Untapped digital potential is the key obstacle for Latvia’s economic growth globally
The first wave of the pandemic in spring came with realizing how crucial it is to adapt and act fast to survive and strive in the changing business world, analyzing existing business strategies and adapting them to the new conditions. Actions taken by Latvian companies proved that we could act fast and adapt to a highly competitive level. For example, Apturi Covid app - developed by various active stakeholders - was the first contact tracing app to go live globally. However, it is clear now that the ambition to take advantage of the opportunities coming from the challenges is not enough.
Digital transformation: gateway to accelerating growth
The new normal in business is overwhelmingly digital. Some sales channels, such as exhibitions and in-person lobby drinks (yes, drinks!), have disappeared completely. The digital marketing sector has been snowballing over the last six months; hence the potential for digital transformation has played an increasingly important role. We see companies with high levels of digitization growing even twice as fast as others in the industry. Not only international research but also data in Latvia show that companies that have been able to prove themselves successfully in the field of ICT services also have the fastest-growing turnover and profit indicators.
To achieve continuous growth in the long term, not just adapting to short-term changes, requires a company-wide focus on the digital agenda. As digital transformation takes priority, so do the digital skills and competencies needed. At the heart of successful digitalization is the talent able to carry out changes effectively. Here, two crucial questions arise: how do we ensure the talent is equipped with the necessary digital skills? How to ensure this knowledge is transferred further across companies and industries?
Lack of digital skills as the main obstacle
If the recipe seems quite simple, then why aren't all companies hiring digital transformation heads and adapting their processes? The situation in Latvia is particularly critical. In the assessment of the European Digital Economy and Society Index, which analyses the digital development of the member states, Latvia's business sector is still lagging behind the EU average in terms of digital technology integration, mostly since Latvian companies do not use the opportunities offered by e-commerce.
This assessment is closely linked to ICT's lack of high-quality academic education. According to World Economic Forum data, the skills and digital solutions that businesses need to grow, remain competitive and continue development is changing so fast that the traditional education system cannot keep up and provide these skills to entrepreneurs and talent. This means that it is crucial for business leaders to strive to develop their and their employees' digital skills, such as product management, user experience, growth strategy, customer discovery, and more, in other practical ways. This time, consultants will not help as businesses need company-wide integrated digital agenda as well as aligned and skilful management.
Most effective knowledge transfer: Peer-to-peer mentoring
This leads to knowledge exchange directly between industry players. While developing our ventures and working with the leading technology companies, we have concluded that the most effective form of learning is from practitioners with experience and real-time opportunities to see what is happening in the market. The Latvian startup community is relatively small; hence, this exchange of expertise occurs mostly within a close circle of entrepreneurs. This creates an excellent opportunity to further share knowledge and develop digital transformation culture.
In spring, we proved to be capable of adapting to market changes faster than most of the world's leading economies. Now it's time to use that same attitude and motivation to, first, catch up with European countries in digital transformation and, second, pull ahead of them by putting our persistence, grit, and a tight-knit community to good use.