The increasing value of going digital

More than accounting

Last July Mckinsey published a useful little paper on the changing relationship of intangible and tangible assets of digital capital and how what was once a small minority of business activity are becoming the rule in the digital economy.

The view being, we can see the rising importance of this shift in the recent copyright battles between Internet and consumer-electronics companies and in the major spending on patent portfolios.  Measuring the full impact of digital capital requires a new set of management and financial lenses that incorporates your intangible assets such as your designs, business models and brands.

This is echoed by the work that BCG have done and called out in my Digital Diamond Hunting post, digital capital has become a major contributing factor in global economic growth. In some economies such as the UK, Sweden and Japan spending on intangibles represents two-thirds of digital capital’s total value.

According to BCG the digital economy is being driven, too, by small – medium-sized businesses’ fast adoption of online commerce. These companies are the backbone of the UK and they've taken to the internet economy, creating a virtuous circle: more choice for consumers, more cash in the marketplace and more promotion of the internet as the way to reach and engage.

Not all rosy

UK startups, have blazed a trail, but for the larger FTSE 100 enterprises things aren’t as rosy. With a market cap of over £1tn and employing an estimated 6.5m people and only four chief technology officers sitting on their boards, an indication of the low priority attached to digital strategy.

With FTSE 100 companies far behind the public, small businesses, startups and even governments in the digital race, there is growing demand for them to be held to account. With various stakeholders considering some form of Digital Performance ranking indicator to showcase this as a key business metric, where companies with at least ten percent of revenues online will be championed. 

Want a playbook and fresh approach?

For the laggards a useful methodology to consider is Max Kreijn’s Open Activation work on how to evolve from enterprise to startup?"  He’s done some fresh work and introduces 7 of the many findings from the research that consolidates the method of Open Activation. Collectively they provide an initial guide to how a large enterprise can begin thinking, acting, and succeeding like a digital startup.

Check it out, as the importance of digital intangibles continues to grow, we are increasingly going to see the need for these types of fresh approaches where the Digital Davids transform the Enterprise Goliaths.