Accelerating Growth of the “Green Digital” Company
Chapter And Authors Information
When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.
MIT Sloan Initiative
Industrial Social Impact Innovation (ISII) is a key lever for both a corporation and the individual to have a meaningful impact on society. The ideal “Green Digital” organization offers an opportunity to accelerate this type of meaningful result by strategically aligning profitable corporate and individual outcomes with harmonized environmental and socioeconomic benefits while accelerating these effects through digital transformation. Key leadership behaviors and a balanced scorecard in the C-suite are required to bring this vision alive, and effective portfolio management and project selection offer a roadmap to this “Green Digital” reality.
Keywords: Industrial Social Impact Innovation (ISII), Green Digital, strategy, environmental, social, profitable, sportfolio, innovation, digital, outcomes.
1. Empowering Industrial Social Impact Innovation
Industrial Social Impact Innovation (ISII) is inspirational. The application of science, math, and engineering in industry offers each of us an opportunity to have a massive impact on what happens in our world simply due to the reach and scale of the products that are produced, the resources consumed to produce them, the environmental strain of the discharge of the facilities that house the production machines, the working conditions of the millions of workers whose livelihood is based on this output, and the quality of life that industry provides to each of us. Innovation in industry in any of these areas can be overlooked as a vehicle to improve life on our planet, as we often rely on government policy and funding to drive these changes. However, historically when we consider the effect of industrial technological improvements (ISII) on the evolution of society, significant social improvements develop in conjunction with transformational industrial advancements. When we review the results of industrial revolutions on quality of life in the Western world, remarkable societal gains have accompanied each of these eras. Consider how the British invention of the steam engine shifted the manufacturing world from a reliance on wind and water power generation to a new source of power – steam. Costs of mass-produced goods dropped considerably offering a significant socioeconomic impact on the life of the average individual (Morrar, 2017). Once perfected, steam technology transformed the transportation industry, as locomotives became the primary land transport mechanism making goods available to remote regions. A second industrial revolution occurred with the American discovery of the telegraph and the telephone that drastically shortened the time for long distance communication – accelerating the pace of business and individual communications dramatically. The infrastructure of the internet as a third industrial revolution has led to a shift in the global economic landscape through information availability that has led to a positive impact on trade, industrial innovation and entrepreneurship, and social well-being (OECD, 2016). It is worth recognizing that this third revolution was facilitated by the ubiquity of the telephone network and ISII within the telecommunications industry referenced in the second industrial revolution (NRC, 1999). As we continue progressing through our current revolution which has been described as the Internet of Things (IoT), it is incredible to consider how the individual – whether in the C-suite, a sole contributor or anywhere in between – can affect far reaching world issues through impactful project or initiative selection in large part due to the access to and analytics of masses of industrial data in this digital age. This age is where the combination of innovation within corporations with a social conscience (ISII) with agility in capturing, organizing, and leveraging data to offer useful predictions and outcomes can shift our current paradigm – hence the need for the “Green Digital” organization
2. Defining a “Green Digital” Organization
We are at a moment in time where the opportunity to accelerate this type of innovation is at hand – and one avenue of acceleration is the “Green Digital” organization – one where ISII permeates the company and is accelerated through digital transformation. ISII contextualized digital tools are employed to transform the financial, socioeconomic, and environmental impacts of the green corporate organism. This type of industrial organization is one which has at least three critical aspects of the business focusing on creating or propagating a socially impactful company and is accelerating this impact through investment and commitment to a digital culture, tools, and outcomes.
3. Green Digital and Strategic Alignment
In a Green Digital organization, one may ask, “Which areas of the company are most critical for this rapid digital transformation to occur?” The answer depends on strategy. While there are many books regarding strategy, we can focus on one that offers three well known strategic choices – Operational Excellence, Product Leadership, and Customer Intimacy (Treacy, 1995). Treacy describes the clear need to focus on one of these value disciplines to deliver superior customer value while meeting industry standards in the other two.
