Meaningful Purpose: How Sustainability Attracts Millennials

Faith Woo

I was in the seventh grade when Al Gore’s controversial documentary, An Inconvenient Truth, captivated audiences and exposed the devastating causes and effects of global warming. I remember no fewer than three of my teachers rolling the projector into class so that we could watch it.

The documentary opened our eyes to the horrors that lurked in pollution and consumption, and inspired a classroom of impressionable twelve-year-olds to adopt the few sustainable practices available to them. The message it delivered – an exciting, galvanizing call to action – resonated in many of my peers and me.

I distinctly recall feeling a sudden passion for environmentalism, though my grasp on the concept then was naturally hazy and loose. This passion has grown with me over the last decade, and remains with me to this day.

The values revolution

The fact is I am not alone: my generation of millennials has grown up with an acute awareness of environmental issues as the threat of global warming produces tangible effects. The consequences of climate change are catching up to us: melting polar ice caps, rising sea levels, and even a sickly Great Barrier Reef. It just takes one Google search of “millennials + sustainability” to conjure headlines about the remarkable interest this generation has in environmentalism.

Moreover, a so-called “values revolution” seems to be taking place among millennials, according to a study conducted by Global Tolerance. The study says that 84% of millennials “consider it their duty to make a positive difference through their lifestyle.” Similarly, an article in Business Insider shares how millennials place great value on the sustainability of a purchase, and are more willing than other generations to spend more for an environmentally friendly product.

As consumers, millennials respond to environmental purpose, and we carry this fervent attitude towards social responsibility into the workplace.

Millennials want meaningful purpose

Companies that champion a purpose beyond financial gain increase their impact with millennials. We want to engage in corporate social responsibility (CSR), and with a great wealth of knowledge on sustainability, our commitment often influences our attitudes towards our employers.

The 2016 Deloitte Millennial Survey concluded that millennials judge companies’ success on a level beyond the financial: my generation’s desire for commitments to improving the world displaces the traditional importance of profitability.

Unlike other generations, millennials actively seek employers whose environmental values align with theirs. The Global Tolerance report found 62% of millennials want to work for a company “that makes a positive impact” and 53% work harder knowing their work makes a difference to the world.

Championing a cause and promoting a purpose engages and inspires millennials, and I believe we value companies with a strong environmental and social record.

Purpose-driven business is sustainable – for all generations

Sustainability is simply another lens through which we can examine the impact of purpose-driven business on a millennial workforce. A company whose purpose in some way aligns with a millennial’s core values is a winning combination where the relationship between employer and employee becomes mutually beneficial.

However, while millennials may be driving the conversation, the effects of a sustainable purpose resonate with employees of all ages. A recent article in Harvard Business Review shows that a company’s engagement in sustainability creates a culture desirable to all employees. In fact, morale and productivity increase in employees when they feel a loyalty to their companies as a result of sustainability programs.

When a company has a purpose, whether environmental or otherwise, it sends a message to employees that their values and passions can be realized on a corporate level. For instance, my purpose and my company’s align. Working at SAP, I see firsthand that its vision and purpose is rooted in many causes, one of which is sustainability. Its dedication to creating a clean planet, combating climate change, and encouraging responsible growth is exemplar of a purpose-driven organization.

I feel lucky that I can share and channel my personal passion for a sustainable world in a professional setting. I feel as though my participation in a company that integrates sustainability “into [its] core business by embedding sustainability throughout [its] organization” adds value to society and benefits the environment. And because of this personal association, SAP has my loyalty.

This blog is part of our Millennials on Purpose series. To learn more about SAP’s higher purpose to help the world run better and improve people’s lives, visit sap.com/purpose.

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Faith Woo

About Faith Woo

Faith Woo is a millennial who likes to stay curious and challenge herself both personally and professionally. She recently graduated from McGill University with a B.A. in English Literature, and joined SAP in May 2016. Passionate about the values of sustainability and corporate social responsibility espoused by SAP, she currently works as an information developer associate, and supports a development team by creating product documentation.

The Pursuit Of Purpose: Five Ways To Incorporate For Good Business

Hernan Marino

When people start companies, one of the first things they are told to do is to create a mission statement. In a wayward world, it is a point of focus, something to which a founder can always return.

But these days, a mission statement is not enough. Companies need to be more than a profit apparatus. Companies need to have a purpose. In order to achieve that purpose, leaders must shape a company’s culture. And then that culture will define a company’s brand.

At the same time, buyers want to associate themselves with brands that stand for good. Fifty-five percent of global online consumers across 60 countries say they are willing to pay more for products and services provided by companies that are committed to positive social and environmental impact, according to a 2014 study by Nielsen.

