COVID-19 has accelerated two important trends: Corporates are increasingly under pressure to address societal challenges and embrace digital business models in order to compete. “The time has come for companies to combine the two agendas – they must use digital business models and Fourth Industrial Revolution technologies to transform their businesses and lead systems change at scale,”says a July World Economic Forum report entitled “Digital Transformation: Empowering The Great Reset”. To that end, the Forum has launched a cross-industry program to help co-create frameworks and guides to new business approaches and showcase “lighthouse” examples of digital-enabled and sustainable business initiatives.
The Forum’s initiative addresses the fact that every company is grappling with how to meet these two challenges while simultaneously dealing with the fallout from the pandemic. Among some 500 active participants in the The Platform on Digital Economy and New Value Creation initiative are large corporates from multiple sectors, such as Dutch healthcare technology firm Royal Philips, German steel distributor Klöckner, U.S. based hospitality conglomerate Marriott International and Japan’s Fujitsu , an information technology equipment and services company.
In a May Fortune magazine global survey 77% of respondents said the crisis will force their companies to speed up their digital transformations. The survey also found that roughly half of chief executive officers believe the crisis will accelerate the move towards so-called “stakeholder capitalism” which is based on serving the interests of society as a whole, as opposed to only shareholders.
That’s a tall order, especially considering, as the report notes, that companies are estimated to have spent $1.2 trillion on digital transformation efforts in 2019, yet only 13% of leaders say their organizations are ready for the digital age. To be effective the shift to digital technologies must be structural, going beyond incremental efficiencies and actually transform their operating and business models.
Companies will have to determine where new value exists, which business models will capture it, and which technologies will support the adaptability and resilience that these models require, says the report. They will have to use data to power better decision-making, optimize finance and free up capacity for investment. In short, “organizations will have to reassess nearly every aspect of their business, guided by a clearly articulated vision,” says the report.
The report recommends ways to tackle the challenge through new value creation; digital-at-the-core business models; intelligent and agile operating models; localized and resilient supply chains; real-time decisions at the edge; data-driven investment decisions; augmented talent; and ways of implementing systems change through digitally enabled collaboration models that correct market failures.
One answer is to use technology to collaborate and create shared value in broader digital ecosystems. For example, global pharmaceutical giant Pfizer is opening labs and R&D within its ecosystem – providing access to tools and publishing results to reinvent itself as an R&D platform, notes the report.
Digital-At-The-Core Business Models
Others are adopting “digital-at-the-core” business models: adaptive, data-led, asset-light and based on services rather than products. For example, Hewlett Packard Enterprise has pivoted to becoming an edge-to-cloud, platform-as-a-service company – responding to the clear shift in customer preferences away from buying and operating IT to consuming IT infrastructure and capabilities as a service. China’s Ping An, headquartered in China, is cited as another example. It has expanded and transformed from being an insurance company into managing five digital ecosystems in finance, property, automotive, healthcare and smart city services, serving more than half a billion online customers.
Digitizing The Supply Chain And Real-Time Decisions At The Edge
The report also discusses how to move to localized, resilient supply chains through digitalization. Henkel, a German conglomerate which specializes in adhesives, laundry and home care and beauty products, uses algorithm-enabled demand sensing – combining internal data with public information such as weather reports and holiday dates – to forecast sales volumes for its consumer products. Since decision- making based on historical data and traditional forecasting models is considered too slow future decisions will increasingly be made “at the edge” by front-line employees who are close to consumers, and distributed across partners and automated machines. Granular, real-time data and predictive forecasting will enable intelligent decisions at the edge to deliver personalized services and forge new collaborations, says the report. It cites oil companies Equinor, Shell and Chevron as examples. All three are now using data generated from oilfield digitalization (with use of sensors, automation and digital twin technology) to make “on the edge” decisions at the field level. These technologies help to predict failure and optimize logistics choices.
To support digital operating models, most companies will need rapid upskilling, to prepare for closer collaboration between humans and smart machines, and an elastic workforce. By 2022, 42% of the core skills needed to perform most jobs are expected to change, while 54% of employees will need reskilling, according to the report. DHL, a courier, parcel, and express delivery company, has, for example. enhanced human capability in warehouses by providing Google’s second-generation smart glasses to “vision pick” products. The result is a 15% productivity boost.