The three disciplines are described as follows:
Operational Excellence – “providing customers with reliable products and services at competitive prices and delivered with minimal difficulty or inconvenience.”
Customer Intimacy – “segmenting and targeting markets precisely and then tailoring offerings to match exactly the demands of this niches.”
Product Leadership – “offering customers leading edge products and services that consistently enhance the customer’s use or application of the product, thereby making the rivals’ goods obsolete.”
Companies should invest in and develop a cutting-edge competitive advantage in the chosen lead discipline while maintaining an acceptable level of performance in the other two disciplines.
4. Digital Transformation Culture and Strategic Digital Investment
Regardless of which strategic discipline is chosen, there is a triumvirate of activities and outcomes that must occur to bring a Green Digital organization alive. The first leg of the triumvirate is the commitment to and discussion of digital investment in the C-suite, where ISII is embedded in the board room and in the executive management of the strategy of the company. This commitment establishes a digital transformation culture into the leadership of the company. Executives must believe in and exemplify this approach to lead the organization – either legacy or native digital – through investment decisions, clear cultural choices, and leadership talent acquisitions that align with the strategic discipline chosen.
And while each company is a blend of all three strategic choices, one strategic discipline must be selected to galvanize the corporate identity and allow for useful strategic decisions. To illustrate this thinking, the prioritization of the second leg of the triumvirate is more dependent on the specific strategic discipline selected.
If a company chooses a Product Leadership strategy, the second must include digital investment in the research or product design area where scientists, engineers, or designers – all creators of future solutions of legacy companies’ core offerings – should be collaborating seamlessly with internal or external digital experts to synergistically create a sustainable competitive advantage and offering – with a clear social impact. Additionally, digitizing the overall function in terms of recording experimental data, sharing research and design results, and building digital design thinking across silos must be prioritized (Ross, 2019).
If Operational Excellence is the preferred discipline, the second leg focuses on investments in the manufacturing or creation of the product or service in a digitally automated environment or semi-automated environment that relies on data and feedback loops to maximize output, reduce cost, and target ideal quality while minimizing the number and amounts of raw materials – including human capital – required to create the product or provide the service. Minimizing waste, especially hazardous waste, and its release to the environment is a key factor in this leg.
If Customer Intimacy is chosen as a discipline, the primary investments in the second leg occur on the customer interface aspect of the business. Digital customer connections must be created to compliment and refine face to face interactions while obtaining data to deepen understanding of customer needs. Digital marketing and virtual selling are key brand building components which, when combined with customer process and use data, should generate novel insights that improve the customer experience and accelerate innovation.
Finally, as a Green Digital company requires some level of digital capabilities, the third leg of the triumvirate is agnostic to the selected strategic discipline. The organization requires the capability of leveraging a platform for obtaining, storing, managing, and analyzing data – either internally built or externally sourced, as this capability is the key accelerator of social impact innovation (Ross, 2019). At the same time, other aspects of a company remain relevant, as Human Resources must provide the talent and training needed to prepare associates for this type of transformation, IT must continue to build the needed infrastructure to run the business, and Finance must manage their areas of expertise. These support functions and others must continue to evolve in a manner appropriate to the digital age.
5.ISII Within Green Digital Organizations
As we consider the Green Digital company, innovation in any of these strategic business disciplines can have a meaningful influence on both our rural and urban neighborhoods. If strategically executed in this context, industry’s ability to impact society has never been greater in terms of quality of life of individuals, the state of our environment and the betterment of the communities whose space industries share. Excitingly, any person who desires to impact the world in a positive manner can use industry as a platform to bring their dreams alive. To mass produce the products that each corporation creates, huge amounts of natural and synthetic resources are consumed, and waste from these processes are discharged into our environment. Many of our neighbors spend much of their lives in these facilities and should do so under safe and healthy conditions. Imagine if you could create or advance a technology that positively influences any of these aspects through innovation.