Maybe that is a reason why so many companies see the benefits of this approach in their bottom lines. Fifty-eight percent of companies with a clearly articulated purpose said they experienced growth of 10% or more over the past three years, according to a study by Harvard Business Review and the EY Beacon Institute. And 75% of executives at organizations that adopt purpose-led practices said that integration of purpose creates value in the short term and over time.

I’ve always believed that leading with purpose is not only a motivator in the buyer’s journey, but also a great motivator for teams. People want to know their efforts are part of a bigger, more meaningful picture.

Even if you’re not a major multinational company like SAP, you have the power to inspire and build purpose into your company’s framework and reap the social and business benefits. Here are five points to keep in mind as you think about creating or enriching your company’s purpose:

  1. Be the kind of company employees believe in. A purpose-led company takes care of home first. I’m extremely proud of the fact that SAP this year made the Fortune 100 List of “Best Places to Work.” This list is near and dear to my heart. It’s not about revenue and stock price. It’s about people. I think it’s no coincidence that last year we were named #20 on the top 100 Most Purposeful Brands in the World list. The two go hand-in-hand. You don’t want to be known for your great value or products while having a negative reputation as an employer. Believe it or not, this can impact your bottom line. Even as an SMB, there’s no limit to the incentives you can offer that provide meaningful benefits to employees. Consider flexible work arrangements or education reimbursement, for example.
  1. Commit to consistency. Becoming a purpose-led company is not a campaign. It’s not one of your quarterly initiatives. It’s about rethinking how and – more importantly – why you do business. Make sure you’re ready for this commitment before you head down this road; you will need to embrace this as a business practice. Discuss the new direction with your team to garner engagement and support. Listen to their ideas.
  1. Put your dollars to work through sponsorship. Whether it’s the environment, education, local organizations, or even disease research, there are a number of causes you can get involved with in your community that will fit any-sized budget. Sponsor a softball team. Sign your company up for an annual cancer awareness walk. Rally around a cause that has personally impacted someone in your firm. Connect with a local organization working with high school students and offer mentorship or a scholarship. The possibilities are endless to do the right thing and make a difference and an impact.
  1. Find the human element in your customer stories. What’s your line of business? Food supplier? Maker of organic clothing? Government services provider? No matter what you do, you are creating a positive impact in the world. So share your stories. For example, if you are an SAP partner, you’re helping companies run better and smarter every day. You’re facilitating your customers’ ability to create a positive impact in the world. You too, can share those stories. This is actually how a new innovation awareness initiative, SAP Innovations4Good, was born. Partner Marketing director Ashley Tully had the opportunity to witness technology we’ve been working on that will help shape and improve the world. Her visit to our labs was so inspirational that she decided to create a platform to share stories of SAP and partners’ innovations with others.
  1. Create a corporate culture of service. Along with your own company-led efforts, you can put initiatives in place to support your employees as they serve. Many companies, like Deloitte, for example, offer paid time off for employees to participate in projects of their own choosing. You can also start a matching gift program, where you match your employees’ individual charitable donations. Think about integrating service activities into company events and celebrations.

Becoming a purpose-led company takes some “soul searching.” But it’s essential to the process. Your customers will be able to tell if you’re just jumping on the bandwagon. And before your purposeful initiatives get rolling, don’t forget to create a solid communications plan. Spread the word on social media. Document your volunteerism. Gather employee testimonials. Create a new tab on your website. After all, the world needs to know about all the good you’re doing.

Not enough humanitarian aid gets to where it’s needed. It’s time to reinvent aid delivery for the digital economy by Rewiring Hope.

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Hernan Marino

About Hernan Marino

Hernan Marino is Chief Operations Officer of marketing and Global Head of SME/Partner Marketing at SAP, the market leader in enterprise application software. SAP (NYSE: SAP) helps companies of all sizes and industries run better. Hernan leads SAP Marketing’s digital transformation, marketing automation strategy and SAP’s growth plans in the SME marketplace.

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purpose , vision

How Future Batteries Could Save Civilization

Dan Wellers and Michael Rander

The future of humanity may well depend on our ability to move away from our dirty and dwindling supply of fossil fuels as fast as possible. To steer ourselves and our planet in the right direction, we have to find another way to feed our civilization’s need for a reliable supply of energy.

Nuclear power may well be part of the solution for the near term, but the need to manage depleted radioactive fuel for centuries makes nuclear energy as environmentally problematic as the fossil fuels it replaces. At best, we should only consider it a bridge to more sustainable forms of power.

