The World of Technology and Start Ups

Is There A Place For Startups In Today's Digital Economy?

In 2014, there was a rather brisk transition to a global digital economy (more abrupt in some countries than in others), leaving everyone wondering what the future would hold. With so many new opportunities in e-commerce, it will be interesting to see what role startups will play in this exciting and ever growing economy. This article will examine the current state of the digital economy, and will speculate about the possibilities for startups within it.

What is the digital economy?

First things first, lets take a look at what the digital economy actually is. The term refers to the economy that is based on a variety of digital technologies. It's sometimes referred to as the internet / web economy because it's usually perceived as any form of business that is conducted through internet-based markets. It isn't however limited to strictly traditional business models, but also encompasses a variety of different aspects of modern life such as education, health, politics and entertainment.

What is the current state of the digital economy?

The current state of the digital economy largely depends on which country you're in. In a study conducted at The Fletcher School At Tufts University (https://hbr.org/2015/02/where-the-digitaleconomy-is-moving-the-fastest Febuary 2015), economists developed an index to compare what the digital economy looks like in different countries – the “Digital Evolution Index” or DEI. The index was derived from four main factors:

  1. Supply-side factors (access, transaction infrastructure, etc.)
  2. Demand-side factors (consumer trends, social media savviness, etc.)
  3. Innovations (startup culture and mindset, entrepreneurial and technological funding, etc.)
  4. Institutions (laws and regulations that promote and/or restrict the digital ecosystem) 50 countries were assigned to four main trajectory zones:
  5. Stand Out Countries – These have a high level of digital development and are predicted to develop even further. Countries include: Singapore, U.S.A., Switzerland, etc.
  6. Stall Out Countries – These have achieved high levels of digital development but are  losing momentum. Countries include: Netherlands, Finland, Denmark, etc.
  7. Break Out Countries – These have high potential to become “Stand Out” countries in the near future. Countries include: China, South Africa, Thailand, etc.
  8. Watch Out Countries – These have both high levels of potential opportunities and a variety of different challenges. Some may succeed in developing, while others may remain stuck. Countries include: Hungary, Egypt, Kenya, etc.

What is the future of the digital economy?

In a report on The Internet Economy In The G-20
(https://www.bcg.com/documents/file100409.pdf), the Boston Consulting Group (BCG, the world's leading advisor on business strategy), predicted that by 2016 there will be 3 billion internet users around the world (around half of the world's population). In the G-20 economies, the digital economy is predicted to reach $4.2 trillion, surpassing some of the world's national economies! For more detailed and in-depth information on this, check out the report here https://www.bcg.com/documents/file100409.pdf. This is clearly a technological phenomenon that presents limitless business/economic opportunities
that many consumers are quite happy and eager to adapt to and make use of – and this is where startups come in!

Is there a place for startups in today's digital economy?

Although there are many different definitions for the term “startup”, they generally tend to be technology-related businesses that are designed to grow fast and to provide something to a very large market. The above discussion on the state of the digital economy shows that there is massive potential for startups today, and possibly even more to come in the future. The success of a startup will depend not only on the services it has to offer, but also on where it is in the world, as well as the various laws and regulations governing the digital economy in different countries.

Startups are often very well suited to the digital economy in their business models and ideas, so many stand a good chance of making it big in the ever-changing platform of the digital economy. Before starting one, be sure to do your research in order to create a case specific competitive strategy!

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