The next generation of technologies of the fourth industrial revolution have the potential to transform virtually every industry and create economic value that is going to be significant.
- blurring the lines
- changing how we interact with the information
- revolutionising the way we live and work
- influencing the future of our world.
They are changing how we are engaging and behaving, both as individuals and as a community.
The digital economy underpinned by artificial intelligence (AI) and digital technologies has also emerged and is becoming an integral part of the economy.
It is replacing the previous industrial paradigms by creating a new economic model that works in a circular manner as a feedback loop. In this model, data and interactions are the source of value.
As the world is digitally transitioning, production processes, supply chains and transactions may be taking place in the physical world, the digital world or both, and possibly at different speeds. Indeed, in the digital economy, an omni channel approach is prevailing.
Digital transformation and technologies
The 2021 technology and innovation report by the United Nations urges all developing nations to prepare for a period of deep and rapid technological change. Change that will profoundly affect markets and societies.
A recent survey by McKinsey also found that the pandemic has sped up digital transformation and technologies by several years.
Digital transformation will involve a fundamental rethinking of:
- how an organisation will work
- the role of government
- the role of the key stakeholders and how they interact.
The main driver of this change is going to be the modern consumer, the public and communities who will be consuming the service or the product.
Instead of contributing towards more inclusive and sustainable development, there is heightened risk that further digitalisation and data-driven development will widen the digital divide and income inequalities. This is down to the resources, skills, and capacities needed to leverage digital transformations.
Human-centric digital transformation
In my view, digital transformation is going to be as much about the technology as humanity, and about the human condition. We will need to get more serious about identity, security, privacy, and the further spread of misinformation.
Digital technologies are not deterministic though. They will be able to create both opportunities and challenges, and we can harness their potential for the common and greater good. I feel we also have an obligation to do so.
Digital technologies hold the promise of the future, from climate action to better health to more democratic and inclusive societies. There is an opportunity for us to think holistically and for the long term and invest in the future that will resonate with everyone.
Important role to play
There is an important role for us all to play, for example, to:
- enhance personal and social protection
- ease workforce transitions
- grow reliance on digital data.
Indeed, there is going to be a need to strengthen and align:
- innovation systems
We also must shape standards and policies that will help create greater tangible benefits.
To close the digital divide, focus will also need to stay on:
- building digital skills in the workforce
- spreading benefits more equitably to combat rising inequalities
- developing technologically aware citizens.
Pursuing creative strategies
The UK, like all the other countries, is pursuing:
- creative art
- innovation strategies
These are appropriate to the UK’s economic, social, and environmental conditions. In close dialogue and collaboration with private and public stakeholders, to ‘shape the digital economy’.
This in turn will identify a reasonable sense of the kind of digital future that is desired and could be achieved with the ethical and inclusive use of technologies at its core.
To model technology innovation and serve as an innovation engine, research and development (R&D) strategies are needed to be equipped for today’s fast-moving world. Investing in R&D could give significant competitive advantage at the business, industry, or national level, and provide the amount of innovation that the UK economy needs to maximise its growth.
Building innovation capacity
However, the answer to boosting economic growth isn’t just going to be about R&D investments, it is going to be about building a robust open innovation capacity. It is going to be about focusing on:
- knowledge exchange
- growing capabilities.
This will incubate, design, and integrate goods and services in markets that are mature and ready for the use of transformative and digital technologies.
A study by Gina O’Connor, Professor of Innovation Management at Institut Universitaire de France, shows that investment in truly breakthrough innovation does pay off. But not if it is limited to R&D. If it encompasses more than R&D and includes robust discovery, incubation, and acceleration capabilities.
The role of R&D, exploration, analysis, discovery, and creativity is going to cultivate new insights and help us to navigate. Without it, we would be forced to rely solely on intuition and luck.
Innovation requires a more comprehensive and holistic way of thinking, thinking bigger. There is an opportunity to approach things differently to help scale innovations rapidly.
For the successful realisation of deliberate and systematic technology-based innovations, we need to consider the path of translating knowledge from R&D into design of products and services. Then commercialisation of those in markets and to the drive of desired socioeconomic impacts and economic growth.
Developing business and industry applications, revenue models, and markets for new products are going to require as much emphasis and effort as inventing the technologies themselves.
A new paradigm
We are on the cusp of another revolutionary paradigm shift in which the rate of adaption is slower because of the pace at which these technologies are accelerating. As with so many past technological breakthroughs, progress in technology has been moving faster than society.
The goal of all scientists should be about better understanding the world around them so that they can:
- solve the world’s most complex problems
- overcome the world’s biggest challenges
- dramatically improve the lives of human beings.
With that level of consciousness, the scientific research community have never been this connected or empowered.
There is a great opportunity too for us all to support policy makers and regulators alike in developing well designed policies at national and international levels. By targeting value creation and capture, we can together build a better, and more inclusive digital economy.
Building our future economy and society
As the UK’s innovation agency, we are strongly committed to:
- helping build our future economy and society by inspiring, involving and investing in UK businesses
- developing and realising the potential of new ideas, including those from the UK’s world-class research base.
The UK is a great place to innovate and do business. For us, there is no better place to be. Our desire is to help maximise the benefits for the individual as well as communities across the society. We are committed to transforming economy that stimulates innovation and productivity while it sustains real connection between innovation and R&D.
In Innovate UK’s plan for action, we are demonstrating our focus and how we are going to build the future economy as well inspire, involve and invest in innovation.
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