Fortunately for the human race, renewable energy is finally becoming competitive. To make it truly transformative, though, we also need to reinvent a technology most of us take for granted: the battery.

Saving power for later

Utility companies are responsible for delivering power at all hours, under all conditions. That’s the central challenge in building a grid powered by renewable energy: you can’t generate wind power on a still day or solar power on a cloudy one, and you can’t tweak the weather to boost power production during times of peak demand. To ensure we continue to have abundant, consistent electricity in a post-fossil fuel age, we need grid-scale ways to store hydroelectric, solar, and wind power for later use and move it to where it’s needed.

The most common rechargeable batteries in use today are lithium ion (Li-ion). Li-ion batteries can pack a lot of energy into a small, lightweight package that charges quickly, retains a charge for a long time, and can be recharged many times before wearing out. However, they aren’t currently able to scale to the size a power grid demands. That’s one reason why battery research and development attracted $480 million in venture capital in the first six months of 2017 alone.

The next generation of energy storage seems to be on the verge of breaking out. Keep an eye on these technologies currently in development:

  • Batteries made of graphene – a one-atom-thick layer of graphite that conducts energy faster and more efficiently than any other material on earth – charge and discharge dozens of times faster than standard lithium-ion batteries, can be charged to full in less time, and store an enormous amount of power for their size. One company is already producing graphene batteries for use in electric cars.
  • A battery made from cheap, plentiful sodium needs to be much bigger than a lithium-ion battery to hold the same charge. That makes sodium batteries impractical for portable devices – but ideal for homes, office buildings, or the grid itself. In fact, you’ll probably be able to buy cost-effective sodium batteries for household energy storage within the next few years.
  • A lithium-sulphur (Li-S) battery could store two to three times as much power in the same space as a lithium-ion battery, or the same amount of power in half to one-third the size. So far, though, Li-S batteries don’t last long, so researchers don’t expect a commercial version for five to 10 years.
  • Lithium combined with air could store twice as much power as a lithium-ion battery of the same size (or the same amount of power in a battery half the size). Like Li-S batteries, though, Li-air batteries have a longevity problem researchers say it will likely take 10 years to solve.
  • Solid-state batteries developed by Toyota scientists can completely charge or discharge in just eight minutes and, because they do not contain liquid as other batteries do, should continue working in temperatures from boiling to well below freezing. However, these batteries are still under development, with no clear timeline for commercial availability and applications.

Other possibilities at early stages of development include batteries made with a fire-retardant solid polymer, batteries that are 3D printed from copper foam, lightweight, long-lasting miniaturized solid-oxide fuel cells, gold nanowires that can be recharged 200,000 times with no loss of capacity, and a wearable nanofilm that captures and stores energy from friction and body motion.

Researchers in the UK have even used nanogenerators to build a phone that charges its own batteries using ambient sound – including the voice of the person talking into the phone. And in a development that could redefine how we think about energy storage, the Massachusetts Institute of Technology is working with Italian sports car manufacturer Lamborghini to build an electric “supercar” that doesn’t even have a battery in the conventional sense – because it can store energy in its body panels made of lightweight carbon nanotubes.

Getting charged up about batteries’ potential

Businesses and governments alike are finally recognizing the potential of being able to store power at grid scale and investing accordingly. Automotive manufacturers are setting up divisions to leverage their existing investments in electric cars into energy-storage solutions for the residential and commercial market. Airplane manufacturers are experimenting with lightweight battery-driven propulsion systems. Governments worldwide are rolling out subsidies to encourage cost-saving, industry-disrupting battery innovations. In fact, in a test the entire world should be watching, Elon Musk’s Tesla worked with French renewable energy company Neoen to build the world’s biggest Li-ion battery installation in South Australia in autumn 2017. Construction ended November 23, and the battery is now undergoing charging and testing before it’s put to work supplementing the local utility’s power grid by storing enough wind energy to power 30,000 homes.

The battery revolution isn’t merely about charging your phone just once a week or driving your electric car 1,000 miles without plugging in. It’s about enabling a society-wide transformation with massive ramifications. Developing better ways to store energy will create new job opportunities, not just at battery manufacturers, but across the economy as we retool and build out an infrastructure that relies on renewable energy sources. Less expensive, more environmentally friendly sources of power will play a vital role in the growth of circular business models that recapture and reuse resources. The power grid will have the decentralized reserves of power it needs to remain resilient even as it increases its reliance on renewable sources.

