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The four pillars of a digital strategy

Summary:
The European Commission’s digital compass attempts to build strong fundamentals. It is a start. An ambitious digital agenda however requires a strategy that is all encompassing and coherent. This opinion piece was originally published in the Money Review section of Kathimerini and is forthcoming in El Economista. On 9 March, the European Commission published a Digital Compass to help advance EU ambitions for a digital transformation by 2030. The proposals rest on four points: 1) ensure more citizens and professionals have basic digital skills, 2) provide sustainable digital infrastructure, 3) promote the digital transformation of private businesses and public services and 4) encourage a system of cooperation between Member States to monitor and promote these goals. How does this fit

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The European Commission’s digital compass attempts to build strong fundamentals. It is a start. An ambitious digital agenda however requires a strategy that is all encompassing and coherent.

This opinion piece was originally published in the Money Review section of Kathimerini and is forthcoming in El Economista.

The four pillars of a digital strategy

On 9 March, the European Commission published a Digital Compass to help advance EU ambitions for a digital transformation by 2030.

The proposals rest on four points: 1) ensure more citizens and professionals have basic digital skills, 2) provide sustainable digital infrastructure, 3) promote the digital transformation of private businesses and public services and 4) encourage a system of cooperation between Member States to monitor and promote these goals.

How does this fit into an overarching digital strategy? The process of digitalisation has brought enormous benefits to our societies, whether through connectivity, convenience, or wide and quick access to services. But it has also posed challenges for the choices we have as individuals: what to share and what to keep private, what is data and what is information, what should be monetised and what really should not. Digitalisation is unavoidable and irreversible. But our societies are struggling to understand the consequences of the depth of change it brings, regulate it and direct it.

Any attempt to understand the limits and harness the benefits of the digital era in a coherent strategy should be built on four pillars: ethics, social fabric, the economy and security.

I start with ethics because the digital era confronts us with the essence of human choice, whether we are free to choose and remain accountable for these choices. How do you program a self-driving car to choose between who is going to die in a car accident? This is the question asked in MIT’s moral machine experiment where participants are asked who they would save between a young athletic woman and a homeless man, or between a baby and a business executive.

Would you accept an artificial intelligence algorithm determining your credit worthiness, or whether you are guilty of a crime, or if the dark spot on your chest is cancer? Who designs this algorithm and are they held to account for its actions? What is the future of humanity when it is absolved of responsibility?

Increased connectivity is also changing the fabric of our societies. Every citizen now has a digital footprint, a record of their online activity: from entertainment, to shopping, our public administration and taxes, and perhaps even voting in the future. What choice do we have to preserve privacy and anonymity, and are we properly informed?

At the same time, connectivity and ease of access in the digital world reinforces biases as we choose to interact with those similar to us. This provides us only with information that we are keen to hear and makes us vulnerable to targeted misinformation. Our inability to distinguish what is real and what is fake news poses a threat to our democracies.

Then there are the economic implications of digitalisation. The digital economy needs far less capital to develop and can therefore scale up faster in comparison to traditional industries. This has given rise to winner-takes- all global firms that are difficult to monitor and regulate.

The digital era is also making multi-sided markets the norm, rather than the exception, where the “currency” for transactions is not money but data. Data that can be turned into information, encouraging some to argue that it is the new oil, or that it should be an additional input in the classical production function. The abundance of data and the search for ways to monetise it is a defining characteristic of the digital economy that offers opportunities for growth but challenges to privacy and choice.

Last, the digital era changes the orientation of security and defence. Most of our daily activities rely on online services: from the running of hospitals, to electricity grids, financial services, to the storing private information. Malicious cyber and hybrid disruptions (like cutting the deep-sea cables or smear campaigns on social media) can jeopardise the functioning of entire countries. It is difficult to imagine being ambitious about our digital presence, if we do not at the same ensure that this presence is safe.

These four pillars need to be built on solid fundamentals, that provide the basis for digitalisation: good infrastructure, (cloud storage, 5G, physical cables), up-to-date digital skills, conditions for innovation and European cooperation to bring it all together.

A credible strategy requires erecting these pillars but also understanding the connections between them. How the ethical choices we make will impact the economy, or how the effects of economic regulation will alter the social fabric. How can we have a single supervisor for our banks through EU banking union, but rely on national security to protect them from cyber-attacks? Security will be decisive in enabling or preventing the development of the digital economy.

The European Commission’s digital compass attempts to build strong fundamentals. It is a start.  An ambitious digital agenda however requires a strategy that is all encompassing and coherent.

Maria Demertzis
Maria Demertzis is a fellow at Bruegel and a visiting professor at the University of Amsterdam. She has previously worked at the European Commission and the research department of the Dutch Central Bank. She has also held academic positions at the Harvard Kennedy School of Government in the USA and the University of Strathclyde in the UK.

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