In 2009 Andrew Wolstenholme released a report called ‘Never Waste a Good Crisis’. This report, commissioned by Constructing Excellence, considered how the industry had performed against the Egan report from 1998. Wolstenholme stated that whilst progress had been made, the sector fell short of the objectives from the Egan report, noting that the Great Recession could be used an opportunity for construction to rebuild itself as a sustainable, low carbon industry.
COVID19 has created an unprecedented crisis and whilst it does not feel like it right now, presents an equally unprecedented opportunity for positive change, extending beyond the ambitions of the Wolstenhomle report. The fact is right now could potentially be the birth of the most successful period in human history. Facing up to the current climate, our world has changed beyond recognition, it is perhaps unlikely that the world as we knew it will return. This may sound dramatic, perhaps even negative to some, though it is not meant to.
Our global economy is based on economic models that were designed before the digital age. They have been tweaked over the years in an attempt to make them fit for purpose as technology has outpaced 'normal' human evolution. However, we have to ask ourselves some tough questions and now is that time.
As large parts of our economy have shut down and gone into hibernation, we have a very unusual opportunity to reflect, to think about what we will do differently as the global economy emerges from this hibernation.
Governments have had to step in to provide a central hand on the tiller, keep the ship steady during these testing times and avoid the many icebergs floating in our economic ocean. Government control in the economy will need to continue for some time, we will in effect be entering a period of increased state intervention. This may well conjure negative images for people however with our responsible Government focused on the public good and wellbeing of citizens, this intervention could unleash new economic prosperity.
Econ101 remains the economic foundation for economists across the globe, yet some of the underlying principles were developed over a century ago. Kate Raworth covers the topic well in her reimaging of economics, very neatly titled ‘doughnut economics’. Kate posits that our current economic model is broken and not fit for the modern world. Doughnut Economics suggests moving away from GDP growth as our measure of value and focusing instead on creating a balanced economy, within social and environmental boundaries that create equality and a sustainable path for humanity.
Mariana Mazzucato is another distinguished economist challenging the status quo, writing about the importance of innovation by the state, of how we must rethink value so that value creation is rewarded, not value extraction and destruction.
Both of these highly influential economists paint a very different picture of the world, where the state has a greater role to play and sustainability is a core measure of value, with finance being of service, rather than a risk to a sustainable future.
Key to this new world will be the Digital Economy, leveraging internet-based technologies to transform industries. Uber is an example of a Digital Economy business, that would not exist were it not for the internet and mobile platforms. From an infrastructure perspective, the National Digital Twin is core to the sectors journey to become a pillar of the digital economy, which is not constrained in the same way as the physical world, enhancing economic resilience as a result.
The digital economy can allow us to rethink value. As we consider what a new value framework might look like, perhaps we can build upon models such as the five capitals. The challenge then is how do we accurately monitor and measure these new areas of value? Perhaps data is the answer, it has long been heralded as ‘the new oil’, this being the case could data become a means of value exchange? A new type of currency?
To enable this a digital core and framework needs to be developed to enable this exchange of value, in a transparent and trustworthy way. The National Digital Twin seeks to achieve this, albeit for different purposes, through federating industry data at scale, data that may well provide the first steps towards a new economic normal.
This is simply one potential pathway for digital twins in the post CV19 world, let’s explore some different opportunities for economic resilience and transformation.
Over the last two years people have been asking 'why do we need digital twins' and 'what value will they create'. We have all read in the news and heard about the problems in reliably modelling the spread of the virus, difficulties in understanding with any certainty the economic impacts……. there are very big complex questions that are very difficult to answer.
Every decision made now has a lagging effect, Governments and businesses won’t know the full impact for weeks, months and possibly even years.
Imagine if we could have been running virtual scenarios, linked to real time data being fed back from the economy, blended with historical data to provide some assurance in the impact of the decisions being made.
Imagine our workforce being Digitally enabled to work in this virtual representation of the physical world to keep the lights on, to collaborate, to plan, to simulate and to enhance decisions.
Imagine being able to simulate natural disasters and assess the impact on people, businesses and the planet on which we live. The benefit if we’d been able to do this in our current crisis is there for all to see.
The creation of the Digital Economy will require input from everyone, from every business and could create a whole new economic model that can operate in isolation of the physical world, so that in times of crisis there is a fall back, a way to continue.
This Digital Economy and National Digital Twin are not 'nice to haves' they are essential to our global economy and the future prosperity of us all. This is a 'must do' and is not constrained by the same barriers as building physical infrastructure, we can start right now.
This is not without its challenges, the creation of a new economic model fit for the digital age will be complex, it is not the easy path, it is the right path.
There will undoubtedly be questions about how to fund such ambitious plans and this is where Government could step in. Investing into the future of our global economy and creating a sustainable path has become unavoidable, we must face into the economic headwinds and build a brighter, greener future for all. Government can invest into job creation through innovation and the creation of a new value framework, embedding systemic policy changes to build a more sustainable world.
To all the leaders out there in Infrastructure, now is the time to push the digital accelerator, we do not need to wait, with Government support we can transform our economy for the better.