Scientists say we have just a few more years to mitigate man-made climate change before it reaches a tipping point that tumbles us into an extremely unpleasant future – so we need to make the transition to a sustainable post-fossil-fuel world as quickly as possible. By allowing us to use power more efficiently and store it more effectively, the next generation of batteries will do more than just help smooth the inevitable turbulence of that societal shift. The energy storage systems we develop today may actually contain the future of civilization.

 

Read the executive brief Next-Gen Batteries Will Define Our Future.

As people, business, and “things” increasingly interconnect in the digital economy, existing business models are being radically disrupted. Learn more about digital business and transformation.


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Dan Wellers

About Dan Wellers

Dan Wellers is founder and leader of Digital Futures at SAP, a strategic insights and thought leadership discipline that explores how digital technologies drive exponential change in business and society.

About Michael Rander

Michael Rander is the Global Research Director for Future Of Work at SAP. He is an experienced project manager, strategic and competitive market researcher, operations manager as well as an avid photographer, athlete, traveler and entrepreneur. Share your thoughts with Michael on Twitter @michaelrander.

Tick Tock: Start Preparing for Resource Disruption

By Maurizio Cattaneo, Joerg Ferchow, Daniel Wellers, and Christopher Koch

Businesses share something important with lions. When a lion captures and consumes its prey, only about 10% to 20% of the prey’s energy is directly transferred into the lion’s metabolism. The rest evaporates away, mostly as heat loss, according to research done in the 1940s by ecologist Raymond Lindeman.

Today, businesses do only about as well as the big cats. When you consider the energy required to manage, power, and move products and services, less than 20% goes directly into the typical product or service—what economists call aggregate efficiency (the ratio of potential work to the actual useful work that gets embedded into a product or service at the expense of the energy lost in moving products and services through all of the steps of their value chains). Aggregate efficiency is a key factor in determining productivity.

After making steady gains during much of the 20th century, businesses’ aggregate energy efficiency peaked in the 1980s and then stalled. Japan, home of the world’s most energy-efficient economy, has been skating along at or near 20% ever since. The U.S. economy, meanwhile, topped out at about 13% aggregate efficiency in the 1990s, according to research.

Why does this matter? Jeremy Rifkin says he knows why. Rifkin is an economic and social theorist, author, consultant, and lecturer at the Wharton School’s Executive Education program who believes that economies experience major increases in growth and productivity only when big shifts occur in three integrated infrastructure segments around the same time: communications, energy, and transportation.

But it’s only a matter of time before information technology blows all three wide open, says Rifkin. He envisions a new economic infrastructure based on digital integration of communications, energy, and transportation, riding atop an Internet of Things (IoT) platform that incorporates Big Data, analytics, and artificial intelligence. This platform will disrupt the world economy and bring dramatic levels of efficiency and productivity to businesses that take advantage of it, he says.

Some economists consider Rifkin’s ideas controversial. And his vision of a new economic platform may be problematic—at least globally. It will require massive investments and unusually high levels of government, community, and private sector cooperation, all of which seem to be at depressingly low levels these days.

However, Rifkin has some influential adherents to his philosophy. He has advised three presidents of the European Commission—Romano Prodi, José Manuel Barroso, and the current president, Jean-Claude Juncker—as well as the European Parliament and numerous European Union (EU) heads of state, including Angela Merkel, on the ushering in of what he calls “a smart, green Third Industrial Revolution.” Rifkin is also advising the leadership of the People’s Republic of China on the build out and scale up of the “Internet Plus” Third Industrial Revolution infrastructure to usher in a sustainable low-carbon economy.

The internet has already shaken up one of the three major economic sectors: communications. Today it takes little more than a cell phone, an internet connection, and social media to publish a book or music video for free—what Rifkin calls zero marginal cost. The result has been a hollowing out of once-mighty media empires in just over 10 years. Much of what remains of their business models and revenues has been converted from physical (remember CDs and video stores?) to digital.

But we haven’t hit the trifecta yet. Transportation and energy have changed little since the middle of the last century, says Rifkin. That’s when superhighways reached their saturation point across the developed world and the internal-combustion engine came close to the limits of its potential on the roads, in the air, and at sea. “We have all these killer new technology products, but they’re being plugged into the same old infrastructure, and it’s not creating enough new business opportunities,” he says.

All that may be about to undergo a big shake-up, however. The digitalization of information on the IoT at near-zero marginal cost generates Big Data that can be mined with analytics to create algorithms and apps enabling ubiquitous networking. This digital transformation is beginning to have a big impact on the energy and transportation sectors. If that trend continues, we could see a metamorphosis in the economy and society not unlike previous industrial revolutions in history. And given the pace of technology change today, the shift could happen much faster than ever before.