What is innovation? Certainly, innovation can be what is discovered and reduced to practice in a laboratory, scaled up in manufacturing, and embedded in a final commercial offering. It can also be a novel way for a customer to receive goods more efficiently, a manufacturing process that consumes fewer resources while maintaining quality, a new method to provide training to deepen employee knowledge or the development of a machine that creates its output in a less expensive manner and improves worker safety. To be sure, regulations force some of these changes to occur as, depending on the political climate, regulatory bodies tighten restrictions on emissions, tax energy usage, or expect safer worker conditions. These approaches are needed to hold business in check. But there is a better answer.
6. Philanthropic ISII
Leading companies, regardless of size, embed ISII into the fabric of what they do by rooting it into their strategy, linking it to profitable outcomes, and accelerating these outcomes using digital strategies and tools. In the corporate setting, profit is the lifeblood of future investments, and the innovation that drives society’s improvements must not choose between the betterment of humanity and creating a financial return. It is incumbent on the innovators of the world to find the answers that will create the solutions that enhance our surroundings. Certainly, our most profitable companies exceed this mark; they innovate and invest to better our world with no profit expectations because they can afford to do so. Consider Amazon’s lead role in the LEAF Coalition – a global effort – the largest public-private sector investment dedicated to large-scale tropical forest protection and sustainable development – that targets a $1B funding source as its ultimate outcome. While this effort will positively impact the planet, build the company brand, and protect the livelihoods of indigenous people (Environmental Defense Fund, 2021), it will not directly generate a significant amount of revenue for Amazon. While we applaud this behavior, we should recognize that the source of these investments stems from profits of other existing innovative Amazon products and services. Many other companies do not have the luxury of this scale of a social impact initiative, as they are focusing on the survival and growth of the business. While these companies certainly have important impactful initiatives, they are often on a much smaller scale.
7. Individual ISII
Rather than lament strained resources and challenging market conditions, there is an additional option for each of us – as industrial innovators. All companies are tasked with creating the unique solution – the sustainable competitive advantage – that has a positive impact on society and grows the business. So, to the scientists, engineers, supply chain professionals, manufacturers, human resource experts, and all others – the onus is on us – to work together to find the answers that will make our world a better place and make our companies profitable. If there is no profit, then there is no corporation, and the huge contributions to the improvement of society are lost.
This reality may seem like a looming challenge….and it is! At the same time, we have some strong enablers. The digital age is upon us, and the pace of innovation has never been faster. The tools at our disposal and the data that we can analyze to discover new insights are democratically available. We can iterate faster than ever due to the pace of information flow, and we tap into computers and machine learning to accelerate our discoveries in all industries – from food to automobiles, diapers to airplanes, and sneakers to smart phones. We must ask ourselves, how do I as an individual rapidly contribute to making the world a better place by leveraging the strengths of the business, cultivating useful and game changing ideas, and implementing innovative digital tools while making my organization more profitable? Leading corporations are starved for this type of talent. Green Digital companies provide inspiring examples of how digital transformations in general and digital tools specifically combined with their core competitive advantage will accelerate our social impact innovation capabilities at a time when the world surely needs fast growing Green Digital organizations.
