Pt 1: Digital, Force for Transformation

In the struggle to save our planet, we need to effectively use our best available assets and expanding capacities to define and implement equitable global solutions. We are undergoing large-scale change driven by numerous scientific and technological innovations. Recent advances in digital technology are transforming every sector of society — health, education, politics, environment and business. Digital communications are impacting our decisions, interactions, work and life habits. Digital has the power to threaten life as we know it as well as facilitate solutions to planetary survival. The convergence of Digital and Sustainability is unexplored territory. This is both our challenge and opportunity.

The German Advisory Council on Global Change (WBGU) made a call for digitization to support the implementation of the 2030 Agenda with its Sustainable Development Goals: “Only if digital change and the Transformation towards Sustainability are constructively interlinked can we make progress with environmental protection, climate-change mitigation and human development.”

Executives and leaders around the world are responding to the challenge and opportunity by adapting their organizations to the digital world, a process commonly referred to as digital transformation.

Most of our current leaders come from a non-digital worldview and do not truly understand the transformative power of digital and how to leverage it to drive sustainability. This must change if we are to successfully address the global imperatives for sustainability. If we look to business for guidance, we see organizations facing disruption and living in a state of constant change. Some 90% of executives consider an organization’s digital transformation as a strategic priority, but some 50% do not feel they have the skills or team in place to execute change and some 35% feel wholly unprepared for the task.

Given these statistics, it should come as no surprise that 70% to 84% of digital transformation efforts fail globally.

Why?

What are the lessons for transformative organizations, change agents and those striving to change our institutions?

Before answering the question why, we need to gain agreement on the following:

• What is digital?
• What is digital transformation?
• What is a transformation business model?

What is Digital?

Digital is a mindset. Both as a strategy and technology, currently digital has not been effectively leveraged for the sustainability of the planet.

Digital is often equated with media, but it is much more. It is critical to make a distinction between digital marketing and social media. In the business context, digital marketing has disrupted business models, brands and consumer relationships. Social media, a powerful channel within the digital communications mix, influences how we communicate, purchase and share information.

Most often digital is seen as a noun through the lens of technology (hardware, software, AI, cloud). But by re-framing digital as an adjective (digital leader, digital media, digital mindset) we are forced to see how digital affects our operations and organizational culture. Inspired by successful digital business models globally, we have distilled four digital lenses (1) to define its transformative power: accessible, connected, information rich, pervasive.

• Digital is accessible, democratizing and empowering rising voices globally.
• Digital is connected across networks to scale content globally in real time.
• Digital is information rich generating data that personalizes relationships and empowers messages to targeted networks.
• Digital is pervasive, transforming the mindset and operations of an organization across all functions and social institutions across all sectors.

When one of these lenses is “missing,” the power of Digital Transformation is compromised.

TEST Values Transform

Digital is the comprehensive force for transformation of values in organizations and society. In an environment of constant change, four TEST Values(1) (Trust, Empathy, Sustainability, Transparency) have proven to have transformative power on content, business models and policy/planning. TEST Values open new doorways for engaging a diverse public, motivating them to quickly adopt sustainable practices, and fueling them to scale solutions globally.

Let’s view each value and see how they can contribute to achieving 2030 SDG Agenda.

Trust: Trust is the currency of all relationships. Digital revolution has changed how those relationships are built, eroded and empowered. Trust in leaders of major institutions such as media, politics, nonprofits and business has dropped significantly (to less than 50%) in the past three years (Edelman Trust Barometer 2018). Because trust of TV and cable advertising among Next Generation (ages 14–35 years) consumers is less than 20%, business has been forced to focus is digital media presence on building brand trust and loyalty. Digital is a powerful venue for increasing the public trust in information sources regarding threats to our global sustainability.

Empathy: Empathy, hearing, understanding and responding to the needs and feelings of all stakeholders is central to engagement and participation. Businesses are obsessively listening to four generations of customers’ needs and feedback with a view to engaging them in memorable, responsive customer experiences. Empathy has transformed from a “posted boardroom value” to a prioritized and active strategy. The effective application of Digital enables transformation agents to gain real-time feedback and establish open and honest communication regarding sustainability issues. This results in empowering engagement and action.

Sustainability: Sustainability is the overwhelming imperative of our planet. With over 70% of Next Generation valuing corporate social responsibility and decisions that support the UN Sustainable Development Goals (SDGs), Sustainability is a passion and love of these digital natives. But the power of the Next Generation’s digital assets has hardly been tapped by transformation agents to communicate and design scalable solutions and engage their global networks in constructive efforts to achieve the 2030 Agenda.

Transparency: The adoption of digital media creates the necessity for transparency in real-time transactions. “Breaking News” across multiple media channels is the norm reaching us in seconds via digital notifications. In turn, transparency demands authentic, responsive communications for all stakeholders and business decisions impacting the community and financial reporting.

