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At the World Economic Forum 2019, top executives from various industries talked about their views on digital economy related to Globalization 4.0. Participants of the discussion were Rajeev Suri, Nokia CEO; Ken Hu deputy chairman Huawei; Abidali Neemuchwala, Wipro CEO; Alfred F Kelly Jr, Visa CEO, and Eileen Donahoe, a UN ambassador.

With digital economy and economic progress, social outcomes are changing fast. The topic explored in the discussion is the tension between the rate of change of technological progress and economic development and the social outcomes due to these factors. They explore if these things are connected or if they’re becoming decoupled and if there’s a tension between these areas.

Ken Hu, Huawei

Digital economy is driven by digital technology. He thinks that 2019 could be a big year for technologies as many of them are at a tipping point like IoT, AI, Blockchain, and 5G. 5G is ready, 5G enabled smartphones will in the market by June 2019. He explains that it will bring benefits to both consumers and manufacturers. For example, consumers can download HD videos in seconds and manufacturers can use the superior speeds for purposes like smart manufacturing, autonomous driving, remote surgery, etc. Focusing on skill development can help to embrace the benefits of digital economy. This required joint efforts from both the government and the industry. By leveraging the changing technology itself, training employees on demand, as a service can help in upskilling.

Social impact

While creating the next version of globalization, Globalization 4.0, the social value should be a key consideration. He shares an example of a food supply shortage growing up. Farmers in a specific region of China used IoT and big data to recover soil for agriculture. They were able to recover 5% of usable farmlands which can provide food for 80 million people. Hu believes that such success can be replicated in every industry and country.

Abidali Neemuchwala, Wipro

He thinks that three things will be or rather needs to be different in Globalization 4.0:

  1. Much more human-centric
  2. Inclusiveness
  3. Sustainability

There needs to be growth beyond being “localized while globalized”. He thinks that people should be given opportunities in the long term where the disparity created by Globalization 3.0 is minimized.

Things that you would do to improve inclusiveness in your organization using digital economy.

Winning employee trust is a priority, he found two things that worked well for Wipro.

  1. The larger purpose of the organization beyond business
  2. Investment and reskilling

Enabling teachers with technology is by creating networks of teachers where they can learn from one another leads to growth. He says that his firm has provided agriculturists and fishermen with means to get price democratization by taking out the middleman. This he says enables inclusion and helps create a positive narrative.

How do you make the focus on customer trust a reality?

He says that Wipro is winning customer trust despite being a B2B business. The most difficult thing for a CEO today is how they would use their own revenue to prioritize the customer. This starts with the employees in the organization. Something that would surprise the customer in very unexpected ways. This may not be good for the short term for the company as it requires investment, but, in the long term puts the customer first.

Rajeev Suri, Nokia

Globalization 4.0 will address the productivity paradox. The previous version, 3.0 didn’t really address productivity with data centers, smartphones, social media etc. In the US, digital economy has had 2.7% productivity per annum and physical economy 0.7% productivity per annum. There will be a tipping point eventually where the productivity starts to meaningfully increase and Suri thinks it will be 2028 for the US. From a global centralized world, we’ll see more decentralized systems. Such a decentralized system will facilitate the global-local concept that Neemuchwala mentions.

Things that you would do to improve inclusiveness in your organization using digital economy.

People are joining for the purpose of the company and are staying for the culture. He wants to use digital technology to battle complexity in order to simplify employees’ daily life. Suri thinks that the purpose of techs like AI and 5G is to simplify the work of factory workers, for example, not to replace them. He doesn’t think that these new technologies will necessarily reduce jobs but occupational changes will happen. In such a scenario, reskilling purposefully is important.

Decentralization and 5g

The whole notion of 5g is going to be decentralization due to the benefit of low latency. There will be more focus on local economies in the next generation of technology. There is a potential to bring back power to the local economies with this shift.

Who is going to address trust deficit governments or organizations?

People value their data, they want to be aware of trustworthy services. Suri thinks that it’s going to be addressed by governments and businesses together.

Eileen Donahoe, UN

The big trend she sees is a dramatic swing from optimism to pessimism about the effects of digital tech on society and people. She talks about tech lash. There are two big areas of discontent in tech lash:

  1. Economic inclusion. Wealth distribution challenges are ‘now on steroids’. There are concerns about massive labor displacement.
  2. Trustworthiness is related to political, civil liberties, democracy. Digitization of society has led to an erosion of privacy, people are now understanding that privacy matters to the exercise of liberty.

If everything you say is monitored, people are going to get more conscious of what they say. Digitization has also made everything society-wide less secure. There is a great sense of vulnerability which neither the private or public sectors are able to address completely.

In the last few years, there is a fear of cross-border weaponization of information.

Along with economic growth, citizens’ liberty, security, and democratic process need to be protected. This calls for a new governance model. We need to push beyond national boundaries, similar to how multinational private organizations have. A governance model that can bring in citizens, civil society and other stakeholders in the picture can increase accountability of corporations.

Basic needs financed by an automation tax, so everybody can live without the need to work?

Dignity of work is critically important so just handing out money won’t really solve problems.

Alfred F Kelly Jr, Visa

He thinks that connecting and improving the world actually shrinks it. Meaning that there is more accessible to people, countries etc,. He lists three major factors:

  1. Innovation where there are efforts to solve real problems
  2. A partnership where companies and governments collaborate to solve bigger issues
  3. Consumer-centric thinking considering that e-commerce is growing 4x faster than brick and mortar

Customers want convenience, security, and privacy. Is it possible to have it all or do customers have to make choices?

He thinks that it is possible to have it all; customers deserve a product that they can trust all the time. Tech industries are trying to create ubiquity around the world. The most precious asset in the digital economy is trust and people need to be able to trust. For financial inclusion, financial literacy is important. People need to be educated so that they build up a trust and it a big focus area.

Are IT industries doing anything to reduce energy consumption?

We are committed to operating our data centers 100% on renewable electricity by the end of next year.

What to make of all this?

The focus seems to be on 5G and its benefits, for the consumers and of course, the tech organizations. I think that the discussions were skewed to a bird’s view and the top executives can’t really relate to problems on the ground. The truth is companies will layoff employees if the growth slows down. At the end of the day, the CEOs have to answer their boards. Don’t get me wrong, being a CEO is a tough job as you can imagine. The discussions look good on paper but I have my doubts on implementing concepts like these on scale.

These were the highlights of the talk on Strategic Outlook on the Digital Economy at WEF Davos 2019. For more detailed discussions, you can view the YouTube video.

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