Wednesday, 14 October 2015

Norway and the Digital Economy

I'm on my way back from Oslo, where I presented a keynote on the Digital Economy at the DND IT-lederkonferansen 2015 conference. Rather than do a standard Eight Traits presentation I decided to build on the work on success factors for digital economies that I prepared for SATNAC last month. You can find the presentation here.

The structure of my argument was as follows:
  • Norway was one of the greatest beneficiaries of the Industrial Economy. Before 1770 GDP per capita was on the same level as Mexico or Portugal; now it is more than twice that of the latter and three times the former. (I had to show 2003 numbers on the chart as doing 2015 made it look crazy!)
  • But now the system is changing away from automation of physical processes into automation of mental ones. This will cause great disruption as it will polarise the productivity and hence the success of companies and countries. So how well set up is Norway?
  • Success for digital economies is driven by four main factors: access to computing, information symmetry, education and skills and an innovative and entrepreneurial culture. We'll cover two in this presentation (mainly because I still haven't fully figured the other two out :) )
Access to computing is world class
  • In terms of access, Norway has one of the highest smartphone penetrations in the world and importantly the device quality is high - 37% of owners have iPhones.
  • Furthermore, despite concerns about speed of broadband domestically, Norway has a top 10 ranked broadband infrastructure. It excels in access to technology and computing.
Entrepreneurial risk is counter-cultural for Norwegians
  • Although there are about 150 scale digital businesses in Norway, most of them are small and locally focused. When these businesses want to scale they tend to leave and go to the West Coast. Norwegian entrepreneurs have largely limited their scope to domestic problems, which might make them some money individually but isn't going to lead to system change...
  • ...and that change is needed because Norwegians have the lowest interest in entrepreneurship per capita in Europe, which is doubly challenging as the country has such a small population
  • Worse still interest in entrepreneurship is declining and the government is actively against the kind of long hours that will support new ways of working
  • Finally the cost of labour is the highest in Europe, meaning that there are real problems to solve if the country is to survive and thrive in a new economy and a world of declining oil prices
There is great opportunity in resolving the current work-life paradox
  • During periods of transition, productivity actually tends to decline in the short term before exploding upwards - this is because there is inherent inefficiency in substituted process that have been perfected with those that are novel
  • The countries that thrive from new general purpose technologies in the long run are therefore those where the benefits of using them outweigh the early inefficiency of using new technology
  • In Norway the cost of labour is so high that the country is one of the few where it is worth stomaching the inefficiency of replacing human judgement with machine learning. Doing this would enable them to develop new technologies and ways of applying them that could enable Norway to take global innovation leadership, rather than just being a later consumer
  • As an example, think how electric cars have taken off in Norway - they are compromised but they are affordable for Norwegians because the cost of running a traditional vehicle is high and the country is rich enough to replace vehicles and infrastructure regularly
  • For the leaders at the conference this means twisting their thinking from how to eek out the last percentage points of efficiency from today's technology and instead resetting their vision onto how to create radical growth by applying that of the Digital Economy
These messages seemed to go down well... or at least although they are challenging they were accurate! That said, I am leaving the country as we speak... 

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