By consistently incorporating these TEST Values in their culture through large-scale messaging, strategy, operations and evaluation, organizations are transformed into enterprises that live and breathe sustainability. Companies respond with changes in infrastructure and communications, impacting all the functional areas. For example, in finance, businesses face the challenge of expanding the goals of their bottom-line analysis from a single focus on financial gain to a Quadruple Bottom Line (impact in terms of Profit, Planet, People as well as the Prosperity of the community). Digital media is the vehicle that facilitates openness and feedback from diverse groups on keeping companies accountable regarding the impact of their products and services.

Digital Enables Transformation (and government control)

Like all technologies, Digital is a double-edged sword. When hammers were invented, they could be used to build a house or bludgeon someone. The wise use of a tool depends upon the education, understanding and consciousness of the user.

Digital used constructively and wisely can open a doorway to positive transformation. It can open new centers of power through the Rising Voices(1) (Next Generation, women, marginalized) across the globe. Their messages are published, heard and distributed via social/digital media. It has democratized the voices of people and scaled their impact on society, while it has been used to suppress voices in China.

Furthermore, the incorporation of digital media in the communications mix has transformed the customer experience — reaction to content, brand and call to action. The old sales funnel, published in 1890, was based on the premise that marketers needed to fill the top of the funnel with as many people as possible. Mass media advertising grew to fulfill that challenge. Organizations marketed and communicated to their constituencies to move them through the funnel, the AIDA processes (awareness, interest, desire, action).

In addition, Digital has transformed traditional marketing and this linear process of moving potential customers from the top to the bottom of the funnel. Now, the Customer Involvement Cycle is interactive and circular because users influence their peers’ experience and adoption. The customer journey has transformed from a focus on action/sale to personal experience throughout the process and now evolving to transformation. The transformation must be authentic, shifting status quo, and sustainable. The retention and sustaining of the client, buyer, voter, patient or student and conversion into loyal advocates and champions of the product, service or institution generates power and sustainability. Transformation agents must leverage digital communications to develop relationships that encourage loyalty and advocacy as assets to scale sustainable efforts.

What is a Transformative Business Model?

We see how Digital impacts our values, organizational mindset and customer experience. Now we need to integrate Digital into the transformative business model that answers stakeholders’ needs, adds value and generates sustainable outcomes. The business model must integrate the power of TEST Values and Digital Lenses to fuel Strategic Transformation.

Digital poses both a global challenge and opportunity in the use of the information rich data collected through each interface. Data mining is a powerful tool for analyzing social impact data but underutilized in personalizing messages and engaging and influencing potential adopters. Transformation agents must mobilize data collection and creatively leverage it for purposeful social outcomes.

Through its connectivity lens, Digital has given birth to the shared economy business model. Uber transformed the traditional taxi service by looking at the business through the lens of a network instead of an individual vehicle. They disrupted the taxi business and became the personification of the shared economy in action. But their failure to transform their leadership and company culture necessary in our transparent digital world has caused some setbacks that have required significant adjustments to their business model.

As it pervades all aspects of society, Digital is a critical force in the progression to the Transformation Economy- where consumers and organisations become the agents of change for personal and social transformation. Value is generated through transformation; it replaces money as the currency for exchange. Transformation organizations must adapt their business model to include the Rising Voices in their communities and their changing values.

So, let’s revert to the question: Why do digital transformation efforts fail?

Digital transformation is organizational transformation propelled by digital mindset and technologies. Digital transformation is comprehensive; it’s an internal process of changing both mindset and culture and translating it across the entire organization.

Transactional vs Transformative

Because most organizations live within a transactional (external) mindset, they see that digital transformation begins with an investment in technology — software, hardware, consultants — to drive the change process. The progressive organization, by contrast, operates within a transformative (internal) mindset investing in people — teams are challenged to integrate change and leverage these new technologies.

Leadership and their teams are challenged to change their focus from the status quo, from traditional beliefs and linear assumptions of the current business model and old ways of using technology, to a transformative mindset. This transformative mindset is then translated into an agile company culture, redefining the team’s approach to organizational change.

What’s the missed opportunity of using Digital to sustain our planet?

Most organizations focus on the technological aspect of digital (blockchain, artificial intelligence, augmented reality, automation, etc.) to differentiate themselves in the marketplace, where technological innovation drives external changes in operations and marketing.

For sustainable success, however, the focus needs to be on Strategic Transformation (1) — the integration of internal processes of changing values, mindset, culture and leadership with the four TEST Values and the external process of leveraging four Digital Lenses in their business model.

The gap in the transformation movement is to link values, transformation and digital into a shared economy model to mobilize people globally, connect resources and generate social impact ventures necessary to regenerate a sustainable planet.

See Part 2: Model for Transformation and Sustainability: Uberization of Strategic Harmony

(1) The concepts shared in the post are central to the thesis of a forthcoming book by Ira Kaufman and Velimir Srića, Strategic Harmony…Values to Fix the Broken World (2019). No part may be reproduced or transmitted electronically without written consent of the authors.

For more information on Strategic Harmony and the book see https://strategicharmony.org/what-is-strategic-harmony/