The speed of change is dictated by the increase in digitalization of these three main sectors; expensive physical assets and processes are partially replaced by low-cost virtual ones. The cost efficiencies brought on by digitalization drive disruption in existing business models toward zero marginal cost, as we’ve already seen in entertainment and publishing. According to research company Gartner, when an industry gets to the point where digital drives at least 20% of revenues, you reach the tipping point.

“A clear pattern has emerged,” says Peter Sondergaard, executive vice president and head of research and advisory for Gartner. “Once digital revenues for a sector hit 20% of total revenue, the digital bloodbath begins,” he told the audience at Gartner’s annual 2017 IT Symposium/ITxpo, according to The Wall Street Journal. “No matter what industry you are in, 20% will be the point of no return.”

Communications is already there, and energy and transportation are heading down that path. If they hit the magic 20% mark, the impact will be felt not just within those industries but across all industries. After all, who doesn’t rely on energy and transportation to power their value chains?

The eye of the technology disruption hurricane has moved beyond communications and is heading toward … the rest of the economy.

That’s why businesses need to factor potentially massive business model disruptions into their plans for digital transformation today if they want to remain competitive with organizations in early adopter countries like China and Germany. China, for example, is already halfway through an US$88 billion upgrade to its state electricity grid that will enable renewable energy transmission around the country—all managed and moved digitally, according to an article in The Economist magazine. And it is competing with the United States for leadership in self-driving vehicles, which will shift the transportation process and revenue streams heavily to digital, according to an article in Wired magazine.

Once China’s and Germany’s renewables and driverless infrastructures are in place, the only additional costs are management and maintenance. That could bring businesses in these countries dramatic cost savings over those that still rely on fossil fuels and nuclear energy to power their supply chains and logistics. “Once you pay the fixed costs of renewables, the marginal costs are near zero,” says Rifkin. “The sun and wind haven’t sent us invoices yet.”

In other words, zero marginal cost has become a zero-sum game.

To understand why that is, consider the major industrial revolutions in history, writes Rifkin in his books, The Zero Marginal Cost Society and The Third Industrial Revolution. The first major shift occurred in the 19th century when cheap, abundant coal provided an efficient new source of power (steam) for manufacturing and enabled the creation of a vast railway transportation network. Meanwhile, the telegraph gave the world near-instant communication over a globally connected network.

The second big change occurred at the beginning of the 20th century, when inexpensive oil began to displace coal and gave rise to a much more flexible new transportation network of cars and trucks. Telephones, radios, and televisions had a similar impact on communications.

Breaking Down the Walls Between Sectors

Now, according to Rifkin, we’re poised for the third big shift. The eye of the technology disruption hurricane has moved beyond communications and is heading toward—or as publishing and entertainment executives might warn, coming for—the rest of the economy. With its assemblage of global internet and cellular network connectivity and ever-smaller and more powerful sensors, the IoT, along with Big Data analytics and artificial intelligence, is breaking down the economic walls that have protected the energy and transportation sectors for the past 50 years.

Daimler is now among the first movers in transitioning into a digitalized mobility internet. The company has equipped nearly 400,000 of its trucks with external sensors, transforming the vehicles into mobile Big Data centers. The sensors are picking up real-time Big Data on weather conditions, traffic flows, and warehouse availability. Daimler plans to establish collaborations with thousands of companies, providing them with Big Data and analytics that can help dramatically increase their aggregate efficiency and productivity in shipping goods across their value chains. The Daimler trucks are autonomous and capable of establishing platoons of multiple trucks driving across highways.

It won’t be long before vehicles that navigate the more complex transportation infrastructures around the world begin to think for themselves. Autonomous vehicles will bring massive economic disruption to transportation and logistics thanks to new aggregate efficiencies. Without the cost of having a human at the wheel, autonomous cars could achieve a shared cost per mile below that of owned vehicles by as early as 2030, according to research from financial services company Morgan Stanley.

The transition is getting a push from governments pledging to give up their addiction to cars powered by combustion engines. Great Britain, France, India, and Norway are seeking to go all electric as early as 2025 and by 2040 at the latest.

The Final Piece of the Transition

Considering that automobiles account for 47% of petroleum consumption in the United States alone—more than twice the amount used for generators and heating for homes and businesses, according to the U.S. Energy Information Administration—Rifkin argues that the shift to autonomous electric vehicles could provide the momentum needed to upend the final pillar of the economic platform: energy. Though energy has gone through three major disruptions over the past 150 years, from coal to oil to natural gas—each causing massive teardowns and rebuilds of infrastructure—the underlying economic model has remained constant: highly concentrated and easily accessible fossil fuels and highly centralized, vertically integrated, and enormous (and enormously powerful) energy and utility companies.

