A new study shows that the United States works at only 18% of its digital potential – missing the potential gains in productivity that should be in the economy. According to the McKinsey Global Institute, a new divide has emerged in the country’s business world, placing every sector into either the “haves” or the “have-mores.”
The researchers at the McKinsey Global Institute compiled a “digitization index” to companies about where and how they are “building digital assets, expanding digital usage, and creating a more digital workforce.” They found that leading sectors have increased their capabilities 4-times over since 1997 and saw the most growth in the last ten years. While media, financial service, and professional services were doing well, government, health care, local services, hospitality, and construction fell behind in their use of digital technologies.
Sectors that use less technology also report the lowest productivity. Since most of these sectors are some of the highest contributors to the gross domestic product (GDP) and the job market, this lack of modern technology places a burden on the economy at large. “We calculate,” writes the team, “that if the U.S. were to capture the full potential of digitization, rather than just 18% of it, this could be worth at least $2 trillion to the economy.”
The researchers found that digitizing a business is much more than implementing information technology (IT) equipment and systems. They attribute the most productive sectors to businesses that use digital devices and services that are integral to their processes—anything from making payments digitally to interacting with consumers on social media and online marketplaces. When it comes to interactions in the workplace, these aids allow workers to become more efficient at complex task while automating simple tasks.
“At the company level, the ‘have-mores’ lead in terms of product, services, business model innovation, and revenue growth — and they are often the ones disrupting their own and other sectors.”
The findings raise questions about the depth of the tech-divide. Since we are within a time when the global economy could use more momentum, seeing the ‘haves’ catch up with the ‘have-mores’ on technology could be a source of economic growth. We can be optimistic about the growth potential of Internet of things and big data, and the digital transformation of sectors traditionally not accustomed to such innovation.
Traditionally, United States’s innovations are adopted with fervour around the world, and the “winner-take-most dynamics” associated with the internet are no exception. As the rest of the world watches, the United States can channel its technical ability into a new wave of productivity, and in turn, transfer this energy into economic growth.
The paper, “Digital America: A tale of the haves and the have-mores,” was published in December 2015.
Featured Image Credit: Sebastiaan ter Burg