Cookie Consent by TermsFeed Generator
EN

Digitalization demystified, an attempt

Everyone is talking about digitalization, and it feels like all companies want to be at the forefront. Is it necessary to jump on this bandwagon?

16/6/2021

Economist Carlota Perez has researched the three preceding industrial revolutions to find out how technological progress affects the economy, culture and society. Today you might think that one day they invented the railway and the next day everything changed. This is not so, because the existing world is not prepared for a new invention. 1886 is officially considered the year in which the automobile was invented. This was despite the fact that steam-powered vehicles had already been around for several decades. In 1886, Benz registered the patent and started producing and selling cars. 22 years later, in 1908, Ford launched the Model-T. 32 years later, in 1918, every second car in the USA was a Model-T and only now did the culture of industrial commodity production begin. The automobile became a successful model only when Ford, with an organisation oriented towards the assembly line and railways, made cars possible for the middle class. Ford was neither early to the market nor had it invented the car.

The world needs some time to adapt to new inventions. It was always a long and bumpy road until a technology became established.

In the age of computers and the internet, also called "digitalization", it is no different. Google's entry into the market is generally considered sykrocketing. Google's search concept was born in 1995, and so that Larry Page and Sergej Brin could cash in money from investors, they incorporated the company in 1998. Eric Schmidt began pushing its marketing in 2001. The IPO took place in 2004 at an issue price of 85 dollars. This value has multiplied until today. The underlying idea of the search engine has not fundamentally changed since 1995. In the meantime, however, Google had launched Maps (2004), Gmail (2004), YouTube (2006), Analytics (2006), Docs (2006), Chrome (2008), and many other products. They thus improved their data collection in such a way, that their actual product, namely advertising, was to remain unrivaled.    

The potential of blockchain, IoT, and AI is undeniable. Discussing it is not of great value.

The speed of market adoption of technologies is in principle overestimated. Communication between computers is made possible by the TCP/IP protocol, invented in 1974. The Public Key Protocol, invented in 1980, brought information security to this communication and Hashcash was launched in 1992 to protect services within this network against attacks. Digital currencies like Digicash (1989) and Bit-Gold (1998) were created to find out that centrally managed currencies do not work. It wasn't until the financial crisis in 2008 that the necessary motivation kicked in and a group of self-employed computer geeks launched Bitcoin. A digital currency system managed by independent, up-to-date, distributed ledgers. The actual invention was not Bitcoin, but distributed ledger technology, better known as blockchain. It is only 13 years later that an application of the blockchain, Bitcoin so to speak, is approved in a country.

Still, no one in El Salvador will wait 20 minutes at the cash register for the validation of the transaction by the network.

When and how the technologies will prevail is the million-dollar question. This is decided neither by scientists nor politicians, but by companies that understand how to develop a market offer from these technologies that is more user-friendly, more efficient, more stable, safer, cheaper or otherwise better than the current one. Only then will a certain technology prevail and be accepted by society. Digitisation is like industrialisation and always has been; the best business model prevails. Nobody is really interested in the technology behind it.

Literature sources: 

Technological Revolutions and Financial Markets by Carlota Perez

Competing Against Luck by Clayton M. Christensen

Bitcoin Gold by Nathaniel Proper

The Google Story by David A. Wyse

You might also be interested in.

Approach, this is how you digitalize businesses!