8. The Green Digital Organization in Practice
Green Digital can be used to describe organizations that strategically aspire and successfully execute a meaningful level of ISII while minimizing their negative impact on society. Concurrently, Green Digital companies accelerate this effort through an active digital transformation with their customers, suppliers, associates, ecosystems, and communities. Consider the Serum Institute of India, a privately owned company with a 2020 revenue of $735M and a workforce of 6000 which is becoming a critical manufacturing player in the world’s vaccination campaign against COVID-19 (The Economist, 2021). They have an ambitious growth plan to increase the monthly production of the AstraZeneca COVID vaccine to 100M units by April 2021, begin the production of an additional COVID-19 vaccine, Novavax, this same month – before regulatory approvals are even finalized, bring a third vaccine online from SpyBiotech, by late summer, and, in early 2022, bring a novel one dose nasal vaccine from Codagenix – also to combat COVID-19 – into its production portfolio. The company’s strategic advantage lies in combining an aggressive, anticipatory, socially impactful, risk managed strategy with a low-cost production position – the Operational Excellence discipline. This production position is enhanced through investment in digital automation that creates a vaccine with minimal post manufacturing handling requirements (no low temperature storage) to inoculate large portions of the third world community. Touring their facility in Pune, India provides a firsthand view of millions of glass vials of vaccine flowing off their conveyer belts at a rate of 5000/minute. Newly minted floor to ceiling manufacturing vats – likely fully digitized – gleam on the factory floor at a cost of $4M each – part of a two year $120M manufacturing investment – fueling the vaccine flow. Giant refrigeration chambers can store up to 70M doses of COVID -19 vaccine – enough to provide inoculation to numerous countries (NPR, 2021). The institute has capitalized on its strategic core competency of generic low-cost serum and vaccine manufacture (since the 1960s) – currently supplying 165 countries – and has accelerated its social impact through the digital transformation and automation of much of its manufacturing process – aspiring to bring four new vaccines to market during a reduced time to market expectation due to the pandemic. This increased capacity and supply has enabled the Indian government to launch a massive domestic inoculation campaign in a dire time of COVID-19 infections in India while also donating vaccines to some neighboring nations and selling vaccines to others. While much of their funding source is from the Poonawalla family, they have also collaborated with the Bill and Melinda Gates foundation to secure an additional $300M investment. The Serum Institute’s next creation, currently under construction, is a new Pandemic Preparedness Facility where they will act now to build the capability of rapidly producing five or six billion doses of any needed future vaccine. While these lofty goals will certainly have obstacles to overcome, success is possible through the Serum Institute’s decision to reduce their risk via heavy investment in digital transformation, ecosystem collaboration, and embedding a socially conscious approach into their mission.
9. The Journey to the Green Digital Age
The Serum Institute is a present day “Green Digital” example, yet ISII itself is not a new practice. It has been performed in many industries for centuries. Historically, our business community has been focused on profits – at times at the expense of society. While industry has long innovated to create goods on a broad scale to lift the quality of life of the individual – with mass produced items from the industrial revolution such as textiles, the automobile, and food production to modern day inventions such as the smart phone – these great societal gains have at times been achieved with a harmful impact on the environment, working conditions, or right to privacy.
To regulate these situations in the U.S., new legislations have been passed such as the Clean Air Act and the Clean Water Act. New organizations have been formed such as environmental watchdog groups or the AFL-CIO to protect workers’ rights. In the digital age, the protection of the right to privacy has been thrust into the center of today’s Internet of Things debate. Similar efforts have occurred worldwide. Rather than wait for regulatory pressure to require change, leading companies ensure that social conscience has become the expectation, and the question of the day has evolved into, “how to generate profits while benefiting society?” This shift began in the latter half of the last century driven by the Green Economy concept that encouraged business decisions to be made to benefit a company while also positively impacting our people and our planet (Pearce, 1989). Furthering this movement, in 1997 the Global Reporting Initiative placed expectations on corporations to evaluate themselves on how their actions impacted climate change, human rights, and corruption (Globalreporting.org, 2021).
As we turned the corner into the new century, an additional wave hit the business community – digital transformation. In the digital age, the pace of technological change proceeds at breakneck speed. At home and in the workplace, digital devices provide us with social interaction, entertainment opportunities, vehicles to do our work, and educational choices previously unimagined. Companies that have focused on the activities that make them great – whether it be P&G creating new and exciting innovations in personal care or BMW designing the car of the future – are now creating innovations in the context of a sustainable world. Synergistically combining digital tools with green product leadership results in a Green Digital state.
