Despite enjoying a high state of digital advancement, Australia is exhibiting slowing momentum in its digital evolution.

Harvard Business Review‘s ‘Digital Evolution Index 2017’ has ranked Australia as a nation which is stalling out in digital momentum.

New Zealand has emerged as a stand-out nation, one which is both digitally advanced, and enjoys a high rate of momentum.

Australia’s not alone as a ‘stall out’ nation, in fact, the world’s five top five as ranked on the Digital Evolution Index – Norway, Sweden, Switzerland, Denmark and Finland – are all on this ‘digital plateau’, demonstrating the immense challenge of sustaining growth.

For a stall out nation, HBR’s Bhaskar Chakravorti, Ajay Bhalla and Ravi Shankar Chaturvedi say getting off the plateau requires a conscious effort to reinvent, to “bet on a rising digital technology in which it has leadership, and to eliminate impediments to innovation.”

Many countries with high-performing digital sectors – such as those in the EU – and ones with high momentum – like New Zealand, Singapore and the UAE – typically have strong government and policy involvement in shaping digital economies.

Three of the world’s most significant economies: USA, Germany and Japan are all sitting on the border between ‘stand out’ and ‘stall out’.

Chakravorti, Bhalla and Chaturvedi outline their five most salient global factors likely to continue to influence, challenge or hinder nation players in different ways on the journey to a digital planet:

1. Digital technology is widespread and spreading fast. There are more mobile connections than people on the planet. More people can benefit from access to information and communication, but incidents of cyberattacks are on the increase and have wider impact.
2. Digital player wield outsizes market power. The five most valuable companies in the world – Apple, Alphabet, Microsoft, Amazon and Facebook – are all digital and all based in the USA. “With products that rely on network effects, these players enjoy economies of scale and dominant market share. They have deep resources for innovation with the ability to accelerate the penetration and adoption of digital products,” they say.
3. Digital technologies are poised to change the future of work. Automation, data and AI, when enabled by digital technology are expected to affect up to 50% of the world’s economy. More than one billion jobs and $14.6 trillion in wages are automatable by today’s technology. This could unlock new ways to harness human energy and also displace routine jobs and increase social inequality.
4. Digital markets are uneven. Politics, regulations and levels of economic development play a major role in shaping the digital economy. China is the world’s biggest internet user (with 721 million online) and is a parallel market, as few major international players have a presence there. India has 462 million internet users and arguably the greatest market potential for global buyers, but it operates in multiple languages and its own set of infrastructure challenges. Europe has 412 million internet users, but is a fragmented market. There’s also the fact that barely 50% of the world’s population has internet today.
5. Digital commerce must still content with cash. Retail ecommerce sales are expected to hit $4 trillion by 2020, about double the present figure. Digital sales, however, have not displaced cash, another hurdle on the path to a digital planet.

In collaboration with the Fletcher School at Tufts University and Mastercard, HBR developed the Index to analyse the state and rate of change of the 60 nations by asking:

1. What are the patterns of digital evolution around the world? Which factors explain these patterns, and how do they vary across regions?
2. Which countries are the most digitally competitive? Which actors are the prime drivers of competitiveness: public or private sector?
3. How do countries accelerate their digital momentum?

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Further reading

• This Kiwi company just got named the most reputable in Australia »
• Australian big businesses are ahead of USA and UK in AI adoption »

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