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Mastering Digital Transformation: Towards a Smarter Society, Economy, City, and Nation

We are very pleased to share with you this essay from our C-PET colleague Dr. Nagy Hanna, based on his recent book Mastering Digital Transformation. Drawing on his lifetime’s experience with the World Bank he sets ICT transformation in a global perspective.

Mastering Digital Transformation:
Towards a Smarter Society, Economy, City, and Nation
(Emerald, 2016)

by Nagy K. Hanna

Digital technologies have yet to deliver significantly and equitably for developing countries. Why? How can policy makers harness the digital revolution for accelerated development? This is the focus on my recent book, Mastering Digital Transformation: Towards a smarter society, economy, city and nation (Emerald, 2016).

The book emphasizes digital transformation as the key to reap the promised benefits of the ongoing technological revolution. Accordingly, digital transformation is not a technological fix, a blueprint plan, a one-off event, or a one-size-fits-all strategy. Rather, it is a social learning process, sustained over time, involving diverse stakeholders with the aim to harness the digital technology revolution and its accompanying information revolution to transform economies and institutions to meet socio-economic priorities, needs and aspirations. This transformation process is driven by vision, leadership, entrepreneurship, innovation, experimentation, openness, agile learning, and partnership among government, business, and civil society.

Digital technologies hold the promise of becoming a game changer for global development. But the much-anticipated developmental promise of this technological revolution remains only a potential. The developmental dividends of digital technologies- inclusive and sustainable growth, improved governance, and responsive service delivery – have been so far limited to isolated cases. They do not add up to transformative development impact. Diffusion, scaling up, and effective use of innovations are what ultimately matters for any significant socioeconomic impact.

Not harnessing the ongoing technological revolution and its innovations is not an option. Given the magnitude of change in competitive advantage that digital technologies can confer on adopters, the risks of slow or poor adoption of these innovations can be similarly dire for industries, governments, individuals, and nations. The ambitious Sustainable Development Goals, adopted by UN members in 2015, would not be attained without harnessing the digital revolution.

Challenges to Digital Transformation

Three key challenges bedevil the design and implementation of digital transformation programs that aim to realize the developmental impact of digital technologies.

First, digital technologies, infrastructures, platforms, and core applications are highly interdependent and should be treated holistically as a dynamic ecosystem. This ecosystem can be conceived to include these components: information and communication infrastructure (connectivity), digital platforms for identification and payments, a local ICT services and digital entrepreneurship sector, technical ICT skills and leadership, content and media industries, digital applications for government and business, digital service provision for all sectors, e-education, enabling cyber policies, and ICT-sector management and regulatory institutions. Maximizing digital dividends requires assessing and nurturing this digital ecosystem and tapping into its synergies at the national, cluster, and sector levels.

Second, the capabilities to plan and implement national digital transformation strategies are increasingly important to engender a shared vision and mobilize a long-term commitment to digital transformation; to integrate ICT opportunities and investments into national and sectoral development strategies; invest in broadband infrastructure and shared digital platforms; reform complementary policies; engage stakeholders; pursue partnerships with civil society and the private sector; secure wide diffusion and inclusion; and enable local initiatives, adaptation, and learning. A digital transformation strategy should be developed in continuous interaction with the national development strategy and as a crosscutting enabler of priority economic sectors. Attention to building local policy and planning capabilities is much needed: to provide strategic direction, to plan and implement digital transformation, and to adapt planning processes to diverse local contexts and stakeholders.

Third, digital transformation demands substantial investment in organizational capabilities, process innovation, and institutional learning, Substantial investment is needed to implement organizational changes, process innovations, and other intangible digital assets (such as digital content) to realize the promised digital dividends. Little attention is given to this technological and institutional learning capabilities in developing countries, where these capabilities are most needed. Yet, best practice suggests that investments in ICT-related process improvements, training, and reorganization, exceed investment in ICT by a ratio of 4 or 5 to 1. These capabilities involve deep changes in skills, roles, norms, routines, teamwork, cross-sector partnerships, and leadership and managerial practices.

These challenges have persisted across countries, prominently in developing countries where complementary assets and coordination mechanisms are weak or missing. These are due to several institutional factors, including fragmented responsibilities for policies and leadership across government and the whole ICT ecosystem, and the relative isolation of ICT sector specialists from development specialists in education, governance, and other providers of complementary assets.