An Opportunity To Do Well By Doing Good
As they recover and rebuild from the COVID-19 crisis businesses have the opportunity to embrace a wider group of stakeholders. For example. Schneider Electric expanded its e-commerce platform in India to enable business customers and partners – many of which are small businesses – to source products digitally, with free shipping, expert guidance and flexible payment options in partnership with fintech companies.
In addition to empowering small businesses new digital collaboration models are making it possible for companies to reimagine healthcare or enable the circular economy, notes the report.
A Digital-First World, Led With Purpose
Going forward “a company’s success will depend on its capacity to create societal as well as economic value and demonstrate purpose-led leadership,” says the report. “Digital technology offers this potential: new ways to create new value for all stakeholders, while making business models more inclusive, sustainable and trustworthy. To realize this potential, companies must move towards open collaboration models, combine goals in terms of value and purpose, and invest in culture and in new leadership capabilities. They must acquire new behaviors and capabilities to effectively interact and execute in ecosystems and deliver on new value. The result will be a digital, intelligent enterprise: resilient, distributed and adaptive to disruptive change.”
Amid the uncertainty about what behavior and trends from the crisis will endure, this much is clear says the report: “updating business for a digital-first world, led by purpose, is now an imperative.”
IN OTHER NEWS THIS WEEK:
The discovery of diagnoses and treatments that could save or improve lives requires access to large data sets, but such access has historically been blocked by variations in data security, patient privacy and data interoperability issues globally. Over the course of two years, the World Economic Forum led the Breaking Barriers to Health Data project with genomic institutions to create a model to share rare disease data across borders in a federated data system. The team announced July 30th that they have produced a proof of concept that outlines how countries can come together, use pre-existing datasets of coded and de-identified patient information and access other datasets across country borders with similar data types. Australia and Canada reached an agreement on how to deploy this proof of concept and will likely test it later this year.
The onetime leader in photography sales is gearing up to produce ingredients for a number of generic drugs, including the antimalarial drug hydroxychloroquine that President Trump has touted in the treatment of coronavirus. The U.S. is aiming to shift from relying on countries such as China and India.
India’s YES Bank has launched banking service on WhatsApp, using a chatbot interface to offer over 60 financial products over the messaging app. Utilizing cognitive computing from Microsoft Azure, the YES Robot banking assistant has been trained to answer over 10,000 related banking queries. The bot uses Microsoft’s natural language processing, combining conversational AI with extensive financial knowledge to make carrying out banking tasks simpler.
Whatapp plans to offer credit, financial services products to lower-income individuals and those in rural areas in India and help digitize local small and medium-sized businesses as the Facebook service looks to make a digital payments push in its biggest market by users.
The supply could lower the entry barriers for startup EV makers, posing a potential threat to legacy automakers, which have their own platforms.
Amazon will offer free grocery deliveries to Prime members across the UK by the end of the year, threatening efforts by supermarkets to profit from the boom in online shopping during the pandemic.
The company has benefited from consumers shopping online because of government-mandated lockdown measures that have forced businesses to close brick and mortar stores and sell online.
A group led by the U.S. Department of Energy and the University of Chicago plans to develop a nationwide quantum Internet that could be functional in about a decade,with the potential to securely transmit sensitive information related to national security and financial services.
The partnership comes as the United States and its allies compete with China in the race to develop quantum technology, which could fuel advances in artificial intelligence, materials science and chemistry.
FUTURE OF WORK
In yet another sign that the pandemic is not expected to end any time soon, Google said it will keep its employees home until at least next July, making the search engine gaint the first major U.S. corporation to formalize such an extended timetable in the face of the corona virus pandemic. The move will affect nearly all of the roughly 200,000 full-time and contract employees across Google parent Alphabet and adds pressure on other technology giants that have slated staff to return as soon as Januuary.
The Consumer Technology Association, which organizes CES, had said in May that it planned to go ahead and hold some events in Las Vegas next year, but the thinking changed as COVID-19 cases spiked around the world, making it impossible to hold an indoor event in January 2021, said CTA CEO Gary Shapiro.There was also uncertainty over whether employees of big tech companies would be allowed to travel by then. Google, for example, said this week that its employees should work from home until at least July 2021.
The fund, created under Morgan Stanley’s Alternative Investment Partners Private Markets, is a globally diversified fund to address critical climate issues including global warming and pollution, depleting resources and eco-diversity, and will focus on helping lower-income and marginalized communities that are disproportionately impacted by global warming.
To access more of The Innovator’s News In Context articles click here.