DTSC: 1.7 Digital Innovation (overview). How to build digital processes?

[Music] foreign [Music] of this content we will then go into digital Innovation and and really build our own processes for that we have to also understand what Innovation actually is and the technical definition from Innovation Theory one of the main theories we're working with is that Innovation is the recombination of things it's just the combination of of other blocks nothing comes from nothing not even the wheel is invented out of nothing it's just a combination of previous things we knew same as when you innovate when you mix colors or build Lego blocks or whatever you

do so first of all we need some blocks and I collected quite a bit of digital trades over the last quarter century and and I hope that's not too much but the more blocks you have the more combinations you can make so I give you seven or from communication seven from storage and seven from computation and then we explore them one by one for example in communication digital the digital is building Network structures and that's very important it doesn't go linear like an assembly line like an industrial age it's Network so we have to understand

Network lingo social networks as we we know them your family Network that you actually know your family Network right so now we bring that to the Forefront of digital reality and we have to understand also the terminology and what these networks does now information networks also have Network externalities which is very important and very different from the previous analog Industrial Age in the Industrial Age if you have something like an apple or a car or something really tangible a product that you can touch if you have more people using it everybody gets less so if

two people share on Apple well if they're Fair everybody gets half an Apple so the more people you have using it's the law of scarcity in the digital age if you only have one in a network I mean who who you want to call like it's like honestly so the more people you have in the network the more value you get now that is very funny for economists they still like don't process that a lot it's the more more you have the more value each one gets and they get exponentially more value that's called positive

Network externality and these are kind of the building blocks we need to understand now combined with this amazing data overflow that we get from the digital footprint that we all leave behind with every digital step we take and we give it away for free a lot now we have our Smart Homes and yes your favorite smart speaker is listening to you and they have to listen to you because when you say I don't know hey Google or Alexa or Siri or whatever your code word is I mean they already have to listen otherwise they wouldn't

hear when you say that and then once you awaken them a colleague of mine here at the University California Davis has shown that yes in the con to the contrary of whatever they say yeah they they listen and they use that and you activate it for marketing that's why these things pop up that you just mentioned in your kitchen yesterday and you have the feeling like how did I ever how do you get this ad it's not convenient all right so we leave this digital footprint behind and once you have this data you have infinite

economies of scale because how do you duplicate it well it's just right Mouse button copy paste also very different if you want to screw a second Apple or you want to build a second car in the agricultural or in the Industrial Age you need to really I mean there are economies of scale the more apple trees you planned and the more cars you produce it gets a little cheap but information it's like once you have the data there is no cost to create a right Mouse button copy paste what cost is that so there is

no variable cost and we will have to talk about that and really let it sink in it's very different to do get around in a digital reality and the same applies to AI if one self-driving car can drive to avoid an accident basically basically all artificial intelligence can do that because again right Mouse button copy paste and that's why also AI inevitably will become much better in some things than we are because a child you have to train again right artificial intelligence just like copy paste and then the next neural net can do that now

once we have these building blocks then we're gonna create Innovations with it we're first gonna see like what happened already when you combine them independent from us creating something for example if you just take economy to scale the network externalities you get these amazingly big monopolies did I say that or or legal police where you have basically this this large concentration of ownership because you can create these digital economies of scale the network externalities make sense that you have huge networks because the bigger they are the exponentially more value you get out of it and

we need to understand how that came about not because of greed or like I mean it's basically that's how the digital age is structured so it's important to understand these Concepts to understand what's going on in the digital age and then we can also you know pick some out and do our own recombinations and see you can come up with your own business model there or with your own public policy project or social social project whatever you are after and create your own you know Innovations with it just pick some out and we will explore

some of these again and that's what we will do in this part we will at the end create our own digital Innovations and you can get a million different combinations out of these trades that we are working through here and I'm very curious to find out what you innovate with in in the digital age so many Innovations to still be explored