Digital revolution

Digital revolution

Innovation has made life as we know it possible. Where would we be without the invention of the steam engine, the discovery of electricity or the rise of computers? The human drive to explore the previously thought impossible got us to where we are now, and it will guide us into a future that may bear little resemblance to our past.

All the developments to date have already had a dramatic effect on businesses. Back in 1964, when the first widely-used mainframe computer was introduced to the market, the average tenure of companies on the S&P 500 index was 33 years. That number is estimated to reduce to 12 years by 20271 .

This is compelling from an investment standpoint, as it shows us how much the investment universe has changed – and can change further still. Many companies that may have been favoured in the past have declined. Some have become bankrupt, while others are now merely shells of their former selves.

There are many reason, of course, why companies rise and fall. However, over the past few decades, technology disruptions have increasingly played a big part in this development. We only need to look at the Top 5 companies within the S&P 500 to see this: all five of them are tech companies, with market capitalizations that surpass the GDP of most countries2

Tech companies dominate S&P 500 index

Source: Bloomberg as at 30 June 2021.

As with other industrial revolutions of the past, ‘Industry 4.0’ has the potential to disrupt almost every industry in every country. A widely-shared quote from an article in Techcrunch describes it best: 

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.” Tom Goodwin3

The impact of the Covid-19

Digital transformation was already progressing at rapid speed prior to Covid-19, and yet, the pandemic has accelerated it further still. Millions of workers have become accustomed to working from home, while many students have turned to remote classes. And those who have previously never shopped for their groceries online may have been pushed to try out this service during the pandemic.

Meanwhile, businesses have been forced into digital adoption and think out of the box to make things work. The importance of ‘technology preparedness’ has been brought to the fore during the pandemic, and what some may have considered a ‘nice to have’ in the past has now become a ‘must have’ for many organizations.

This will leave a lasting impact beyond Covid-19. Many of the changes that have been made are likely here to stay. People and businesses have begun to understand the current capabilities of modern technology. But once we emerge from the shadows of the pandemic, they may also see the opportunities that lie ahead.

Technology leapfrogging

In the developing world, mobile phones have offered people the opportunity to ‘leapfrog’ previous paradigms. They can skip the process of getting fixed broadband, and gain access to the internet and the services that come along with it on their mobile phones.

‘Mobile money’, for example, allows people to store their funds digitally, make and receive payments without the need for a bank. While it’s less common in the developed world, mobile money has gained a lot of traction in the developing world, where a vast number of people do not have access to banks.

Sub-saharan Africa has embraced mobile money the most – it’s the global leader in mobile money adoption, usage and innovation. In 2020, the region saw transactions made via mobile money reach US$490 billion – roughly 63% of all transactions worldwide.4  According to the Poverty Action Lab, there are signs that the use of mobile money is changing people’s lives. Research suggests that it generates financial resilience, increases savings and could also change occupation choices – especially among women.

The developed world has certainly taken notice: large Silicon Valley firms have begun to either acquire or fund African start-ups. It remains to be seen how much technology leapfrogging can help in the long run. Some observers believe that no real progress can be made without good governance and infrastructure – two factors that developing economies tend to lack.


  • 1 Source: Innosight. 2018 Corporate Longevity Forecast: Creative Destruction is accelerating.

    2 Source: Bloomberg. The Top 5 companies within the S&P 500 index are: Apple, Microsoft, Amazon, Alphabet and Facebook.

    3 Source: Techcrunch as at 3 March 2015, ‘The battle is for the customer interface’ by Tom Goodwin.

    4 Source: Statista as at 30 June 2021.

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