Is there a business case for the next generation of digitisation?

As I reflect on the emerging 3 laws of digitisation, I have been asked many times if there is an overall “business case” for the shift in labour or GDP.  The way I think about this is to start with some very simple high level metrics.

Global GDP is 75 Trillion approximately. (World Bank)

The high-level industry breakdown extrapolating the UK data:

Agriculture 2%
Manufacturing 23%
Services 75%

Digitisation in the form of the pattern 1 : augmented product pattern  will allow the manufacturing industries to grow into the service industries and capture some of this GDP. If they are wildly successful, they could increase the GDP by 20% over a 20 year period and grow to 28% and take share from the service industries. This represents a $3.5tr shift in GDP as a direct result of the augmented product pattern.

For the service industries digitisation will lead to pattern 5: codify services. If we consider the service industries as consisting of three broad groups – creative, routine and personal. Creative includes graphic designers, engineers etc. Personal includes hair dressers, local retailers etc. Routine includes those with a significant element of routine work that is highly likely to be digitised using combinations of Cognitive technologies such as AI or Machine Learning. If we make the assumption that these represent an even distribution of the service industries i.e. 25% each of the 75% GDP. The impact on the 25% of the routine service industry is the question we need to explore further to understand the business case.

If the manufacturing industries are successful in their augmented industry pattern, we can see the routine service industry being reduced by 5%. The remaining 20% will be subject to further digitisation. A working assumption could be that 50% of this will be displaced in the 20-50 year period and open a new industry for services digitisation. If we assumed creating the platform for digitisation will be the key to success, and there will be an exponential adoption, we could argue 25% of the transformation will happen in the first 20 years and so a further reduction of 5% is possible.

The conclusion is that the digitisation industries have the opportunity to represent 10% of the global GDP over a 20 year period. Which based on current GDP value is $7.5tr.

 

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