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Digital disruption: how can leaders in Government respond

A major concern for leaders in Government is to find the best ways to respond to the disruption caused by the digital revolution – the deep and profound transformations in the way of living, producing, consuming and interacting in society, as a result of technological advances, especially of digital technology.

Although this revolution is global, one of the most important levels of decision making and action is at country and regional levels, calling on Government leaders and a wide range of stakeholders in business, academia, citizens and media to act decisively.

 

So, what should leaders in Government and the public sector do to make sure that a country, a region or an economic ecosystem do not stay behind and that as many citizens as possible benefit from the digital revolution, or the Fourth Industrial Revolution, to use the term that marked the 2018 Davos Conference.

Countries, regions and economic ecosystems have differing challenges and levels of maturity. However, from our project experience of working with Governments and several stakeholders, and from our research, it is important to act in a structured way in, at least, eight dimensions[1].

  1. Make the digital challenge a priority for the country, region or ecosystem
  2. Use eGovernment as an anchor
  3. Ensure maximum broadband internet connectivity
  4. Promote a strong and open entrepreneurial ecosystem
  5. Stimulate businesses to transform themselves
  6. Develop critical digital skills
  7. Fight the digital divide – protect the society
  8. Engage top champions and top advisors

1. Make the digital challenge a priority for the country, region or ecosystem

Government and public-sector leaders need to build a sense of urgency, define a shared vision, mobilize society and build an actionable framework or guide plan with maximum support from a wide variety of stakeholders. This is not easy, as many of the concepts of this emerging information society are vague, new models are difficult to visualize by public and business managers, resistance and fear of change are endemic in society, and the media industry focuses more on daily short-term impact events.

Several actions can be taken in this regard. Leaders should have the courage to place digital transformation high in the political agenda. After all, jobs created or threatened by technology do matter, as well as new ways of serving the citizen in health, education and other social dimensions. It is important to place the political responsibility at the highest level in Government, not in a peripheral ministry or on a political agent with low weight and notoriety. It is also useful to build and empower one or more stakeholder bodies with a real say in policy and implementation. A useful operational lever is to introduce a digital agenda in all Government budgets, at national, ministry, regional or institutional levels.


2. Use eGovernment as an anchor

Government leaders should embrace boldly the digital agenda and build a citizen centered Government, breaking down as much and as fast as possible Government silos, integrating the latest technologies to build a “one to one” relationship with citizens and businesses instead of the dominant “one to many” relationship.

The key to success is not conceptualization but the drive toward implementation.

Several countries provide case studies of best practices and of lessons learned which can be easily adapted. Several reputable bodies, such as the OECD - The Organisation for Economic Co-operation and Development, have researched and developed sound guidelines.

It is necessary to digitize entirely the public sector with new digital tools and to change processes, culture and service models. Empower central, regional and local Governments with budgets and people with coordination authority and implementation skills to sustain a strong implementation. Above all, it is necessary to avoid fragmented Government initiatives, which overlap, duplicate or are conflicting. Public sector CIOs need to be placed higher up in the hierarchy level. Transversal transformative projects need to have full political and budget support, based on business case proposals and tight calendars.

Besides building a citizen centric Government, leaders should use eGovernment as an anchor to speed up the digital transformation across society, involving business in the implementation of eGovernment, for higher efficacy and to strengthen the economic fabric and provide opportunities to start-ups, through smart procurement.

Furthermore, some strategies can accelerate the digital transformation in society. For example, ICT (information and communications technology) in education has a fundamental impact on the citizens of the future, but also permeates the whole society through the student’s families. “Smart city” solutions engage the average citizen in new ways of living.

Government regulation can unlock or block the societal drive towards digital modernization. This lever does not cost money and is often neglected.


3. Ensure maximum broadband internet connectivity

Although measuring the exact impact of broadband internet penetration poses several challenges to researchers, it is unquestionable its role as a disruptive enabler for economic growth, innovation and productivity, consumer surplus, empowerment of citizenship, job creation and poverty alleviation, amongst others. More important though, is the fact that those who do not have broadband, i.e., means of access to data communication, will be increasingly excluded from the competitive game and the social gains associated.