Now, according to Rifkin, the “Third Industrial Revolution Internet of Things infrastructure” is on course to disrupt all of it. It’s neither centralized nor vertically integrated; instead, it’s distributed and networked. And that fits perfectly with the commercial evolution of two energy sources that, until the efficiencies of the IoT came along, made no sense for large-scale energy production: the sun and the wind.

But the IoT gives power utilities the means to harness these batches together and to account for variable energy flows. Sensors on solar panels and wind turbines, along with intelligent meters and a smart grid based on the internet, manage a new, two-way flow of energy to and from the grid.

Today, fossil fuel–based power plants need to kick in extra energy if insufficient energy is collected from the sun and wind. But industrial-strength batteries and hydrogen fuel cells are beginning to take their place by storing large reservoirs of reserve power for rainy or windless days. In addition, electric vehicles will be able to send some of their stored energy to the digitalized energy internet during peak use. Demand for ever-more efficient cell phone and vehicle batteries is helping push the evolution of batteries along, but batteries will need to get a lot better if renewables are to completely replace fossil fuel energy generation.

Meanwhile, silicon-based solar cells have not yet approached their limits of efficiency. They have their own version of computing’s Moore’s Law called Swanson’s Law. According to data from research company Bloomberg New Energy Finance (BNEF), Swanson’s Law means that for each doubling of global solar panel manufacturing capacity, the price falls by 28%, from $76 per watt in 1977 to $0.41 in 2016. (Wind power is on a similar plunging exponential cost curve, according to data from the U.S. Department of Energy.)

Thanks to the plummeting solar price, by 2028, the cost of building and operating new sun-based generation capacity will drop below the cost of running existing fossil power plants, according to BNEF. “One of the surprising things in this year’s forecast,” says Seb Henbest, lead author of BNEF’s annual long-term forecast, the New Energy Outlook, “is that the crossover points in the economics of new and old technologies are happening much sooner than we thought last year … and those were all happening a bit sooner than we thought the year before. There’s this sense that it’s not some distant risk or distant opportunity. A lot of these realities are rushing toward us.”

The conclusion, he says, is irrefutable. “We can see the data and when we map that forward with conservative assumptions, these technologies just get cheaper than everything else.”

The smart money, then—72% of total new power generation capacity investment worldwide by 2040—will go to renewable energy, according to BNEF. The firm’s research also suggests that there’s more room in Swanson’s Law along the way, with solar prices expected to drop another 66% by 2040.

Another factor could push the economic shift to renewables even faster. Just as computers transitioned from being strictly corporate infrastructure to becoming consumer products with the invention of the PC in the 1980s, ultimately causing a dramatic increase in corporate IT investments, energy generation has also made the transition to the consumer side.

Thanks to future tech media star Elon Musk, consumers can go to his Tesla Energy company website and order tempered glass solar panels that look like chic, designer versions of old-fashioned roof shingles. Models that look like slate or a curved, terracotta-colored, ceramic-style glass that will make roofs look like those of Tuscan country villas, are promised soon. Consumers can also buy a sleek-looking battery called a Powerwall to store energy from the roof.

The combination of solar panels, batteries, and smart meters transforms homeowners from passive consumers of energy into active producers and traders who can choose to take energy from the grid during off-peak hours, when some utilities offer discounts, and sell energy back to the grid during periods when prices are higher. And new blockchain applications promise to accelerate the shift to an energy market that is laterally integrated rather than vertically integrated as it is now. Consumers like their newfound sense of control, according to Henbest. “Energy’s never been an interesting consumer decision before and suddenly it is,” he says.

As the price of solar equipment continues to drop, homes, offices, and factories will become like nodes on a computer network. And if promising new solar cell technologies, such as organic polymers, small molecules, and inorganic compounds, supplant silicon, which is not nearly as efficient with sunlight as it is with ones and zeroes, solar receivers could become embedded into windows and building compounds. Solar production could move off the roof and become integrated into the external facades of homes and office buildings, making nearly every edifice in town a node.

The big question, of course, is how quickly those nodes will become linked together—if, say doubters, they become linked at all. As we learned from Metcalfe’s Law, the value of a network is proportional to its number of connected users.

The Will Determines the Way

Right now, the network is limited. Wind and solar account for just 5% of global energy production today, according to Bloomberg.

