Sponsored content: created in partnership with Lappeenranta-Lahti University of Technology.
The digital economy is a vast and dynamic landscape, which has been shaped by a series of fundamental shifts over the years. From the advent of computers and the internet to the rise of connected devices and data-driven innovation, each development has redefined how we live and work. Today, people are constantly creating and expanding their digital footprints as technology becomes increasingly integrated into everyday life.
“The process of datafication, transforming aspects of our physical lives into digital data, has accelerated over decades to the point where nearly every action we now take at work or in our personal lives creates a digital footprint,” says Paavo Ritala, professor of strategy and innovation at LUT Business School in Finland. “People have claimed that data is the new oil, highlighting the incredible value and influence of digital information.”
The rapid rise of AI is one of the most prominent consequences of datafication. AI systems, running on vast amounts of data, are now being integrated into businesses and people’s daily lives, fundamentally changing how they interact with technology and services.
“Another critical element of the digital economy is the increasing power of digital platforms and ecosystems,” says Ritala. “The companies that run these platforms, including AI-driven ones, are becoming increasingly influential. This is due to a winner-takes-all effect, where a few dominant platforms gain immense market power. [This is] something that has been very visible for some time and continues to play out.”
Digitalisation has also driven a shift from a product-centric, physical asset-based economy to a data-driven, service-centric one. This transition is evident even in industries that rely on physical machinery, as they are embedding more digital and data-driven functionality into physical products.
“The trend of incorporating more data-gathering devices into physical assets has been progressing for a while,” Ritala says. “The latest development is a move toward AI-augmentation and intelligent products and services. These newer, smarter offerings are a direct result of the long-term trend towards data-driven assets.”
Data has a profound impact on how businesses make decisions. Companies are becoming more data-sensitive, gaining real-time access to a wide variety of information about their own operations and market conditions.
“By using digital technologies, analytics and, increasingly, AI, organisations are able to enhance their decision-making with more information and knowledge than ever before,” Ritala notes. “While some companies are better at this than others, the overall trend is clear: decision-making is becoming more informed and data-centric.”
Anticipating or predicting the future is challenging, particularly given the rapid pace of digital transformation. But there are ongoing trends that provide clues as to the direction of travel.
“We can expect continued growth in digital capabilities, including AI models, data and information technology, in our lives,” Ritala says. “We should expect this growth to be exponential, not linear, which is why the pace of change often feels so rapid.”
However, there are physical and sustainability limits that must be considered, and this can lead to difficult conversations around policy and ethics. “Data ownership and the implications of an increasing reliance on AI in society, the workplace and geopolitical domains will be important questions in the coming years,” says Ritala. “But the right answers will result in unforeseen value being created.”
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