The future of globalisation is one of the defining issues facing digital societies.
For a quarter of a century, globalisation has delivered unparalleled efficiencies by exploiting the comparative advantage of nations into tightly integrated value chain systems. At an interpersonal level, it exposes people to new ideas and different cultural perspectives.
Globalisation is often framed as an inextricable result of a digitalising economy. The more likely story is that digital technology has been directed by nation states and corporations in their age-old pursuit of geopolitical and commercial advantage.
But digital technology is malleable. If the way to achieve geopolitical and commercial advantage changes, then it’s likely that digital technology will change to reflect that new reality.
What’s becoming clear is that governments are now pursuing explicitly nationalist regulation, trade and tax policy, along with digital industrial policy. This is in response to growing pressure from citizens and businesses to address the rapidly increasing negative aspects of globalisation, such as growing trade tensions between the three economic superpowers — the US, China and the EU – with the business community caught in the crossfire.
Globalisation isn’t dead, but its trajectory has changed. Digital technology will reflect those changes and will adapt to meet a different set of geopolitical and commercial objectives. CIOs will need plans to navigate this new reality.
National/regional ideological narratives
Digital societies are starting to take shape in a balkanised fashion, divided into distinct factions around national or regional ideologies.
It is often taken for granted that the internet as an American invention, is also an extension of American values, with views ranging from the sanctity of free expression and association, suspicion of strongly centralised government and the belief in a dynamic economy driven by creative destruction.
Evolution borne of political pressure is well underway. The tenet of a globally consistent digital infrastructure founded on American principles is now giving way to a series of distinct national/regional interpretations of a digital society.
The most notable distinctions are:
Europe: The Old World Digitalised – a society that embraces digital technology so long as it’s done in a way that respects long-established traditions that are central to social cohesion.
China: Benevolent Guardianship – a society that sees technology as an engine of prosperity so longs as it is propelled by, a powerful, central agent that makes decisions for the benefit of the whole.
How countries and regions respond with openness in a digital society is just one factor within a broader set of conflicting geopolitical, domestic political, military and economic objectives.
CIOs must factor geopolitical considerations into their innovation programs. Every ideation effort must go through a consideration of how their concepts will play out in distinctly different digital societies.
There is also an impact on digital product management, which must have an effective localisation process. While product managers must be measured by global success of the products under their direction, they must be pushed to front-load localisation, so products don’t face long cross-country lag times.
Reliance on highly federated multinationals
The demand for greater globalisation has been a central motivation for many of the advances in enterprise IT technology. But as interest in economic nationalism grows, the focus will have to shift.
Rather than focusing on the efficiency gains in spaces between business operations across countries, what emerges is an opportunity for CIOs to reshape their organisation’s digital technology to exploit the differences between digital societies.
This stems from the fact that citizens and businesses in different countries will have increasingly different digital environments that they shop, interact with one another and conduct business. But all of this will be increasingly distinct and non-interoperable outside regionalised digital societies.
Managing a world of balkanised digital societies
Since digital technology permeates the entire operation of an enterprise, the implications of balkanised digital societies have a profound effect on every multinational organisation. Brand, customer and sale management, if not also supply chains, will increasingly require expertise that doesn’t scale well outside specific countries or regions.
If the cost of administering a globalised operating model exceeds the value of doing business in a specific country or region, then it makes more sense to localise the operations in a specific country or region. There’s no reason why this same dynamic wouldn’t apply to the digital realm.
Decision making will, by necessity, become more federated. Growing incompatibilities between the technologies in digital societies will necessitate yet more localised expertise.
To manage this situation, enterprises will need to reinvigorate the original concept of the wholly owned subsidiary model common prior to the mid-1990s. That is an organisation structure with broad decision rights used to ensure the maximum degree of relevancy for specific local market conditions.
Multinationals won’t disappear because the trajectory of globalisation changes; they just end up looking a lot different than they do today. Moving forward, enterprises will decentralise power into subsidiaries with a greater scope of autonomous decision-making responsibility.
The opportunity for CIOs in a world of balkanised digital societies is to figure out the enterprise IT resource that can be deployed in the most efficient fashion to achieve maximum impact across national nodes of a multinational enterprises.
Brian Prentice is a VP analyst at Gartner. His research explores how enterprises are transforming user experience and engagement outcomes though the implementation of human-centric digital design practices and by adopting a digital humanistic perspective of technology. Brian is also conference chair of Gartner IT Symposium/Xpo 2019 on the Gold Coast, 28-31 October.
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