The key drivers of this change are our business leaders themselves. Imagine the number of decisions CEOs must make today with the constant stream of information flowing in their direction. Today’s executives see keeping pace with technology as their number one challenge, as they are concerned about competitive threats, the needed investment to provide customers and employees with the expected digital experience and the pace of market shifts driven by technology (The Economist Intelligence Unit, 2018). To succeed, they must quickly adapt and evolve within the context of the Green Economy. We as individuals must feed our CEOs with the needed ideas and creativity with which they can make the most informed decisions to achieve Green Digital status. The best will listen.
Take Dr. Uger Sahin and Dr. Ozlem Tureci – leaders of another present-day example of a Green Digital company – BioNTech. This Berlin based company that had never produced a commercial product has partnered with larger players to offer the world one of the earliest COVID -19 vaccine options – a Product Leadership discipline decision. The husband and wife’s scientific team is behind the breakthrough mRNA technology based COVID-19 vaccine. These scientists traditionally have focused on cancer research based in these same mRNA digital modelling techniques (The New York Times, 2020). In mRNA research, it is typical to customize a cancer immunotherapy treatment to an individual patient by using a digital model of the genetic profile. By comparing the genetic sequences of a vial of healthy cells to the DNA profile of cells from a biopsy of the cancerous tumor, researchers can gain key treatment insights. The discovery of these insights is accelerated by using algorithms to compare the DNA sequences of the two samples to produce a list of targets expressed by the cancerous cells that will be useful in training the immune system to attack the disease. Expert technicians convert this digital model into physical products enabling a customized solution for the patient (Nature, 2020). BioNTech leveraged this partnership to channel their discoveries to market and to create and distribute a flu vaccine in 2018. In March 2020, the root approach of this cancer and flu research was refocused towards the COVID-19 vaccine solution. While the long-term outcome and meaning to the world of the mRNA vaccine is unknown, this innovation from the heart of these two BioNTech leaders and their team is noteworthy, as it has helped enable the world to emerge from the pandemic – with clear intent to serve mankind using elegant genetic science combined with digital innovation.
10. The Three-Legged Stool
While these examples represent companies making progress towards the Green Digital ideal, there still is a large gap between this ideal of a company with an equal emphasis on financial, socioeconomic, and environmental stewardship outcomes and the companies striving to reach this state. And there are other companies who have not gained much momentum at all. The challenge facing each CEO today is how to balance profit generation, socioeconomic impact, and environmental concerns while satisfying shareholder return demands (Guardian, 2018). Some analysts point to the fact that 80% of the market capitalization value of a company is geared toward intangible assets not included on the corporate P&L ((PWC, 2013). We can infer from this statement that 20% of the output of a corporation drives most of the shareholder value – primarily measured in financial returns. There is work to be done to balance this scorecard. While ideas such as the Environmental Profit and Loss (EPL) statement have been developed and adopted within a handful of companies, the concept has not been widely enacted in the business world. We can consider the ideal of the Green Digital organization as an entity that generates all returns through ISII and acerates these returns through savvy, strategic digital investments. These returns are measured in the corporate vision, executive behavior and decision making, and in individual success measures from the c-suite to the individual contributor – all linked to outcomes that balance the categories of the three-legged stool – socioeconomic, environmental, and financial. Stakeholders and shareholders must be considered equally in this equation.
11. So, What’s Next?
The winning results of The Serum Institute and BioNTech are easier to value now that success is close at hand. However, rapidly executing profitable ISII in the digital age is an emerging business practice that must be repeated routinely. Strategies should be rapidly and clearly outlined, tested, and refined. Opportunities must be properly scoped, regulations understood, and corporate cultures fostered towards this practice.