But, says Rifkin, technology exists that could enable the network to grow exponentially. We are seeing the beginnings of a digital energy network, which uses a combination of the IoT, Big Data, analytics, and artificial intelligence to manage distributed energy sources, such as solar and wind power from homes and businesses.

As nodes on this network, consumers and businesses could take a more active role in energy production, management, and efficiency, according to Rifkin. Utilities, in turn, could transition from simply transmitting power and maintaining power plants and lines to managing the flow to and from many different energy nodes; selling and maintaining smart home energy management products; and monitoring and maintaining solar panels and wind turbines. By analyzing energy use in the network, utilities could create algorithms that automatically smooth the flow of renewables. Consumers and businesses, meanwhile, would not have to worry about connecting their wind and solar assets to the grid and keeping them up and running; utilities could take on those tasks more efficiently.

Already in Germany, two utility companies, E.ON and RWE, have each split their businesses into legacy fossil and nuclear fuel companies and new services companies based on distributed generation from renewables, new technologies, and digitalization.

The reason is simple: it’s about survival. As fossil fuel generation winds down, the utilities need a new business model to make up for lost revenue. Due to Germany’s population density, “the utilities realize that they won’t ever have access to enough land to scale renewables themselves,” says Rifkin. “So they are starting service companies to link together all the different communities that are building solar and wind and are managing energy flows for them and for their customers, doing their analytics, and managing their Big Data. That’s how they will make more money while selling less energy in the future.”

The digital energy internet is already starting out in pockets and at different levels of intensity around the world, depending on a combination of citizen support, utility company investments, governmental power, and economic incentives.

China and some countries within the EU, such as Germany and France, are the most likely leaders in the transition toward a renewable, energy-based infrastructure because they have been able to align the government and private sectors in long-term energy planning. In the EU for example, wind has already overtaken coal as the second largest form of power capacity behind natural gas, according to an article in The Guardian newspaper. Indeed, Rifkin has been working with China, the EU, and governments, communities, and utilities in Northern France, the Netherlands, and Luxembourg to begin building these new internets.

Hauts-de-France, a region that borders the English Channel and Belgium and has one of the highest poverty rates in France, enlisted Rifkin to develop a plan to lift it out of its downward spiral of shuttered factories and abandoned coal mines. In collaboration with a diverse group of CEOs, politicians, teachers, scientists, and others, it developed Rev3, a plan to put people to work building a renewable energy network, according to an article in Vice.

Today, more than 1,000 Rev3 projects are underway, encompassing everything from residential windmills made from local linen to a fully electric car–sharing system. Rev3 has received financial support from the European Investment Bank and a handful of private investment funds, and startups have benefited from crowdfunding mechanisms sponsored by Rev3. Today, 90% of new energy in the region is renewable and 1,500 new jobs have been created in the wind energy sector alone.

Meanwhile, thanks in part to generous government financial support, Germany is already producing 35% of its energy from renewables, according to an article in The Independent, and there is near unanimous citizen support (95%, according to a recent government poll) for its expansion.

If renewables are to move forward …, it must come from the ability to make green, not act green.

If renewable energy is to move forward in other areas of the world that don’t enjoy such strong economic and political support, however, it must come from the ability to make green, not act green.

Not everyone agrees that renewables will produce cost savings sufficient to cause widespread cost disruption anytime soon. A recent forecast by the U.S. Energy Information Administration predicts that in 2040, oil, natural gas, and coal will still be the planet’s major electricity producers, powering 77% of worldwide production, while renewables such as wind, solar, and biofuels will account for just 15%.

Skeptics also say that renewables’ complex management needs, combined with the need to store reserve power, will make them less economical than fossil fuels through at least 2035. “All advanced economies demand full-time electricity,” Benjamin Sporton, chief executive officer of the World Coal Association told Bloomberg. “Wind and solar can only generate part-time, intermittent electricity. While some renewable technologies have achieved significant cost reductions in recent years, it’s important to look at total system costs.”

On the other hand, there are many areas of the world where distributed, decentralized, renewable power generation already makes more sense than a centralized fossil fuel–powered grid. More than 20% of Indians in far flung areas of the country have no access to power today, according to an article in The Guardian. Locally owned and managed solar and wind farms are the most economical way forward. The same is true in other developing countries, such as Afghanistan, where rugged terrain, war, and tribal territorialism make a centralized grid an easy target, and mountainous Costa Rica, where strong winds and rivers have pushed the country to near 100% renewable energy, according to The Guardian.

