MARCH 2016 / NO. 2
TAGS: DIGITIZED, AIRBNB, UBER, ALPHABET, GOOGLE, KPI, DEBT, HOUSING BUBBLE, US, EUROPE

Everything can be digitized

“Everything that can be digitized will reduce value and everything that can’t be digitized will increase value”, Salim Ismail, Founder of Singularity University
The digital revolution is underway with the biggest hotel chain Airbnb that doesn’t even own a single hotel room, and Uber, the biggest taxi-company that doesn’t even own a single car. The value-chain as we know it will change and be replaced by service-offering systems. This has already happened with the telecom, travel and music sectors. During the next 10 years some 70% of jobs will disappear! For organizations, this means disruptive change requiring more flexibility, different ways of working without hierarchical structures, and the ability to organize in small flexible units. This will give companies the opportunity to innovate and to scale-up rapidly. Even Google recognized that it had to change, and did so by restructuring and establishing Alphabet, their new holding company. We changed our strategic intelligence practices some years ago by using many more ‘pre-decision-making analysis tools’ such as strategy by uncertainty, strategic war-mapping, scenario analysis, Grey Swan analysis, current market place and future space analysis, and analysis of constraints.
This resulted in much better insight and foresight because it enabled organizations to identify the crucial Key Predictive Indicators of future change in a timely way.

Indicators of constraints

The key question is, whether this replacement by service-offering systems is going to happen during the next downturn of the world economy. Some indicators of constraints include the following: first we had the US with the bursting of the housing bubble, then Europe with the financial, euro and economic crisis and now the upcoming crisis in emerging markets. In addition, country debt in emerging markets rose from 150% of GDP in 2009 to 195% in 2015, while corporate debt surged from less than 50% in 2009 to 75% of GDP in 2015. Lower economic growth in emerging markets, weak commodity prices, the stronger dollar and the expected increase of the interest rates in the US dam the flood of cheap capital. Debt cycles may end in crisis and recession: the challenge is to identify how much pain still lies ahead of us. To try and answer this we have to identify the Key Predictive Indicators such as pressure on the profitability of multinationals, and the decrease in cash flow of exporting companies.
You can get these kinds of insights not from data-information gathering on markets, nor from analysis of industry sectors or competitive intelligence, but from foresight gained from strategic intelligence.
“We have to realize that sustainable future growth in Europe is an illusion as long as the average debt of the 19 euro countries is 92.1% of National Income, while we all agreed on a maximum of 60%”
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