The start of 2016 offers great promise as the world awakens to the power of connectivity and increasing digitization. The new Digital Age is upon us and it is unlike anything we have experienced before. It is creating change at a speed so tremendous it will hold us breathless, but we are also faced with great challenges and increasing uncertainty. Today, we have reached an inflection point, which poses the question, “who is going to lead?” Government and business leaders recognize there is great economic benefit to be gained from the Internet of Everything – which amounts to a staggering $19 trillion in the next decade from increased revenues and lower costs globally. In the digital economy, we estimate that the value to date created by the Internet could increase five-fold. Not only will this shift provide tremendous value, but it will be one of the major factors between the haves and have-nots on a global basis.
Government leaders need to ask themselves if they are positioning their country to reap the full potential of the digital economy. Just as we experienced in the mid-1990s with the Information Age, we are at the very start of new opportunities and a potential digital divide – unlike the familiar term referring to the gap between demographics of those that have access to IT and those that don’t, today we are talking about countries, cities and companies that embrace this new digital world. Countries who take advantage and find themselves on the right side of the line will succeed, while those that choose to ignore it will struggle to generate jobs, foster innovation, and grow GDP. Some countries, especially those that had limited benefits from the Information Age, are getting ahead of the curve and making certain they won’t miss the opportunity.
In order to capture this inflection point, countries need to focus on three areas.
First, getting the market transition right. This means ensuring that adequate digital capabilities, including infrastructure and cybersecurity, are in place to deliver the right information, at the right time, to the right machine or person, to make the right decision.
Second, countries that will flourish, will also have the courage to make bold moves. Leadership teams often fail because they become comfortable and stay doing the “right” thing too long. Third, leaders need to have the courage to reinvent themselves and their organizations.
Countries like France, England, Germany, Italy, India, and Israel already initiate digital plans to create job growth, make workers more productive, develop a robust ecosystem of innovative startups, make citizens and data networks more secure, and accelerate regional development.
In France, President Francois Hollande is leveraging the next wave of the Internet to jumpstart economic reforms and create jobs for hundreds of thousands of citizens. A historically socialist government, France has had the courage to quickly implement unique partnerships with the business community to drive entrepreneurial spirit and thinking. As a result, 250 companies have established R&D centers in France since 2007, and the number of French startups is growing at a rate of more than 2o% per year. With these initiatives,France will reap the benefits of a sustainable innovation ecosystem worth an estimated $50 billion.
In India, Prime Minister Narendra Modi is leading a program of unprecedented scale with his Digital India initiative, which will work to build digital infrastructure, leverage digitally-enabled government services, increase digital skills among the population, and contribute to the creation of 1 million jobs every month. A budget has been put in place for the development of 100 smart cities, which would tremendously help address the population influx of India’s urban population, expected to reach 404 million people by 2050. Additionally, the government has implemented a program that aims to train 400 million people in skills for the future by 2022. With strategic technological investments, India can completely transform how citizens, businesses and the government interact, potentially adding $550 billion to $1 trillion in economic value for the country.
Unfortunately, there has not been a strategic discussion around the digital revolution and how it can fuel economic momentum in any of the 2016 U.S. presidential debates. U.S. leadership must shift its thinking as economic growth is increasingly dependent upon digital policies and investments. Such a platform is needed for companies and countries to compete effectively. In reality, while the U.S. is on a solid economic course compared to other regions of the world, we are not guaranteed a leadership position as the world continues to evolve.
In today’s new Digital Age, technology will play a significant role in the economic competitiveness of all countries. Government leaders should be prioritizing a solid digital strategy that will make the transition into this new era as successful and seamless as possible. By exciting citizens about the new digital opportunity, breaking down silos of competing groups to form a truly open innovation ecosystem and shifting day-to-day resources to focus on big long-term investments for the future, countries can ensure that they break through and bridge the digital gap.
John Chambers is executive chairman of Cisco.