Zhang Xinhong: Why is digital transformation the only way for enterprises?

Successful digital transformation enterprises will form a dimensionality reduction blow to conformist enterprises, and network effects will exacerbate the formation of a winner-take-all situation.

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• Zhang Xinhong 丨 Chief Informant of the State Information Center

New digital species will also emerge in large numbers

Over the past few decades, there have been two phases in which new species have emerged particularly highly. The first stage was in the mid-1980s, because at that time we implemented the policy of reform and opening up, and it was institutional innovation that triggered a burst of innovation vitality. The second stage is the emergence of the mobile Internet, and in the decade after 2010, these new species have simply dazzled us. The vast majority of these new species are digitally related, so they are also called digital new species, that is, new things that have emerged from the use of digital technology.

Digital new species can be divided into four broad categories. The first category is new products, such as smartphones, digital cameras, digital TVs, digital toilets, intelligent robots, driverless cars, and so on. The second category is new formats, such as Weibo, WeChat, live video, digital games, sharing economy, platform economy, industrial Internet, and so on. The third category is new models, such as e-commerce, e-government, live streaming with goods, remote office, Internet hospitals, unmanned supermarkets, cloud services, and so on. The fourth category is new occupations. There are now more and more new careers that we haven't even heard of in the past.

In July 2020, 13 ministries and commissions, including the National Development and Reform Commission, issued a guiding opinion on supporting the development of new formats and models, clearly proposing 15 new formats to support development. It is mainly distributed in four major areas: one is the field of online public services and consumption, including online education, Internet medical care, remote office and digital governance; the second is the field of enterprise digital transformation, including industrial Internet platform, traditional enterprise digital transformation, virtual industrial park and industrial cluster, and unmanned economy; third, the new individual economy, including new economy, micro-economy, flexible employment; fourth, sharing economy, including the sharing of living materials, the sharing of production materials and data sharing. It is believed that these 15 new formats will have better development in the next period of time, but the new formats in practice are far more than these.

The development of new infrastructure and new technologies will continue to spawn new formats. Taking the changes brought about by the development of mobile technology in different eras as an example, the 2G era has SMS, QQ, Alipay, the 3G era has smart phones, mobile e-commerce, Weibo, WeChat, online and offline combination (O2O), and the 4G era has scan code payment, sharing economy, social e-commerce, and short video. What will happen in the 5G era? Now everyone talks about 4K/8K HDTV, AR/VR/MR, intelligent Internet of Things (AOIT), industrial Internet, digital spaghetizer, and so on, but the really great products have not yet appeared. When 3G was just developed, everyone didn't know what 3G could do, and then Apple mobile phones appeared, and the whole world had a big change. What kind of revolutionary products 5G will bring, we can only wait and see.

In the next few years, a new generation of information technology such as 5G, artificial intelligence, AR/VR, blockchain, and digital life is ready, and some revolutionary products and applications are gathering momentum.

A new batch of super platforms appeared

At a time when BAT has grown into a super giant, many people are worried about whether it will curb the innovation of other companies, and I think people don't have to be too anxious at this point. With BAT (Baidu, Ali, Tencent), TMD (Toutiao, Meituan, Didi) will still appear now. There are still more than 200 unicorns in China.

Whether it is Internet entrepreneurship or star enterprises in traditional industries, platforming has become the trend of the times. Once the industry platform is formed, the speed of its ecological expansion will accelerate sharply. Looking to the future, China's industrial Internet has now begun to make great strides, I believe that in the future, every vertical field may appear one or two very large platforms, and the emergence of several super platforms on the basis of these many platforms should be expected.

In what areas will the super platforms of the future emerge? I said it's all possible, like agriculture, manufacturing, healthcare, education, tourism, pensions, finance, real estate, etc., because these areas do not have really big super platforms.

There will be significant changes in employment patterns

With the emergence of a large number of new formats, a large number of new occupations will inevitably appear.

Since the promulgation of the new occupational code on the mainland, three batches of new occupations have been announced, with a total of 38 new occupations. Among them, in the first batch of new occupations, there are e-sports players, in the second batch of new occupations, there are takeaway brothers (online delivery workers), and in the third batch of new occupations, there are network salesmen (including Internet celebrities who are now doing live streaming with goods). Most of these professions hadn't been heard of in previous years, because they probably hadn't appeared yet. They can now be called new occupations, indicating that they have at least accommodated the scale and capacity of employment in more than one million. There will be more new careers in the future, some of which we may not have imagined right now.

New formats have become a very important reservoir of employment and a catalyst for new occupations. As we all know, from 2013 to 2019, more than 13 million new jobs were created in China's cities and towns every year, which is an achievement under the conditions of economic slowdown under our new normal. That is to say, this is the best stage for us to solve the employment problem under the conditions of economic slowdown. If you use traditional economic theory, you can't find the answer at all, and the fundamental reason lies in the development of new formats and the catalysis of the digital economy.

Not only has the employment capacity increased, but more importantly, the future employment model will also show diversification. Among the new terms I just mentioned, there is the home economy, and more people will become practitioners of the home economy in the future, and they will do everything at home. In the future, the proportion of flexible employment in cities in total employment will be very larger than it is now, and it is entirely possible to double in 10 years.

During the 2020 pandemic, several U.S. tech giants pioneered the concept of permanently working from home. Working from home permanently is not only a matter of saving commuting time on the road, not just saving free lunches, but more importantly, it means that in the future, enterprises can choose employees to no longer be limited by geography, and enterprises can use people from all over China and even the world to work, which will definitely lead to deeper changes.

