Summary List Placement
Digital transformation has become a major focus for CEOs over the last decade. Defined as the adoption of technology to replace manual processes, digital transformation promised to fundamentally change how businesses delivered value to customers.
But for years, digital transformation was more hype than reality, and the vast majority of companies failed to successfully ‘transform’ their businesses. As recently as October 2018, a McKinsey study found less than 30% of companies had succeeded in digitally transforming their businesses.
One good thing about 2020 is that this year is shaping up to be a transformative one for digital transformation. The pandemic and the resulting economic volatility has accelerated the adoption of the various technologies that are foundational to driving transformation, especially with respect to cloud adoption.
At the beginning of 2020, a KPMG study found 67% of CEOs expressed concern about migrating all of their business to the cloud. Now, that hesitation has nearly vanished. Changing consumer behaviors, work from home, and volatile economic conditions necessitate a new generation of digital solutions for customers and employees alike.
While digital transformation finally seems to be transitioning from buzzword to reality for many corporations today, CEOs must start preparing for the next big transformation on the horizon — a kind of transformation that may require an even more fundamental reorganization and rethinking of what it means to be a business: sustainable transformation.
Sustainable transformation goes hand in hand with stakeholder capitalism, an idea that has gone from fringe to mainstream over the last few years, with prominent supporters such as Marc Benioff, CEO of Salesforce.
Stakeholder capitalism is the idea that companies should serve the interests of all stakeholders, not just shareholders. While simple in principle, it is quite a departure from the kind of capitalism that has prevailed in the post-war era. Stakeholder capitalism at its core is about sustainability.
The long-term viability of a corporation depends not just on maximizing profits for shareholders, but making sure the interests of consumers, employees, and the environment are maximized as well.
While results so far have been mixed, proponents believe stakeholder capitalism is good business. They believe companies can generate sustainable profits while simultaneously practicing a ‘kinder form of capitalism’ and avoiding risks that may pose existential threats to their businesses.
For example, consider a mining company harvesting materials underground on an island. If the company solely focuses on maximizing short-term profits by digging in the most efficient manner possible, they will soon run out of minerals to extract.
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After the last ton of earth is extracted, there is no more source of profits. The land is bare. The negative externalities of the digging are severe for inhabitants and for the environment. So after maximizing short-term profits, there is no more business for the mining company and all stakeholders are worse off.
Stakeholder capitalism is …read more
Source:: Business Insider