1. Operating a business in the digital economy
Challenges, opportunities and skills
Presentation by
Felix Ritchie
Professor of Applied Economics
Director,
Bristol Centre for Economics and Finance
26th january 2017

2. Contents Big changes Little or no change Markets Employment Skills
geography
basic good business

3. Markets – who gains? Businesses that can exploit information
initially, at least…
Who has benefited?
firms who can exploit information
margins reduced by pricing information
consumers gain at expense of producers
firms looking to service the ‘long tail’
spammers
digital product development times reduced
digital inputs and outputs free of geography
Internet changes calculations of return
Free-at-point-of-delivery models
Possible to identify and service ‘long tail’
Spam is cost-effective…

4. Markets – who gains? Businesses that can exploit information
Businesses that can exploit behaviour
Who has benefited?
firms who can exploit information
margins reduced by pricing information
consumers gain at expense of producers
firms looking to service the ‘long tail’
spammers
digital product development times reduced
digital inputs and outputs free of geography
Internet changes calculations of return
Free-at-point-of-delivery models
Possible to identify and service ‘long tail’
Spam is cost-effective…

5. Markets – who gains? Businesses that can exploit information
Businesses that can exploit behaviour
Businesses servicing the ‘long tail’
Who has benefited?
firms who can exploit information
margins reduced by pricing information
consumers gain at expense of producers
firms looking to service the ‘long tail’
spammers
digital product development times reduced
digital inputs and outputs free of geography
Internet changes calculations of return
Free-at-point-of-delivery models
Possible to identify and service ‘long tail’
Spam is cost-effective…

6. Markets – who gains? Businesses that can exploit information
Businesses that can exploit behaviour
Businesses servicing the ‘long tail’
In the long run: consumers/purchasers
Who has benefited?
firms who can exploit information
margins reduced by pricing information
consumers gain at expense of producers
firms looking to service the ‘long tail’
spammers
digital product development times reduced
digital inputs and outputs free of geography
Internet changes calculations of return
Free-at-point-of-delivery models
Possible to identify and service ‘long tail’
Spam is cost-effective…

7. Employment Are computers replacing humans? In the long run, no
Recent conventional wisdom: machines…
replace ‘repetitive’ workers
augment ‘creative’ workers
True in the future…?
‘Computer’ jobs versus ‘human’ jobs
expert systems doing the jobs that were thought to need human skill/insight
received wisdom: technology replaces manual workers and enhances service workers
no longer true?
Longer term – technology enhances productivity and growth – does that help in short term?

8. Employment Are computers replacing humans?
Opportunities for flexible employment
or risks, for employer and employee?
in the long term, integration seems to have the advantage
Do you have employees, and if so, how many?
sure?
Digital assets are mobile
how much do you trust your employees?

9. Employment Are computers replacing humans?
Opportunities for flexible employment
How trustworthy are your staff?
Do you have employees, and if so, how many?
sure?
Digital assets are mobile
how much do you trust your employees?

10. Skills Education levels increasing across the world
is this education well targeted?
good news: training older workers now less of a problem
bad news: we don’t know how young people learn
At UWE, aim to give students practical skills eg training in Office tools, lots of practice at presentations and group work
But is our education system suited to this? Evidence that young people learn very differently

11. Skills Education levels increasing across the world
is this education well targeted?
Do we still need to instill ‘knowledge’?
are analytical skills more important?
It seems likely that the ability to analyse information correctly is becoming more important than finding it

12. What isn’t changing?
Geography matters, even for digital goods

13. What isn’t changing? Geography matters, even for digital goods
businesses still cluster
trading
networking
employing
training
reputation
ie production advantages
Becoming even more important as market advantages disappear?

14. What isn’t changing? Geography matters, even for digital goods
Basic business rules
even digital products need a market

15. What isn’t changing? Geography matters, even for digital goods
Basic business rules
Surprisingly little, conceptually
but digital economy changes scale and speed of business

16. Summary
Reasonable idea of who the commercial gainers and losers are, in short and long term
so far
Lot more uncertainty about employment and business structure
Uncertainty about future skills but likely to value
adaptability skills
analytical skills