Digitalization Post Covid Part 0: a framework to understand opportunities and challenges
Apple introduced the first Macintosh in 1984. IBM created the first smartphone in 1992. In the past 30–40 years, the theme of innovation is digital transformation (or digitalization). Technology combined with capital, very much so like a tiger with wings, tremendously increased efficiency and productivity. Now in the 20th of 21st century, we are so used to instant gratification enabled by Amazon and Alibaba. We saw a marketing post on Instagram about a really nice pot, we then go to Amazon to place the order, the next day, with excitement, we open the box, now the pot is sitting in my kitchen. I will probably never actually use the pot, but I feel gratified.
The trend is unstoppable in any way. Along the way of relentlessly scaling digitalization into everyday life, we may still have a long way to go. Then there comes the pandemic, which is accelerating everything in digitalization. Here I would like to introduce a model to help thinking through the opportunity and challenges of the incoming accelerated digitalization. There is a two-axis here. One axis is the level of science and technology innovation we need to solve a problem. For example, it’s no innovation to create another eCommerce or food delivery app, but there is innovation to be done to have drones instead of human power make the delivery. The other axis is to what extent is a problem can be solved by technology. For example, shopping can be completely digitalized, but education is probably not, since the social element and behavior cultivation are also something indispensable to a good educational experience.
As shown in the four regions divided by the coordinate axes, for example, E-commerce is something that we hope to see fully digitalized, and the whole process of shopping can indeed be modeled completely online (right now the only section that still needs human power is probably just delivery). So drone delivery is something we hope to achieve next. Delivery is highly solvable by technology — in other words — human beings as a species would love to see delivery by drone instead of human beings if it achieves a similar level of security and accuracy. However, it seems that there are some technology breakthroughs to be done before this is realized. Education, however, is a bit different. On one hand, it seems quite mature for us to deliver courses online and design all sorts of learning programs or materials to facilitate learning, but the social and behavioral part of education makes it unlikely that school will be completely replaced by online education.
Using this framework, we can quickly pinpoint what is the promise and challenge in a specific digitalization field. For example, a self-driving car is something we all hope to be realized, however, the closest to that vision today is probably just something like Tesla Autopilot. Apparently, there are 6 levels of vehicle autonomy (from level 0 no driving automation to level 5 full driving automation), and the technology today apparently cannot achieve level 5 yet. So we put the vehicle autonomy in Quadrant II.
In the forthcoming articles, I will analyze each specific industry to gain further details on the promises (business opportunity sizes) and challenges (technology, legal/policy, etc).