But there is a big problem. How do you convince a corporation to invest in this type of transformation to a Green Digital company – especially if there are other more profitable, less risky options? How does an approach to social impact innovation not just be a part of a corporate vision but become woven into the fabric of a company? If you sit in the C-suite, begin by influencing the discussion and, depending on where the company is on this journey, quietly or vocally make this approach a part of the thinking. If you are an individual contributor or middle manager, one of the key elements under your control is your individual project or the project portfolio of your team. There are many projects on any corporate list, all fighting for limited resources. Begin to rank your projects in terms of what a Green Digital company would be emphasizing. The winners will be the projects that improve individual quality of life, the environment, solve customer problems, and are offered at a lower cost or higher value and profit than the current compromised solution.
Of course, each company is in a different place on the Green Digital spectrum. In addition to overall corporate measures around financial, environmental, and socioeconomic impact, it may be useful to determine where your company sits on this continuum using the criteria below to evaluate the current project portfolio.
The strength of the profitable, socially impactful project can be evaluated by the way that the project scope is defined and executed using the following steps:
Step 1 – Identifying less than optimal social and environmental approaches to a solution: No matter the quality of our current portfolio, it can always be greener. Find the initiatives that, while improving the current state, have the most room for improvement from the “Green Digital” perspective. Consider the chosen strategic discipline. Use voice of customer studies, deep regulatory knowledge, megatrend alignment, and a financial and environmental analysis of the market to allow for a layered understanding of the opportunity to be addressed. These weak points can be turned into strengths.
Step 2 – Matching of company capabilities with possible solutions: Start with areas where the company has been the most successful – leverage strengths. Use current profit generation as a key metric to validate the strength and determine how to create a “Green Digital” solution to propagate these dollars while bettering our world. Consider the unique strengths of your organization – strategic and tactical – and match those capabilities with the solution generation proposal. You will more likely gain support and to succeed in areas that are aligned with the strongest capabilities of the company.
Step 3 – Identifying the critical elements that will create an irresistible and profitable result: Understand the key barriers and limits of the existing state at the granular level. Focus on a project scope and solution that overcomes those barriers while remaining competitive. Determine the social, environmental, and cost measures that, if obtained, will guarantee rapid market acceptance.
Step 4: Filling in gaps in current capabilities with open innovation: Have a clear understanding of where your company lacks capabilities – as a manufacturer, researcher, logistics provider, or digital enabler – and partner with external organizations who compliment what you can uniquely do to provide synergistic solutions.
Step 5 – Apply digital thinking to the solution: Consider your strategy, overall offering, and business model. In a legacy company, use product design to ensure that innovation in your core competency is combined with digital data capture (process data, final product quality, user frequency, feedback loops) and an excellent user interface or other aspect of digital to create a Green Digital business model. Can the digital offering stand on its own? Digital natives must also continue to innovate and should consider how to accelerate what is already being done using newer, better, faster, cost competitive technologies to enhance their offering.
Step 6 – Evaluate internal processes to offer innovative alternatives and maximize efficiency: Consider how support functions can be reinvented to leverage our virtual connections, and consider system improvements to connect analog data to the digital world. As an individual contributor, evaluate the systems that impact your project to determine how you can influence enhancing a digital transformation where needed. As a C-suite member, rank and prioritize the strategic digital needs of the organization and understand which are needed first to offer the ideal customer experience.
12. In Summary
The ideal Green Digital company model represents an exciting future for our world while also presenting us with a corporate and an individual challenge of how to contribute to this transformative moment. Balancing our overall corporate outcomes to deliver stakeholder and shareholder return with clear and equal measure of the aspects of the three-legged stool will be a significant step forward. Embedding ISII activities into the success measures and outcomes of each corporate individual will weave this philosophy into the life and breath of the company. And the properly aligned strategic digital investments will accelerate us to new heights at a pace never imagined. To reference Steve Jobs, perhaps it is our own opportunity to put a “ding” in the universe. To begin, whether it is project scope or just a conversation to influence thinking, make a “Little Bet” – one that focuses on what we can afford to lose while affording the opportunity for learning and iteration along the way – with the possibility of magnificent gains (Sims, 2011). If we just take this small step, who knows where it will lead?
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