Digitize or die might be too simple a phrase to capture strategy for firms and nations seeking to boost their productivity. In fact, it might be the case that the relationship between digital technology intensity and productivity is far more complex than that. Consider the case of South Korea, considered by nearly everyone to be a country that is advanced in its adoption of new technology.
Despite that status, the productivity gap between South Korea and the United States is widening, says Pooya Nikooyeh, McKinsey & Company partner. Assume you agree that productivity can be measured; that some countries are by such measures “more productive.”
Assume you believe there is a correlation between wealth and productivity. One still is left with unclear causal relationships, even if correlation appears to exist. We might note that progress is uneven. Social infrastructure seems to play a role in explaining the effectiveness of converting inputs to outputs.
Almost nobody disagrees that information technology is correlated with productivity growth, but most also would observe that the process is not uniform.
Matters are probably not dissimilar at the firm level. Some industries seem to realize more direct and immediate benefits from applied information technology than others, just as some industries are considered more vulnerable to digital change.
The unanswered question is how much digital technology will change business results in some industries that have historically not seen the obvious upside from digital technology change. The same sort of uncertainty seems to apply even to whole nations.
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