Therefore, the objective of having “everybody connected digitally at all times at high speed and at affordable prices” is not a utopia anymore, but a necessity for all countries which do not want to be excluded from the global digitally interconnected world of economic and social opportunities. Even for less developed economies/countries, internet access is key to reduce poverty related to lack of information and knowledge and remoteness. The past policy of “universal access” to wireline communication should now apply to broadband.

However, promoting broadband poses several issues that require strong leadership from Government.

Firstly, broadband is only effective if provided in combination with the adoption of information technology and socio-economic changes, i.e., new applications, services and contents, and changes in Government and business processes relevant to people’s lifestyle. Therefore, simplistic supply side policies, based on infrastructure deployment, are bound to fail in its impacts and to bankrupt funders. A balanced supply and demand side policy, integrated with societal processes relevant to people – health, education, public services, new services to consumers by business – is required. This calls for differing strategies for differing socio-economic groups, addressing in different ways wealthy and poor, disadvantaged social groups, rural and urban, formal and informal economy, age groups, geographical areas and the differing maturity of economic sectors.

In addition, these services need to be affordable to citizens and consumers and within the reach of Government budgets, which is not an easy task. In general, State-owned facilities are the less desirable option, as they are less agile in serving the consumer-citizen, less innovative, more expensive and less transparent. Therefore, private sector investment should be the primary funding of broadband development in geographical areas where the market is sufficiently developed to offer sound financial returns for investments by carriers. Where there are unserved regions due to market failure, Governments should enter directly as a service provider or generate the necessary stimuli in order to render the market more attractive to private sector investment.

It is important to have a national broadband plan, to promote a shared vision and to align and federate efforts of all stakeholders in the right direction, coordinating actions of private and Government bodies. To reduce inequalities, it is fundamental to implement policies of digital inclusion and to target key sectors, such as health, education and public services, to widen societal impact. To increase investment efficiency, it is important to make available regulation, competition policies and incentives for private investment in infrastructure and to implement platforms for sharing of infrastructure. To increase adoption levels, it is important to stimulate and support innovation by businesses in services relevant to citizens and make incentives available to business and consumers-citizens.


4. Promote a strong and open entrepreneurial ecosystem

The opportunities and the threats of the digital revolution derive not from incremental gains but from the disruptions that can emerge from the new technology. Digital era services and products with wide impact. These disruptions make incumbent market leaders and economic value-chains redundant, leading to reduced economic output and job losses, and, over time, to economic and social decline. On the other hand, through innovative disruption, newcomers can become the new leaders.

However, disruptive innovation requires completely new ways of working, new culture, new tools, new economics, new everything.

Technology start-ups are figuring out how to adapt and succeed in this new digital world better than the incumbents. It is therefore important that Government leaders create very strong incentives for start-ups and for the creation of innovative entrepreneurial ecosystems that attract both talent and smart capital and scale up promising new services and products. Large investment in entrepreneurs is cheaper than the alternative social security funding or joblessness unrest.

In addition, since ecosystems take time to form, it is important to promote linkages to the most advanced ecosystems in the world, rather than close-up local ecosystems, attracting foreign talent and capital, and helping local entrepreneurs go global.

Government leaders should take caution and not engage in what must be led and done mostly by business and university/research centers. Government should concentrate on creating the right conditions for success by these players, through regulation, incentives, taxes, policies, legislation and funding. Government support must be selective and focused on high economic impact/high long term social impact entrepreneurship, i.e., transformational entrepreneurship and social entrepreneurship, not wasting resources on exploitative entrepreneurship.


5. Stimulate businesses to transform themselves

Businesses create jobs and revenue, not Governments. Hence, a country can respond successfully to the digital challenges only by mobilizing its private sector to react quickly to the digital challenges.

Therefore, Government leaders should incorporate into their role to create the conditions, to stimulate and to support businesses to transform themselves.

