According to a forecast by Statista for 2020, there are some 20.4 billion connected devices worldwide. And their number is growing. Technological progress occurs in networks. Artificial Intelligence (AI), connectivity and digitalization, all three terms describe the same phenomenon from different perspectives.
Digital systems constitute the basis for today's communication. Digital data is being created, stored, distributed and processed with the help of modern information technology such as computers, smartphones, communication networks, internet applications and databases. Connectivity increasingly influences human interaction, the working world and the economy. Accordingly, new lifestyles, behavior patterns and business models are being created.[1]
We are at the beginning of a new societal era. A network society is emerging which requires a different set of skills compared to yesterday. This is not just about being able to understand digital structures and processes, but much more fundamentally about understanding the social and cultural changes that accompany digitalization.
In a digital and connective world, new concepts are required to reflect, for example, the human needs of trust and security. Cultural and social settings that are immediately accessible in an analog world need to be redesigned for a network society. The emerging communication capabilities are giving rise to new social structures that are developing their own dynamics and complexity.
[1] See also: Zukunftsinstitut, Megatrend Konnektivität, Der Megatrend Konnektivität (zukunftsinstitut.de)
Individuals, companies and public bodies must prepare themselves for these changes. They must understand the connection between technology and social transformation, adapt their way of operating, realign products and services, and anticipate the transformation to a network society. At the very heart of this development stands the Internet as a supporting communication medium for people and machines. It initiates a new way of life, new behavioral patterns and new business models. For example:
- The sharing economy is changing entire sectors of the economy. Transparency and communicative interaction create the framework for new business relationships.
- The use of streaming profiles creates transparency on the one hand and allows demand-oriented offers on the other.
- AI is changing the interaction between humans and machines. Learning machines help to optimize economic processes. However, they are also increasingly part of everyday private life. Household and health are more and more monitored by AI applications. The number of interfaces between humans and machines is continuously growing.
- Blockchain technology is changing the traditional allocation of power and control. Decentralized ledger systems, cryptographically networked on users' computers, create security of transactions and contracts outside of established institutions.
These are just a few examples of the various networks that are developing. However, the new network society must consistently place human needs and opportunities at the very heart of its activities. It will become important for companies to holistically understand both the network technology and the corresponding social components. This is the only way to develop a sustainable culture for the network society of the future.
Risks: The connectivity of people, machines and companies expands the access to information tremendously. Creativity is fostered and new knowledge emerges. However, digital networking also carries dangers. Misinformation and defamation of people, products and companies are the order of the day. Permanent accessibility leads to distraction, hysteria and feelings of stress. Users lose the ability to distinguish between true and untrue as well as important and unimportant. Over-connectivity causes loneliness as well as disorientation.
Companies have to realize the bivalence of connectivity.
Opportunities: Connectivity. Stakeholders in all market segments search for connectivity solutions. These are producers of devices, platform vendors or industry manufacturers. They intend to improving their products and services and making them fit for the future in a rapidly growing market. It is therefore necessary to find, develop and integrate the right digital technology. And this before competitors have captured the market for themselves. Therefore, the right technology and right launch date are the decisive competitive factors.
Recommendations: The digitization and networking of the society opens up a wide range of opportunities. However, it also harbors far-reaching dangers, as the technology and the social effects of digitization are not in harmony at present.
What is needed is the right degree of networking that respects the autonomy and self-determination of users on the one hand and takes advantage of the full potential of digitization on the other. Responsible managers and developers should follow this principle. Only then - as defined by the ‘Zukunftsinstitut’ (Frankfurt and Vienna) - can a new 'ethic of the digital' emerge.[2]
This was the report ROM_04 – Connectivity-The Network Society. We analyze megatrends, external disruptions, and internal organizational processes for their impacts on business risks, but also opportunities. The intention is to give impulses making companies fit for the future.
You are invited to participate in the discussion and contribute your experiences and examples. In doing so, you will be helping to expand and improve the knowledge about risk and opportunity management.
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