The new format also lowers the employment threshold, making employment in the GSP possible, and the quality of employment is significantly higher than that of traditional employment forms. Technological advances coupled with flexible employment models have greatly lowered the threshold for employment. The abundant open resources on the platform have also improved the employability of workers. Vulnerable groups such as persons with disabilities, the elderly, the under-educated, women, and workers in rural and remote areas have increased their opportunities to participate in value creation and employment.

There has been a major adjustment in the competitive landscape

Every major technological advance will bring about a major adjustment in the global economic structure, which has become a basic historical common sense. Therefore, this digital revolution will also trigger a major adjustment in the global economic structure. Who will be the beneficiary? China will not miss such a historic opportunity.

Mary Meeker, who is known as the Queen of the Internet, mentioned in her report that in the past 60 years, the United States' share of global GDP has fallen from 40% to 25%. The fastest rising is China. From the perspective of the development curve, China began to take off around 1994, from only 4% to 15% in 2017 (more than 16% in 2020). 1994 is the first year of China's full access to the Internet, which is no accident, and future changes will still be closely related to the development of the digital economy.

Not only will the global economic landscape change, but the competitive landscape of the industry will also change. You can take a look at whether it is TOP20, TOP50 or TOP200, those with the fastest growth rate and upward climbing enterprises, platform companies occupy an absolute advantage and become the main force driving global economic growth. The degree of digitalization, networking and intelligence determines the competitiveness and vitality of the industry, and this trend will be increasingly strengthened in the next few years.

Within an industry, the competitive landscape of enterprises will also change. Successful digital transformation enterprises will form a dimensionality reduction blow to conformist enterprises, and network effects will exacerbate the formation of a winner-take-all situation. Today you are the boss, tomorrow you are not necessarily. At the same time, cross-border competition is becoming more and more common, and industrial boundaries will become more and more blurred. For any business, you may not know who your competitor is, you may not be the person who is ahead of you, or the person who is closely following behind your ass and ready to bite you, but in a field that you can't see now and hasn't appeared in your field of vision.

Similarly, the competitive landscape between regions and cities will also bring about new changes due to the transformation of digitalization. The Internet has broken the boundaries of time and space, the decisive role of geographical advantage is weakening, and regions and cities that are good at seizing the opportunities of digital transformation are likely to achieve leapfrog development. Whoever can go a little faster will have a very different result.

Data drives everything to become a reality

If you think about it, you can know that old drivers can't drive without navigation. When we go to a place to participate in a meeting, it is basically data-driven: the meeting notification is data-based, the schedule is data-based, the way to go out to ask for a ride is data-driven, and what route to take is also determined by data. When using an online ride-hailing car, the supply and demand matching of a ride-hailing technology only takes 0.12 seconds, but it takes 57.6 billion times to calculate the data behind it. On the surface, online car-hailing beats taxis, takeaway beats instant noodles, and e-commerce beats department stores, etc. on the surface, but the difference behind it lies in big data.

Now everyone's mobile phone is pre-installed, downloaded a lot of app, when you sleep they are quietly updating, such iterative innovation is getting easier and easier, even you can not feel it at all. The development of mobile payment has made the money we use digital, and china has also taken the lead in entering a cashless society. Manufacturing is even more so, the original assembly line is to turn people into machines, and the future of intelligent manufacturing is to make machines more like people, even smarter than people, more capable, more reliable.

Data-driven everything has become more and more a reality, and it has really changed the world. Numbers have begun to redefine everything, add the word "number" before everything you know, such as the digital economy, digital government, digital cars, digital buildings, digital mobility, digital toilets, etc., and you will find that these things are very different from before. Slowly, we can find that speaking with data, making decisions based on data, and acting on data will become a very natural thing.

Data-driven everything brings another major change, or new opportunity: all business is worth redoing. If you look at the work and business you are doing now with a digital mindset, you will find that you can completely start over, and it is likely that it is a unique job. In fact, every company can ask itself: Who will be your competitor in ten years?

Data capabilities are the core competitiveness of enterprises in the future

In the future, who can find big data, and use these big data well, the competitiveness of such enterprises is not the same as the competitiveness of traditional enterprises, and it is easy to complete the "dimensionality reduction attack".

What is the data capability? Here is a simple formula:

Data capability = data + algorithm + computing power.

Data capabilities will become the core competitiveness of the future, forming a new competitive advantage. This is true for a country, for a business, and for everyone.

China's ability to improve data has its own unique advantages, and it can gain some advantages in the data competition in the next few years. We have the largest population and the largest number of netizens, everyone is the most important source of information, everyone uses more and more information, creates more and more data, and the value created by using data will become greater and greater. In the past, our small data did not do well, and the dependence on big data will be very strong, which will also make big data develop rapidly. From the perspective of innovative practice, at present, China is no worse than any other country in the field of big data applications, and many of the Internet companies we have cultivated are international leaders.

Governments and enterprises will take the initiative to promote data openness

It's a judgment and an expectation.

Since the 1980s, since we gradually established a variety of information systems, one of the biggest headaches has been "data islands". This situation is likely to change significantly in the coming years.

People have realized where the value of data is, and the more people use it, the greater the value of the data, the greater the value of the existence of the organization, the more opportunities for innovation and development, and vice versa.

Data openness is also an urgent need to develop the big data industry, spawn new formats, and cultivate new kinetic energy. For this problem, Schönberg once said very bluntly: "The government does not need to subsidize and establish so-called emerging industries, only need to open the government's data to cultivate a new growth point." "That is to say, the government opens up the data, and the value it generates is huge" Data openness can make the data flow, let the data release the value, and let the data integrate resources.

For enterprises that have a large amount of useful data, open data has also become an inherent need for the development of enterprise ecology. The more data is opened, the more data will be obtained, and the ecosystem will be more perfect and powerful.

(The author is the author of the book "Numerical Variation")