by Nicholas D. Evans

Digital transformation with purpose: Making the shift towards balanced business models

Sep 20, 2018
Digital TransformationIT LeadershipTechnology Industry

As companies continue to work on their digital transformation initiatives and to make steady progress, it’s vitally important to re-visit goals and objectives along the way.

puzzle tower / growth / achievement / risk / balance
Credit: Thinkstock

While many companies are well into their digital transformation journey, it’s been widely reported that relatively few organizations are truly thriving or succeeding. Consultancy Inc.Digital, for example, cites only 18% of organizations as digitally thriving and consultancy ClearPrism has found that “fewer than 12% of companies capture more than 85% of economic profit in any industry.”

Difficulties in execution aside, digital transformation is clearly an ongoing journey, not a destination, but how many organizations have a truly clear picture of where they want to go? What’s the end game for their transformation? Is it customer obsession, revenue growth, cost reduction, process improvement, greater competitive differentiation, accelerated innovation, increased market share, improved shareholder value, all of the above, or perhaps something more?

As companies continue to work on their digital transformation initiatives and to make steady progress, it’s vitally important to re-visit goals and objectives along the way. What may have seemed the correct vision and strategy just a couple of years ago, may now be only part of a larger picture that organizations and the C-suite now need to consider and actualize for future success.   

Re-thinking customer-centric business models

Many of today’s most powerful business models put the customer at the center and drive scale by offering an incredible value proposition that’s simply too good to resist. Amazon’s ecommerce model gives customers the ultimate in price, selection and availability – something Amazon calls the “holy trinity” and something the company has applied over the years to successfully grow their business and beat out the competition. Uber’s ride service gives customers ease of use, convenience and real-time visibility. The same can be said for Airbnb and the list goes on. While this customer-centric model has built many of the tech giants that we know today, some see growing inequality and a policy failure, and raise the question of whether we have the balance correct for the many stakeholders involved in our business ecosystems and for the broader economy.

Is the exchange of value between all stakeholders proportionate or are these business models skewed in favor of customers and investors at the expense of employees, partners and the social good? This is now part of the larger picture that organizations need to consider and embrace for future success. Since we live on a planet with finite resources, considerable climate and pollution problems, and with AI continuing its inexorable journey of automation and optimization, it will be vital for corporate business models to be more equitable in the exchange of value for the benefit of society.

Adding purpose to the digital agenda

There’s now a growing number of organizations who are adding purpose to their digital agendas. You can see this reflected in their mission statements. These mission statements have evolved beyond slogans and wishful thinking to tie directly to quantifiable goals and objectives that can be measured and reported on an annual or even quarterly basis, so companies and stakeholders can gauge progress and see real-world results.

As an example, procurement software provider SAP Ariba has incorporated “procurement with purpose” into its strategy and helps companies “look at their suppliers – and at their suppliers and customers – so everyone can see who is doing good, who protects both people and planet, and how far their influence extends.”

They achieve this by looking deep into the supply chain of their $2.1 trillion business-to-business ecommerce network which connects over 3 million companies worldwide. The premise around their network transparency is based on the following:

  • Society: When you know the working conditions of the people who work for your suppliers, you can change those people’s lives.
  • Economy: Helping communities thrive while your business does the same is the best practice there is.
  • Environment: Seeing every source along your supply chain, you can make choices that protect our planet and preserve your resources. 

By supporting the United Nations Global Compact, SAP Ariba are also joining over 8,000 participating companies who are aligning strategies and operations with universal principles on human rights, labor, the environment and anti-corruption, and taking actions that advance societal goals. 

A recent Ernst & Young survey, “Purpose-Led Brands”, found that two in three respondents from global companies with annual revenues greater than $1B are actively reviewing or working on the UN’s Sustainable Development Goals (SDGs) which represent 17 aspirational global goals for achievement by 2030.  

As awareness for SAP Ariba’s “procurement with purpose” platform grows, other global organizations are supporting their mission. This is exemplified by their involvement in an upcoming event in Monaco, The Carlyle Global Partner Summit. Here, Tifenn Dano Kwan, SAP Ariba CMO will share the worldwide movement building around social procurement, women-led businesses and organizations driving today’s global economy and community-building relationships with groups like Procurious and Pledgeling – all focused on purpose-focused efforts to drive social impact.

We can drive the purpose agenda as individuals

While corporate progress is promising, as consumers and employees, we have considerable power to drive change as well. We can choose to do business with companies that treat their employees fairly and have robust approaches to corporate social responsibility (CSR) in addition to working with those that offer the most compelling value propositions to us as consumers.

The choice doesn’t have to be a binary selection of profit or purpose and the most innovative companies should be looking at how to deliver excellence on both fronts simultaneously.

We can also choose to do business with companies that have a human-focused approach to implementing AI where they never lose sight of the fact that it’s their employees who are on the front lines of serving and supporting their customers. Rather than being in the people elimination business, companies should focus on how humans and machines can work together.

As consumers, if we’re brave enough, we can force companies to change by voting with our wallets and taking our business elsewhere, but willing companies can play a large role as well. By focusing on purpose-driven as well as business-driven objectives and by focusing on a well-balanced approach to value exchange in their ecosystems, they can truly help make the world a better place.