Cross-posted from International Institute for Analytics
There was a great article recently in the McKinsey Quarterly – The Second Economy. In it W Brian Arthur discusses the fact that
Digitization is creating a second economy that’s vast, automatic, and invisible—thereby bringing the biggest change since the Industrial Revolution.
It’s a good article and worth a read. Brian talks about the systems that drive this economy – that automate decisions so that systems can communicate and collaborate without human intervention. These systems for automating decisions have three characteristics it seems to me:
- They are very agile or “constantly changing” as Brian says – easy to change as needs and circumstances change.
The digital economy moves faster than the physical one as it has fewer constraints on change – it’s much easier to reconfigure something electronic than it is to reconfigure something physical
- They are analytic – using the data available in the network to decide what will work best
We have more data than ever before both inside our organizations and in the network as a whole. The systems for the digital economy consume this data analytically, using it to behave in more effective, more profitable ways
- They are adaptive or self-configuring as Brian puts it – testing and learning to see what might work better over time
Whether people conduct the experiments or the systems conduct experiments automatically, the systems for the digital economy learn and evolve constantly to maximize their value.
These, of course, are the characteristics of Decision Management Systems. To participate in the digital economy your organization needs these kinds of systems so learn to build them.