- Must get education component right as losers will be left out of the job market
- Malaysia doing the right things around capturing digital opportunity
AS THE group chief executive officer, Growth Markets for Accenture Global, Gianfranco Casati has a pretty good view and feel for how nations in growth markets are competing and how they are adapting to the Digital Economy. Yet, when asked if he could point to any one country that seemed to have all the pieces in place or was moving aggressively to put the pieces in place, no one country came to mind.
Sure, there’s China, already the second largest economy in the world and on its way to becoming the largest. But the scale of China makes it unique and its digital companies unique as they can depend on the domestic market to achieve scale before going global. Witness the formative growth years of Alibaba, Tencent and JD.com – all of whom achieved scale domestically before flexing their muscles on the global stage.
But while no growth market nation leap to mind as an example, Casati does lay down a few components that they must have in order to be winners in the Digital Economy.
Education is an obvious anchor component for countries to deliver in a manner that equips its citizens to have the basic tools that allow them to be participants in the new labour markets of today. “You have to prepare them for a work environment that was not there 10 years ago,” he notes.
He also cautions that Accenture’s own research shows that, due to the rapid pace of technology, “there will be a mismatch between the supply component [labour] and demand with a portion of the supply not matching the needs of the demand from the labour market.” Hence the need for government to get the education component right.
Read: #mydigitalmaker aims for students to be ready for future jobs
The second critical element is infrastructure, not of the physical kind but the virtual kind and with the third being financial markets.
The reason the Silicon Valley is so successful is not because people there are smarter than anyone else, it’s because it attracts global talent to move there because they have the right ecosystem of financial and investment tools that allow entrepreneurs to start.”
In the following video, Casati fleshes this out a bit more.
Noting that the future for nations does not lie within their boundaries anymore but in global trade that is digital in nature, nations need to be part of the digital environment where they [or their companies] can capture value, “and this happens by creating platforms to capture consumers beyond their boundaries with Malaysia’s Grab as an example of a company that has used technology to capture markets beyond Malaysia. In the past, it was very hard for companies from mid-sized countries like Malaysia to do so,” he says.
Having access to global markets has also been aided by the democratization of technology. “Companies from growth markets can now also plug into cloud platforms that give them access to a quality of service and level of functionality that could only come from making substantial investments in the past. But today they don’t have to make those investments themselves and this then gives me an opportunity I never had before,” says Casati emphasizing that this is an important leveler of the playing field for growth nation companies.
But to actually be able to grab the opportunities presented in the Digital Economy requires entrepreneurial spirit. And, in that sense, Casati points to the 98% small medium enterprises (SMEs) portion of businesses in Malaysia as proof that the entrepreneurial drive in Malaysia is strong.
“So, what your government is trying to do around the Digital Economy to ensure Malaysia is successful in riding the digital wave, makes sense,” he says alluding to the recent budget announcements which had a heavy emphasis on the Digital Economy.
In terms of measuring how a country is doing to adapt to the Digital Economy, Casati is looking at the creation of new companies, whether they are called startups or not. “I am looking to see how many new companies are emerging from a country and not so much at how well their traditional companies are adapting to digital,” he says.
One reason is speed. Casati feels that it takes a lot longer for a traditional company, especially large ones, to adapt to digital versus a new one established which wants to take advantage of the new digital economy we are moving into.
And there’s also a problem with old companies. As Casati shared in the video above, “traditional companies want to kill internet companies, whether they are external competitors or set up by the company itself to try and capture value from digital platforms.”
Specifically pointing to the retail environment, Casati says Accenture has been called in to help a number of traditional retailers to add an e-commerce component to their business but all have failed. ‘The rest of the organization reacted like the body would to a virus and rejected it,” he says.
He notes that the current leading e-commerce retailers all grew as digital companies and none came from the traditional retail environment.
Pointing to Southeast Asia, he feels that, population aside, the low number of Forbes Global 2000 companies based in the region means there will be less rejection from incumbents towards new digital companies emerging that do not need to own assets (like Uber or AirBnB), can grow faster and create new jobs.
“With all the factors in play around digital, I think today, there is opportunity for small companies to emerge from almost any country,” he feels.
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