The book offers tools, frameworks, and best practices to address these challenges. Herein lies the opportunity to make the great leap for digital transformation. It proposes an integrative framework to guide the thinking about the ICT-enabled transformation ecosystem, and its main components and key players, in order to pursue coherent policies and mutually reinforce ICT-enabled development initiatives. The framework helps policy makers and stakeholders engage in identifying the interdependencies, missing links, and binding constraints in the e-transformation ecosystem that should be prioritized. It calls on ICT policy makers and regulators to break out of the ICT bubble, and interact with the developmental context to be transformed.

What Are The Transformation Possibilities?

ICT-enabled transformation possibilities are vast and ever expanding. This book focuses on effective practices for transforming government and key service sectors of the economy, as well as transforming enterprises, communities, and cities.

First, the book explores some of the strategic approaches to transforming government: taking a whole-of-government perspective; mobilizing demand for better services, promoting public-private partnerships, and monitoring the performance of service providers, etc. New platforms and practices should be leveraged for public sector transformation: digital civil-identification (digital ID), mobile devices and apps, open government data (OGD), big data and analytics, and cloud computing, among others.

Second, the book illustrates how an integrative view of sector transformation can be applied to the education and learning systems, health systems, financial services, and agricultural extension services, among others. Third, measures to promote digital communities and inclusive information society are explored, such as developing local content, and establishing funds for grassroots innovation.
Fourth, the book reviews the emerging practices of smart cities, discusses the merits of competing approaches to smart cities and calls for adopting an ecosystem view that takes account of all stakeholders.

Final vast area of digital transformation is in business.

The book proposes such policy measures as: access to Internet and digital technologies; use of ICT to reduce transaction costs with government and improve the business environment; policies and platforms to facilitate e-commerce and open trade; enterprise-based training and learning; Internet-based business development services; and transparent and effective regulation.

How Can Countries Master the Digital Transformation Process?

Mastering the digital transformation process demands upgraded managerial and technical skills, digital leadership institutions and networks, enabling policies and regulations for a digital economy, a high-quality communication infrastructure, and a competitive local ICT industry, with capabilities for fast learning from local and global practice.

The book proposes strategies to strengthen the supply response of educational institutions and reposition them for the smart economy.
It calls on policy makers to define clear roles for government, private sector, and development partners, and to build institutions with the requisite core competencies to orchestrate and implement various elements of the transformation process. It raises the key questions that a regulatory framework must answer. Key steps are outlined in developing broadband strategies to promote supply, mobilize demand, and secure universal access. Finally, the book draws on a large body of experience on how to promote the ICT services industry in diverse contexts and in support of a vibrant digital transformation ecosystem.

What Are the Emerging Lessons?

• The concluding chapter sums up emerging lessons from the experience of the leading countries into few mutually reinforcing fundamentals. These are best framed here in terms of a learning agenda for researchers and policy makers of transforming countries:
How can a country pursue a holistic and long-term transformation strategy? What can be done to sustain commitment and reconcile the pressures for quick wins with the longer-term investments needed in institutions and foundational projects? How can leaders strengthen the digital transformation ecosystem, and exploit the potential synergy among its elements?

• What measures can help align and integrate the national digital transformation strategy with the development strategy? How can local content and applications development be promoted to advance development priorities?

• What complementary factors will be needed, economy-wide and in each sector, to realize the digital payoff? What roles should policies, institutions, and leaders play? How can policy makers secure attention to the softer aspects of transformation, like managing change, skills, incentives, and culture?

• How should policy makers engage stakeholders, build coalitions, and pursue partnerships to create and implement a shared vision? What roles can the local ICT industry and civil society organizations play?

• What measures are necessary to secure digital diffusion and inclusion? How early should affordable access and universal digital literacy be pursued to realize equitable and sustainable transformation?

• What balance should be struck between strategic direction and local initiative? Can both be aligned to create a virtuous cycle of innovation and societal learning?

• How can policy makers support experimentation, innovation, and adaptation? How can they enable fast learning, agile monitoring, and participatory evaluation?

Developing countries have the opportunity to learn from the experience of frontrunner countries while inventing their home-grown best practices. Newcomers like Estonia, Korea, and Singapore have leapfrogged, learned fast, became test beds for innovation, and started to partner and exchange their tools and lessons with the most advanced countries. Learning from these good practices should help countries and local governments build capacity to master the digital transformation process. Mastering this process is likely to be the defining core competency of the 21st century.