While it is understandable that discussions about Brexit will dominate the political and economic agenda in the UK for the foreseeable future, we need to ensure that other equally important issues are not relegated to side show status.
The most important of these 'other issues' is digital disruption.
The potential negative impact of Brexit on the UK and Scottish economies will pale into insignificance if we do not rise to the challenge presented by disruptive digital change.
As argued strongly in our end of 2015 FSB Report - Digital Disruption and Small Businesses - the changes brought about by the Internet over the last twenty years are nothing compared to what is coming over the next few years. No industry, no organisation is immune from the threat of being disrupted. With 40 per cent of jobs under threat from automation, no individual is immune.
Many businesses, across a broad spectrum of sectors, could be displaced by digital disruption over the next five years. Transforming digitally, not Brexit, is the number one survival challenge facing UK business today. Digitally transforming our economy to enhance international competitiveness is the number one economic challenge. Staying relevant in a digital world is the main personal challenge we all face.
Collectively, we need to transform or become a nation of digital dinosaurs.
Given the very strong link that exists between the innovative use of digital technology and national competitiveness, it would be economic suicide to allow digital to become a side show. It should be the main event, not Brexit. Across a wide range of digital maturity measures, the UK is already falling behind many of our overseas competitors.
Evidence for this comes from no less a source than the World Economic Forum’s Networked Readiness Index (NRI) which 'assesses the factors, policies and institutions that enable countries to fully leverage information and communication technologies (ICTs) for increased competitiveness and well-being; and the role of ICT in driving innovation'.
Key headline findings from the 2016 report in relation to the UK are as follows:
- Worldwide there are seven countries leading the field in terms of ICT investment - Singapore, Finland, Sweden, the Netherlands, Norway, Switzerland and the United States. The seven are all 'enthusiastic adopters' currently deriving a wide ranging economic benefits from being digital.
- Worryingly from a UK perspective, the report states clearly that the leading seven nations are in the strongest position to capitalise on the next wave of digital disruption. ‘The breakaway of these seven economies is significant for other nations given the role that networked readiness is likely to play as the world transitions to the Fourth Industrial Revolution’. Since publication of the report, it is interesting to note that the Netherlands has become the first country in the world to roll out a nationwide Internet of Things Network.
- While the UK sits in 8th place, just behind the seven leaders, it is progressing at a slower rate than most leading countries, especially in terms of infrastructure and individual usage. With most other nations increasing their ‘capacity to innovate’, the UK may struggle to maintain a top ten position. There are seven countries with an NRI Score of 5.6/5.7 pushing the UK (5.7) for a top ten position - Canada, Korea, Germany, Hong Kong, Denmark, Luxembourg and Japan.
- The report findings covering business use of the Internet and ICT are also very worrying from a UK perspective. Businesses in the UK occupy 1st and 2nd position worldwide in terms of their use of the Internet for B2C and B2B transactions (mainly ‘having a web site’). However, our overall ranking on the Business Usage Index is only 16; behind Switzerland, Sweden, Japan, United States, Finland, Germany, Netherlands, Israel, Denmark, Austria, Norway, Chinese Taipei, Korea Republic, Singapore and Luxembourg.
- In terms of ‘firm level ICT adoption’ (the readiness of businesses to adopt new technology), the UK ranks in 14th position; 18th position in terms of the number of patent applications made per million of population; and in 10th position for ‘capacity to innovate’. For investment in ‘staff training’, the UK ranks as 21st in the world - a shocking indictment of our willingness to invest in training and people development.
- Reinforcing the above, we are ranked in 24th position for ‘overall skills development’; 21st position for the ‘quality of our education system’; and in 46th position for the ‘quality of our math and science education’.
A World Class Digital Nation by 2020? I think not!
While the NRI Scores presented above relate to the UK as a whole, there is no reason for thinking that results for Scotland would be much different, if these were available. There is, of course, the added danger that discussions around Indy 2, as well as Brexit, could push digital much further down the political agenda. Does economic suicide await?
As normal, all comments and feedback are very welcome.
Note: Now in its 16th year, the annual ranking of 139 world economies on their networked readiness is the result of a partnership among the World Economic Forum, INSEAD and Cornell University. Economies are measured on 53 indicators organised in 10 “pillars” such as infrastructure, political and regulatory environment. An economy’s performance in each of the 53 indicators is used to compute its standing in the Networked Readiness Index (NRI). Full details can be found here.
Details of our next Digital Leaders Masterclass in association with the University of Edinburgh Business School can be found here. You can register an interest in attending here.