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Lesson 1: Introduction: Managing in the Digital Economy
What is the Digital Economy?
How digital innovation, technology, and market disruption transform industries, business practices, and market strategies. This course addresses the ways digital technological innovations transform industry, business models, strategies, operations, and management, and create new markets and products. The Economics and Markets module builds a foundation for understanding the role of disruptive technologies and their transformational impact on business strategies and models. The module has three focus areas - behavioral and informational economics, power laws, and platform competition. The Disruptive Information Technologies module is based on Clayton Christensen's concept of disruptive innovations, with discussions centered on Clouds and Mobility, the Internet of Things, 3D printing, robotics, and transportation. The Implications of Data module focuses on the collection, analysis, and use of massive amounts of data driven by digital technologies. The topics covered include big data, privacy and security, search and ad technologies, health, and current/emerging topics. The Transformational Impact module discusses the strategic implications of digital innovations on work, business, industry, and society.
Note: This is a general description, not a course blueprint. It gets more and more out of date every year.
The field of the digital economy is vast. It expands constantly and changes swiftly. One course, degree, or even a lifetime of work will not be enough for anyone to grasp its intricacies . To be effective, managers must understand the electronic heartbeats of the business. So, the questions remain: What should we study? How much? Which way? The answers, of course, depend on whom you ask – users, programmers, systems analysts, website administrators, and managers – will each have a "pat" set of responses. Here, I explain my rationale.
MBADM 830 addresses the ways digital technological innovations transform the industry, business models, strategies, operations, and management and create new markets and products. Course content focuses on (1) understanding digital markets, including information economics; (2) testing Clayton Christensen’s concept of disruptive innovations; (3) examining the implications of so-called “big data” for digital business; and (4) integrating current technical and behavioral developments with a focus on the transformational impact of digital innovation for work, business, industry, and society.
Many MBA programs include an introductory or strategy course on Management Information Systems (MIS). The course can be Introduction to Information Systems, Strategic Management of Information Technology (IT), Corporate Information Strategy, or Digital Strategies. The course title provides a cue to the content of the course. The title of our course, Managing in the Digital Economy, and the associated description also provide some insight into the content. The description is a theoretical framework and does not define the content of the course. Since we have 3 credits and one course as a constraint, the philosophical approach to this course can be described as follows.
First, we are looking at the latest digital/IT advances that can be characterized as disruptive innovations and have a transformational impact. Second, we may also explore established technologies that are critical in the business world and have continuing relevance for innovation. Second, we look at the operational, strategic, and industry-level effects of such advances. Finally, we are developing a way to approach such changes to existing and future business problems. The course does not delve into the technical aspects of IT.
As we study the digital economy, we will encounter an explosion of technical terms and jargon. We will discuss the relevant terms for our course from the next lesson onwards; for now, a general understanding is good enough. The term digital economy does not have a standard definition. Broadly, the digital economy is an economic system using digital technologies to create, distribute, and consume goods and services. It is characterized by the growing interconnectedness of people, businesses, devices, data, and processes through the Internet, mobile technology, and other digital channels.
The scope of the digital economy grows every year, and information technologies continue to push the frontier forward relentlessly. The digital economy affects all spheres of human activity. Figure 1.1 (click it to enlarge) indicates that the digital economy primarily affects business but also intersects with digital infrastructure, digital government, and digital society. This figure helps conceptualize the digital economy. However, remember that many researchers take a more comprehensive view of the digital economy and may contend that it covers all three circles shown in the figure. For our purposes, a general understanding of the term is sufficient.
A deep study of the digital economy will take many lifetimes and perhaps more. What are we going to study?
Figure 1.1
Looking at Figure 1.1 closely (click it to enlarge), you will see Emerging Technologies intersecting digital society and the digital economy. Disruptive innovations mostly come from emerging technologies. So, we will focus on emerging technologies most critical to the business world.