are still very much in my life and that was 20 years ago. We are still a community and connected across the globe. I get so much out of being part of the network," she said. 

Professional background

Mike has focused his career on trying to make communications more effective, using data driven decision making to drive marketing campaigns and communications. He is the founder of Lumen which uses cutting-edge eye tracking technology to understand what captures customer attention and drives consumer behaviour. He started out at BMP DDB, the agency that invented Account Planning. In 2007, he moved to New York, to start a strategic planning department for Tribal DDB in North America, applying planning practices to digital communications. Two years later, he went out to Mumbai, to head up the planning department for the DDB group in India. He returned to the UK to work for Tesco's advertising agency, before taking on his MBA.

Mike credits his time at Imperial, in part, for the creation of his company. 

"I owe the very foundation of my company to the Imperial alumni network. It connects you from people you know, to people they know and to people they know. The Imperial network is very strong," he said. 

‘Culture trumps everything’ was the resounding message from the Imperial Women’s Network panel exploring ‘Changes in Organisational Culture’. Our panel of experts provided a well-balanced outlook on why the culture of an organisation is key to success and how to address changes to culture in a positive and effective way.

Impact of digital 

Nicola Millard, Principal Innovation Partner, BT, began the discussion focusing on productivity in the digital age and the future of a diverse and innovative workforce. She looked at how office space is becoming more adaptable, and approaches to the traditional work structure are more flexible. Technology has allowed for greater connectivity and collaboration, but her message was that culture must underpin this with trust, support and continued investment in upskilling: “Technology potentially untethers us, as long as culture doesn’t hold us back.”

Factors for success

Suzanne White, Director of Organisational Transformation, Deloitte, discussed the behaviour shift in the banking industry over the last few decades, and how this has led to cultural transformation in the sector. She outlined the issues that need to be addressed for successful transformation:

• Behaviours – you need to tackle the elephants in the room before you can move forward and this needs to be done with c-suite involvement
• Build transparency and trust
• Be inclusive and have a holistic approach

Suzanne also explored the best way to measure culture. Ask yourself: What is the vision? Are there key moments in the organisational history that you can learn from? What existing metrics do you have? What are the current conditions and how will they support success? Do you have local leadership to help drive change? And how can you leverage internal talent?

Employees and leaders must all share the same beliefs, values, and behaviours to drive change. This includes both the processes and decision-making, as well as the people-focused issues of reward and recognition, stories and symbols.

Inspiring change

‘Don’t lead change, inspire a movement’, was the advice from Jill Williams, Occupational Psychologist and Talent Consultant, Partner, Honne. Her focus was on how to bring human principles to the heart of an organisation. Organisational change can often focus on what people don’t have, or the typology of becoming ‘innovative’, ‘futuristic’ ‘dynamic’. Instead the focus should be on the positives of the organisation and its employees. Jill’s advice about creating a meaningful culture focuses on four conditions:

1. Psychological safely and trust – allow people to feel trusted enough to take risks and speak out
2. Meaning and purpose – help people connect with their work and align with personal values
3. Belonging – promote deep, purposeful relationships which foster open and challenging dialogue
4. Growth mind-set –  push people to learn from their mistakes and promote professional curiosity

It is important to put emphasis on emotional and behavioural outcomes, not only the measurable and tangibles ones when designing culture strategies. Incorporate stories, symbols and shared meaning into your vision to effectively mobilise people and create emotional buy-in. Co-design your vision with your employees with support from the top-level, because top-down enforcement will not be effective. Tap into key people and influencers in the business and create an open dialogue.

Culture and strategy 

Rachael Brassey, People Transformation Lead in Defence, PA Consulting, discussed why culture is key to the critical delivery of strategy and results of an organisation. To effectively review the culture you need to look at what is going on below the surface. What are the unspoken issues that need to be addressed? Rachael suggested a business case for each cultural change to show the return on investment. She recognised that implementation may take some time and involve nudge tactics to embed changes, but that taking small steps to affect sustained change is crucial.

Audience Q&A

The panel were then asked questions by the audience of Imperial alumni, students and guests, and were joined by Clare Roberts, Managing Consultant, Culture Change and Leadership, PA Consulting and chaired by May Huang, Director at Edolosophy International Limited.

The panel were asked how you know when cultural change is required. They agreed it needs to be something that is continuously evolving – do not leave it until there’s a burning platform! Listen and respond to your employees, resolve and evolve, with everyone pulling in the same direction. There is no point enforcing policies, for example hot desking to create greater ‘collaboration’, if your employees are habitual and don’t want to!

