What is the digital economy?

Over that five years I have been working on projects related to Digital Economy and I realised that could not find a clear definition or explanation.

Wikipedia is a good starting place: http://en.wikipedia.org/wiki/Digital_economy

That did no really cover what I was thinking about here. If we look a the GDP of major nations, we talk about three main industries: Agricultural, Manufacturing and Services. We have seen a value shift from agricultural to manufacturing and now to services. Services industries dominate the GDP of many nations (over 60% for all the European countries -this wikipedia table provides details)

We are seeing the start of the shift of value from the service industries. Moving call centres to countries with cheaper labour is an example. Replacing routine work in the service industries with software is another example. This second example gives a clue to the digital economy.

If we think about how value was created in the past, we started with farming and mining, We evolved to manufacturing as the most common way. We have now arrived at serving.

The advent of industries that provide valuable information is the digital economy. The likes of Google, Facebook, Twitter are all example of digital economy organsations.

 

Image

The picture above illustrates the transition to the underlying verbs the define how value is created in each of the economies.

The challenge that we face going forward is how will traditional businesses create and capture value in this digital economy.  I will aim to use this blog as a means of engaging in a conversation around this topic. I look forward to hearing views and ideas here.