Many dominant corporations in Peru are currently in the midst of digital transformation. These initiatives to incorporate new technology help companies to maintain market share and add value to society by offering digital solutions to customers.
But, haven’t corporations had enough time to figure this out? Isn’t something still missing? Isn’t time for a new status quo?
I think so.
We need to go a step beyond corporate digital transformation. Instead of thinking about how to modernize Peru’s companies, let’s work to foster conditions that will allow Peru to create the next Nubank or Mercado Libre.
We need a digital transformation of the entire country that broadens opportunities for people to lead economic change. I believe this change will come from technology entrepreneurs who are building disruptive, high-growth startups.
The diagrams below show what this could look like in theory. First, let’s start with a simplified Peruvian economy that is composed of only four companies: A, B, C, and D. Let’s say that the inputs to the economy are human capital, technology, capital.
Currently, corporations are executing digital transformation by hiring top talent and using new technologies. They are also re-investing their own earnings in digital transformation initiatives. This allows them to survive and grow in the current environment.
We can see in the diagram below, how this will end up. As digital transformation occurs, we will be left with four companies that are more digital savvy. However, it is the same four companies. Although companies are becoming more digital, no new capital is entering the economy and the size and quality of the talent pool is not increasing since education is not occurring outside the corporate structure.
Now, let’s take a look at a scenario in which human capital, technology, and capital are entering the wider economy – rather than just the existing companies. This would grow the overall talent pool by improving the quality of education across the economy and making it easier for new talent to enter the economy. Capable entrepreneurs would be empowered to build disruptive businesses that would change the status quo and drive employment growth.
In this scenario, two digitally native, companies, X and Y, emerge. This would be better for everyone by up-ending a stagnant status quo and allowing for new solutions to enter the market.
If we seek to leverage technology to transform the entire economy, it needs to be done by supporting the tech entrepreneurs that bring creative destruction to the Peruvian economy.
Now that we have taken a look at what the digital transformation of the economy looks like in theory, let’s explore what it looks like in practice.
Here are some examples of ways that key inputs are currently entering the Peruvian economy:
- Human capital: UTEC is forming engineers and scientists that will solve problems in Peru, while Laboratoria and Codable are training the programmers that build solutions for the future. Peruvians abroad or immigrant founders are adding new ideas to Peru’s economy and WeWork brings innovative spaces for workers to be a part of an international community.
- Technology: Last year, IDB announced a partnership with Internet para Todos, to get better connectivity to 6 million Peruvians in rural areas. In Lima, startups Xertica, Uber, Rappi are bringing disruptive technology and business models that improve adoption rates and access to services.
- Capital: COFIDE Fund of Funds will be investing in venture capital funds to direct capital to entrepreneurs building high growth businesses.
All of these inputs serve to grow the economic pie and drive innovation in Peru. This will create the necessary conditions where future Nubanks and Mercado Libre’s can launch and thrive right here in Peru.
It isn’t enough to promote digital transformation of companies in Peru. We need an economic renewal, led by a new generation of entrepreneurs. People like Mariana Costa, Diego Olcese, Ragi Burhum, Carlos Ganoza, and many more.
How can we provide them better input conditions and empower them to lead the digital transformation of Peru?
Thanks to Carlos Ganoza for offering insights to improve this article.