Change doesn’t take place overnight, and there is a need for empathy and compassion as there is often fear of change. There is no perfect model for cultural change, it has to be tailor-made based on the people and the purpose of the organisation. However there are some consistencies around identity, vision, creating passion and effective processes that are relevant in any organisational review. And the importance of incremental change is also key – companies can’t afford not to innovate these days, but it doesn’t have to be big or expensive to contribute to change, just keep the dialogue going.

Praveen Karadiguddi (MBA 2009) is the Founder and CEO of Scrumconnect Consulting, which recently won a £14m bid from Ministry of Justice to help build a digital criminal justice. In this blog post he explains how the business has grown to 120 strong, with £13m revenue in the last two years and why ‘people over profit’ is key to his success. 

While I believe we still have a way to go before we become the kind of organisation we think it should be we are being recognised for our work already:

• Scrumconnect is getting award this month in House of Commons for 'Emerging tech firm of the year in public services'

• We are providing services to the DWP Child Maintenance Online Services team, which is nominated for Best Tech For Good Project & Inspirational Team of The Year at the Real IT Awards in July.

How did it feel when your business launched?

We were initially very nervous as it was just when our first child was born, Shilpa was on maternity leave, the market crashed and we had around £600 in the bank after paying for my MBA. With no money in the pocket I was still full of energy and feeling I could take on the world!

What was the greatest challenge you faced in starting out?

Chicken and egg situation. We needed good clients to attract good people to work for us.

Other challenges included financing, balancing expenditure with early revenue streams, increasing staff numbers and often bringing in a leadership team offering a new range of skills.

What have been the key lessons learned from the whole process? And what is your advice to budding entrepreneurs?

• Find your ‘why’? What and why is the purpose, cause or belief that drives you and your company. Your ‘why’ is the one constant that will guide you towards fulfillment in your work and life
• Cash is the oxygen of the business- oxygen is cash. Without cash, a business does not survive. Cash flow – the constant inflow and outgo of cash in a business operation – is the lifeblood of a business
• Be obsessed with the customer needs and solving their pain points

What have been the highlights so far?

1. Growing the business from 5 people to 120 people in the last 2 years
2. Achieving £13m in revenue
3. We are proud of the work we have done helping our clients build some key national services at DWP, Department of International Trade, HMPPS, Ministry of Justice, Home Office, Defra etc. The services we co-created with our client are:

• positively impacting around 14m+ people so far
• working on Brexit projects for Defra Fisheries
• keeping borders safe via Digital Services at the Border programme
• digitising the criminal justice programme
• paying out around £4-5bn payments every year.

We’re proud to be a diverse workforce and support women in tech. Shilpa Kaluti our co-founder, is running the ship from finance and operations and we have women in other key leadership roles.

Our consultants are diverse, representing the UK, Finland, Canada, France, India, China, Turkey, and Ukraine.

Plus we work across the whole of the UK, with clients from London, Newcastle, Blackpool, Sheffield and Manchester. Yes we get asked about moving internationally, it's still early days! We are exploring with clients in Germany and New York.

How did your time at the Business School prepare you for setting up your own business?

The best thing about MBA is it helped me gain a holistic understanding of business and appreciate finance, marketing, strategy, change, negotiation etc. I graduated out of the Full-Time MBA at Imperial in 2009. It was over a decade ago, however there are so many things I learnt that are still relevant in my day operations. In particular the Organisational Behaviour and Negotiation course, a key takeaway from which was how to have culture that creates a safe environment for our people and company to thrive. I also took a lot from the Innovation Entrepreneurship & Design programme, as well as Strategy.

What are the current challenges in your sector that you are facing?

The current biggest challenges include IR35 (a piece of legislation from the HMRC relating to off-payroll working), Brexit and an uncertain market time due to Coronavirus. Businesses more than ever need to have stronger business models to grow in these uncertain times. We are growing at a rapid pace however we need to be aware of the market conditions as we see clients cut spending and gig economy changes happening in the UK market.

Great management thinker Clay Christensen talked about “Consulting on the Cusp of Disruption”. I think disruption is here already in terms of business models, new boutique companies shifting from integrated solution shops to modular providers, which specialise in supplying one specific link in the value chain.

Digital is bringing a big disruption where tech startups have swept across many markets and eroded the profits of many major enterprise companies.

Clients have become more demanding, in terms of solving user needs of the customers, pushing back against concepts such as big IT, billable hours, and requiring fixed fees and with greater transparency on costs. In an increasingly agile environment, intensified by rapid digital innovation, clients now expect more value, rapid concept to cash, design thinking, a higher quality of work and a faster delivery of solutions and services.

All that said, we are happy to take on these challenges and so our next Big Hairy Audacious Goal (BHAG) is to reach 300 people and grow in Europe.