What is 'digital' – and is it creating a new form of capitalism?

What does 'digital' really mean?

To use the words of Neelie Kroes, Head of the European Commission's Digital Agenda, "Nearly every business is a digital business now". I'd be tempted to drop Neelie's "nearly". We're all digital now. But what does that really mean? What is digital?

According to a recent MCA survey, 94% of UK senior executives see digital as important or very important to their business. I wonder what the other 6% are thinking. 93% of them say they understand digital very well. And yet, when pressed on what digital means, they each described it very differently.

Whilst digital has become the hot economic topic, many will feel that we have lived for some time in the digital age. Rapid transfers of data across the internet have vastly improved transaction speeds, enhanced organisations' knowledge bases, and empowered consumers. Why only now have we seen this explosion of focus on digital, on the rise of the Chief Digital Officer, and on the necessity of digital Transformation?

Collective mind-set

Digital is NOT a marketing campaign, a website, a mobile device, '1's and '0's, or about getting rid of paper. It is the collective mind-set of a connected world, a culture, an expectation of immediacy of service and access to information to which we have become accustomed with the arrival of ubiquitous connectivity.

Digital is an opportunity to improve. But it is also a disruptive threat that enables others to compete with you at a much lower cost of entry. To think digitally is to reimagine your business from the perspective of 'what the web would do', paying no heed to the legacy and accumulated years of experience. Digital operates at sprint speed rather than marathon pace.

The most obvious effect of Digital can be seen in the people around us. Globally there are now over four billion mobile phone subscribers. Many, even in emerging economies, have smartphones. Take the commuter train – twenty years ago, people would be reading the newspaper, a book, or possibly listening to their Walkman. Now, commuters play music, read a personalised media digest, watch a film, send emails, work, text, chat, and tweet – all on the same Android device.

So to some degree digital is an enabler. People could do many of these things before the digital age, or approximate them, but not all, and not as easily, and not necessarily on the train. Now digital gadgets allow them to. Businesses can respond to this. By recognising what consumers want to do, and what products or services they want to consume, they can secure competitive advantage by creating innovative business models that engage consumers individually, immediately, and intelligently.

Great expectations

But the fact that consumers can do so much wherever they are creates an expectation, a culture. All of our commuters can use their devices to find JFK's birth date, to get news as it unfolds, or to view page 96 of War and Peace. They can access tracks from their entire music collection stored in the cloud. Some can reprogram their domestic TV, their heating or their robot vacuum cleaner. Being able to do this in some areas of life creates an appetite to do it in others.

It also creates new appetites. People want to access services, their medical records, buy a car, keep tabs on their children, receive the best deals on insurance, holidays or oven chips, book a safari, arrange a mortgage, all at the touch of button. We can listen to music while travelling. But what about mixing it? We can play games in the back of the car. What about inventing them? And if I can network with people while sitting on the train, why should I commute at all to my dull old-fashioned, city-based workplace? Why shouldn't I work at home, or in the café, or on the beach?