Anil Nair, Portulans Institute Senior Fellow
The digital native
In 2001, Marc Prensky wrote about Digital Natives, the first generation to have grown up playing with and using computers, videogames, digital music players and cell phones, and emerging as native speakers of the digital language. He suggested that while the rest are rooted in the past in varying degrees, the thinking patterns of digital natives have perceptibly advanced. And that’s because digital natives parallel process and multi-task, prefer their graphics before their text, thrive on instant gratification and frequent rewards, and function best when networked, preferring games to serious work.
Digital natives have indeed proliferated – some becoming digital entrepreneurs, and many influencing organizations of different vintage, culture and sizes, across the global firmament.
Digital entrepreneurship is broadly defined as the pursuit of business opportunities using technology. This includes the creation of new products or services and new forms of business, the expansion or development of knowledge bases, and the upgrading or creation of organizations. It is the synergizing of business, knowledge and institutional entrepreneurship with digital. The e-strategies of digital businesses boost operational capability, sustenance, and organizational development, and give them an unprecedented competitive edge.
Digital entrepreneurship is delineated by three eras. The seed era (1990-2000) characterized by the establishment of Internet technology, the start-up era (2001-2015) which saw the emergence of new digital technologies like the mobile, LTE, cloud computing, open source, and social media platforms; and the expansion era (2016-20xx) when, apart from the arrival of newer technologies, digitalization was introduced into every aspect of people’s lives.
Digital native organizations and brands were born in the post 2000 start-up era. Amidst a proliferation of brands, the many successful digital native brands (DNBs) rely on four competitive capabilities – building great customer relationships, offering compelling reasons for customers to buy from them, maintaining frugal customer acquisition costs, and using the best and latest technology to drive customer loyalty. DNBs play in categories with distinct dynamics, can quickly finetune variables relating to product, pricing, messaging and logistics to retain and grow their customer base, and constantly expand their field of play. Customer service, loyalty programs and predictive analytics are part of their differentiated armory. They continue to optimize the value chain by seeking to increase their buying power, creating economies of scale, and deriving operational efficiencies through digital interventions. Digital natives have weaponized their digital tools of trade.
We are now seeing the next phase – digital natives, including those embedded within innovative organizations, influencing significant change and disruption in nearly every industry – including healthcare, education, pharma, oil & gas, media, banking, insurance, technology, financial services, retail, manufacturing and utilities. In the book ‘Digital Vortex’ the authors help us understand how disruption impacts industry. What’s happening to companies is akin to what happens in a whirlpool, where vortices pull objects towards its center, the velocity increasing exponentially as it happens, their paths being chaotic and unpredictable, with objects colliding, breaking-up and recombining.
Let’s look more closely at digital disruption in retail and manufacturing.
In retail, once upon a time, buying goods meant you had to visit a store. Now, online stores have provoked the death of distance. Virtual and augmented reality have helped create innovative layouts and immersive experiences. The expanse of online stores is limited only by imagination. Artificial intelligence bots help answer customer queries with increasing efficiency, and machine learning sharpens purchasing recommendations. Big data and analytics have simplified inventory, pricing, logistics and loyalty programs. A seminal moment was the creation of virtual stores by Tesco in 2011 – a display of products on the walls of metro and bus stations, where commuters could scan QR codes to place orders during the time they waited before their commute, and scheduled delivery happened when the customer got back home.
In manufacturing, according to McKinsey, the value to be captured from going digital with Industry 4.0 initiatives could be 15-20% from inventory holding cost reduction, 15-30% from increase in labor productivity, 30-50% from reduced machine down time and 85% from improvement in forecasting accuracy.
Digital immigrants, refugees and outcasts are all part of the digital melting pot. It was of course Marc Prensky who talked first about digital natives and immigrants. Digital immigrants weren’t born in the age of digital ubiquity like digital natives, but adopted technology, intuitively and through participation. But he explained the continuum in binary terms. It has since been proven that culture trumps technology, with middle aged and older academics and scientists for instance, actively modeling the behaviors of their younger colleagues including in device adoption, social media use and communication preferences. With that said, many digital immigrants are still adapting to the rapid changes of the digital age, despite living in that age for over two decades.
Digital refugees are those who haven’t been able to keep pace with digital technologies, and remain uncomfortable with using them. For example, blue collar workers who weren’t able to transition into knowledge workers. The increasing prevalence of AI, ML, automation, analytics and IoT is affecting brick and mortar workers most.
Kel Smith introduced us to the idea of digital outcasts, older populations or those with disabilities, who are contributing to creating a relationship between one’s senses and the surroundings, including haptic interfaces, smart shoes, brain controlled computing, and alternative communication text to speech, to avoid digital marginalization.
Digital democracy demands that we think beyond these groups too.
According to the WEF, 2.9 billion people, mostly in developing countries, lack opportunities to go online and engage meaningfully with the digital economy. Which implies they are being denied the essential aspects of everyday life, including banking, healthcare, education, media, communications, even identity, in a cycle of worsening societal wellbeing. Yes, that’s a third of the world’s population who are still unconnected, no less.
A 2016 paper by the WEF pointed out four main reasons for why this chasm persists – infrastructure; affordability; skills awareness, cultural acceptance; and local adoption and use.
Countries need to urgently address these divides. Over the last couple of decades, Portulans Institute’s Network Readiness Index (NRI) has established itself as one of the most comprehensive assessments of digital readiness, measuring key indicators like access, trust and inclusion. Past editions have focused on geographical and economic disparities arising from digital changes. The 2022 report will explore the intergenerational effects of digital transformation, including connectivity gaps in under-served areas, which significantly limit the capacity of youth to fully benefit from ICT advances and participate across digital fronts. In the words of John Garrity, Chief of Party for USAID-BEACON, ‘The NRI is utilized by many governments to track overall digital transformation in their countries. The comprehensive nature of the NRI helps to identify areas of potential focus for national digital strategies. Sub-pillars are very useful for tracking specific targets, for example, utilizing the sub-pillar on access to focus and track progress on infrastructure deployment and the sub-pillar on regulation to focus efforts on improving the policy environment.’ The benefit to countries that use it is immense in accelerating digital transformation.
NRI 2022 will be launched globally on 15 November 2022. You can register to reserve your spot at the virtual event here.
Anil Nair was Managing Director, Country Digitization for APJC at Cisco Systems till recently. In his role at Cisco, he was involved with government, industry leaders, and academia in accelerating national digitization strategies to drive economic growth, create jobs, and build innovative ecosystems across India, China/Taiwan, Australia, Indonesia, Japan, South Korea, Philippines, and Thailand.
Prior to that, he was MD/CEO at AGC Networks Ltd, Securitas India, Aegis Consulting and Avaya GlobalConnect Ltd. During his career he has led 4 successful turnarounds and 2 start-ups. Anil has been the recipient of an Award for Professional Excellence by the Indian Institution of Industrial Engineers and has won the Udyog Rattan Award. He did his Advanced Management Program from ISB-Kellogg Business School in Chicago.