Digital technology has only begun to penetrate industries. As it continues its advance, the implications for revenues, profits, and hence for society, will be dramatic. Comprehensive digital strategies for companies and for value chains/ecosystems will be the biggest differentiator between companies/value chains that win and that don’t. Those that engage in disruptive innovations related to creation of new markets, new value propositions, new hyperscale platforms, new supply chains and business systems will have the highest returns.

Government leaders can act in a variety of ways. Three types of actions should be considered. Firstly, promote the creation or emergence of a strong ICT sector that can serve the rest of the economic sectors, export and compete globally. For existing ICT sectors, its reinforcement should be a priority of economic policy. Secondly, increase ICT spending in terms of investment and consumption. Thirdly, implement participated sector approaches, whereby economic policy is not only directed at the economy as a whole but also directed at very specific economic sectors and with specific measures, for example, connected manufacturing, customer centric retail, smart farming, smart cities, digital education and human centered health.


6. Develop critical digital skills

Because the Fourth Industrial Revolution runs on knowledge, Government leaders need to promote a concurrent revolution in training and education.

This requires a national plan for digital skills. Such a plan needs to address both the new skills necessary and the impact of the new digital technologies on jobs.

The new skills set needs to be addressed at three levels. Firstly, regarding STEM – science, technology, engineering and mathematics – mostly at high school and universities, to power the digital capacity of the economy in the short term. Secondly, at all school levels, introducing digital access to all students (laptop per student or other methods) and changing the teaching method, whereby the teacher is no longer the center of the classroom, but the facilitator to a wide range of knowledge accessible through the internet. Thirdly, basic digital literacy for the population at large in order to reduce the digital divide.

On the other hand, balancing between job gains and losses and overcoming the mismatch of skills required/skills available (shortage) is a complex undertaking that requires close cooperation among education providers, Governments, and businesses.

The best way of protecting jobs is not to delay technologies that take up jobs, but to accelerate those technologies that create new jobs. Efficiency innovations reduce jobs. Disruptive market creation innovations create jobs.

Lastly, Government leaders must be bold in engaging as early as possible with social institutions and labor unions regarding the flexibility of work in the digital era.


7. Fight the digital divide – protect the society

The digital revolution can have a dramatic impact on those sectors of society less prepared to adapt or already in a disadvantaged position. The tendency is for digital disruption to increase inequalities, unless Government leaders take decisive action to work on models of greater inclusiveness.

Equal access to the internet is a necessary basic levelling field that can open up new opportunities for the poor and for those previously excluded by providing cheaper and faster information and knowledge to all.

Government programs directed at the youth, the urban poor, the rural and remote dweller, the elderly, women and recycled workers, can make technology a liberating factor. Mobile devices and communications, DIY (do it yourself) models, social media and other technologies can allow for new economic models to emerge, that can more easily give competitive resources to the individual and the small economic operator than in the past.

 

8. Engage top champions and advisors

The digital revolution makes the competitive landscape more complex. Our life is becoming a combination of physical, technical and biological dimensions.

Due to the rapid pace of technological advancement, countries that harness digital technologies stand to reap significant economic benefits in the long run. Nations that are slow to embrace the digital run the risk of falling further behind.

In this context, Governments, political parties and the public sector should adopt practices that attract the most qualified individuals and should give them the necessary conditions to succeed. In this regard, nationalistic perspectives should be balanced with the gain associated to getting the best qualified individuals in the world, independent of nationality, to reinforce universities and public institutions.

In addition, a new type of leader is required, one who is able to think creatively of the new social frameworks needed to adjust to the challenges of the digital revolution. Moreover, a new type of leadership is needed, more related to learning and coordinating than to instructing, to sharing than excluding, to experimenting and innovating than to managing, to communicating digitally than formally, to formulate agile responses than bureaucratic rules.

Government leaders of today have a very high responsibility in creating the conditions for future generations to live adequately in a technologically driven future.

[1] This article is based on a key note speaker presentation by Leadership Business Consulting’s CEO, Carlos Oliveira, at the Technology Innovation Conference in Johannesburg, 2018

 

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