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Sustainability as a purpose for your digital transformation
The digital transformations of today must be purpose-led
Daniel Pink (2009) identified and described in his book that people want to use their skills to achieve a "greater" purpose – for instance, getting involved in a "good cause" that they are passionate about.
Almost everyone nowadays is investing in digitalization and digital transformation initiatives. Digital transformation is not about technology; it’s about culture and people, purpose and vision. According to HBR, a high percentage of those initiatives fail to pay off. The reason is that companies focus on specific technologies (“we need a machine-learning strategy!”) rather than doing the hard work to fit the change into the overall strategy, vision, and purpose. Companies should align tech investments with the business goals to serve customers, and business needs as best as possible. Sometimes the vision or purpose is unclear; thus, it needs to be developed first, or even a complete reorientation is needed before starting a transformation.
The Global Risks Report 2021 found that climate action failure is among a subset of environmental risks, which is the second-most imminent threat to our society. Sustainability, in all its facets, is not just a megatrend anymore but a business imperative. Customers are demanding sustainable behaviors, services, and products. New regulations require that companies demonstrate their positive impact on the environment and society.1 Many companies make bold changes to pivot their businesses to become sustainable. Companies work on initiatives to make their products, services, and business models sustainable, zero-emission or circular to reach a greener future.
Having many companies without a goal for their digital transformation and a high pressing need to become more sustainable, it seems that these two megatrends belong together like salt and pepper. Companies that invest in sustainability generally find that improved resilience, better operational performance, and business success follow the investment.2
The belief that the costs for sustainability outweigh the benefits is why many executives are reluctant to put sustainability at the core of the business. But academic research and business experience show that it’s the opposite. Embedded sustainability efforts clearly result in a positive impact on business performance. 3
Cost reduction through sustainable initiatives
Significant cost reductions come from efficient and better resource management. Lower consumption of water and energy as well a minimized waste management. Food waste can be reduced by sharing opportunities or can be used to produce energy. Existing materials can be reused or shared. For example, not used furniture can be upcycled or downcycled or shared with others to save storage costs.
Better routing, truck and car loading can significantly improve fuel efficiency, which leads to financial savings. Improved energy production and consumption lead to a better and more cost-effective usage of energy. Clean energy usage boosts these benefits. Predictive maintenance lowers the need for continuous human intervention, prevents too early replacements of parts, extends life, and reduces costs and resources needed.
New revenues through sustainable models
Purposefully applying sustainability and circular into your business opens up new possibilities and inspiration for changing your business models to become more sustainable, which leads to new revenue models, not just cost savings, and attracts the conscious customer.
Too Good To Go fights food waste and tries to close the resource flow. Instead of producing vast amounts of food waste in shops and restaurants, customers can buy food for a reduced price before it’s thrown away. A win situation for the shops and restaurants, they earn instead of wasting money, customers can buy good food cheaper end of the day, and the environment wins because fewer resources get wasted.
Sharing business models like BlaBlaCar reduces the need to own a car, which helps optimize costs for the owner and reduces the costs of owning a car for the passenger.
Product Service Systems (PSS) focuses on purchasing products via a lease or subscription to fulfill customers’ needs. Product-as-a-service models lower the financial burden that customers need to acquire expensive products, reduces material and energy requirements. Such an example is Rolls Royce’s power-by-the-hour model, where engine and accessory replacement service was offered on a fixed-cost-per-flying-hour basis. Another example is Philipps’s light-as-a-service or pay-per-lux model.
How does digital play a role?
The above cost-saving opportunities and business models are less practical without digital technologies. These activities and business models are heavily dependent on digital technologies. Data need to be collected, integrated, and analyzed. Digital platforms need cloud computing to run and scale.
For example, Google used the power of AI to reduce the energy needed and thus, the bill for cooling their data centers by 40%.
Various digital technologies are used to enable sustainable activities in various states. Below is a non-exhaustive list of digital technologies.
People need a greater purpose to stay motivated at work and fulfill themselves in what they are passionate about. Digital initiatives often fail to pay off. Sustainability seems to be a perfect fit for the digital transformation journey companies are currently going through. Sustainability as a purpose could drastically improve the degree of initiatives creating value and motivate employees.
Digital technologies have the power to accelerate the sustainability transformation in many ways and create value for everyone; Profit, People, and Planet. Put people, and the planet at the core of your digital transformation strategies, and employees, customers, your wallet, and the planet will thank you.
Combining these two topics can fundamentally change how your business operates in the future, improving your resilience and increasing operational performance and business success.
Sustainability is a complex topic and very broad. But this should not stop you from exploring becoming a sustainable company, just because of some fear of difficulty and the thought it will not pay off. Research and experience clearly show the opposite.
Experiment & prototype with sustainability innovation and digital sustainability and impact profit, people, planet.
Also worth reading: How digital is accelerating sustainable energy