The Light and the Darknet

Even if all the different IoT-enabled economic platforms become financially advantageous, there is another concern that could disrupt progress and potentially cause widespread disaster once the new platforms are up and running: hacking. Poorly secured IoT sensors have allowed hackers to take over everything from Wi-Fi enabled Barbie dolls to Jeep Cherokees, according to an article in Wired magazine.

Humans may be lousy drivers, but at least we can’t be hacked (yet). And while the grid may be prone to outages, it is tightly controlled, has few access points for hackers, and is physically separated from the Wild West of the internet.

If our transportation and energy networks join the fray, however, every sensor, from those in the steering system on vehicles to grid-connected toasters, becomes as vulnerable as a credit card number. Fake news and election hacking are bad enough, but what about fake drivers or fake energy? Now we’re talking dangerous disruptions and putting millions of people in harm’s way.

The only answer, according to Rifkin, is for businesses and governments to start taking the hacking threat much more seriously than they do today and to begin pouring money into research and technologies for making the internet less vulnerable. That means establishing “a fully distributed, redundant, and resilient digital infrastructure less vulnerable to the kind of disruptions experienced by Second Industrial Revolution–centralized communication systems and power grids that are increasingly subject to climate change, disasters, cybercrime, and cyberterrorism,” he says. “The ability of neighborhoods and communities to go off centralized grids during crises and re-aggregate in locally decentralized networks is the key to advancing societal security in the digital era,” he adds.

Start Looking Ahead

Until today, digital transformation has come mainly through the networking and communications efficiencies made possible by the internet. Airbnb thrives because web communications make it possible to create virtual trust markets that allow people to feel safe about swapping their most private spaces with one another.

But now these same efficiencies are coming to two other areas that have never been considered core to business strategy. That’s why businesses need to begin managing energy and transportation as key elements of their digital transformation portfolios.

Microsoft, for example, formed a senior energy team to develop an energy strategy to mitigate risk from fluctuating energy prices and increasing demands from customers to reduce carbon emissions, according to an article in Harvard Business Review. “Energy has become a C-suite issue,” Rob Bernard, Microsoft’s top environmental and sustainability executive told the magazine. “The CFO and president are now actively involved in our energy road map.”

As Daimler’s experience shows, driverless vehicles will push autonomous transportation and automated logistics up the strategic agenda within the next few years. Boston Consulting Group predicts that the driverless vehicle market will hit $42 billion by 2025. If that happens, it could have a lateral impact across many industries, from insurance to healthcare to the military.

Businesses must start planning now. “There’s always a period when businesses have to live in the new and the old worlds at the same time,” says Rifkin. “So businesses need to be considering new business models and structures now while continuing to operate their existing models.”

He worries that many businesses will be left behind if their communications, energy, and transportation infrastructures don’t evolve. Companies that still rely on fossil fuels for powering traditional transportation and logistics could be at a major competitive disadvantage to those that have moved to the new, IoT-based energy and transportation infrastructures.

Germany, for example, has set a target of 80% renewables for gross power consumption by 2050, according to The Independent. If the cost advantages of renewables bear out, German businesses, which are already the world’s third-largest exporters behind China and the United States, could have a major competitive advantage.

“How would a second industrial revolution society or country compete with one that has energy at zero marginal cost and driverless vehicles?” asks Rifkin. “It can’t be done.” D!


About the Authors

Maurizio Cattaneo is Director, Delivery Execution, Energy and Natural Resources, at SAP.

Joerg Ferchow is Senior Utilities Expert and Design Thinking Coach, Digital Transformation, at SAP.

Daniel Wellers is Digital Futures Lead, Global Marketing, at SAP.

Christopher Koch is Editorial Director, SAP Center for Business Insight, at SAP.


Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.

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Human Is The Next Big Thing

Traci Maddox

One of my favorite movies of 2016 was Hidden Figures. The main character, Katherine Johnson, and her team of colleagues had an interesting job title: Computer. Here’s what Katherine said about her job: “On any given day, I analyze the binomial levels of air displacement, friction, and velocity. And compute over 10 thousand calculations by cosine, square root, and lately analytic geometry. By hand.”

That was the 1960s. It was amazing work, but work that took hours to complete – and something an in-memory computer could do in a fraction of a second today.

Just as in-memory computing transformed calculating by hand (and made jobs like Katherine’s much easier), digital technologies are transforming the way we work today – and making our day-to-day activities more efficient.

What’s the real impact of technology in today’s workplace?

We are surrounded by technology, both at home and at work. Machine learning and robotics are making their way into everyday life and are affecting the way we expect to engage with technology at work. That has a big impact on organizations: If a machine can do a job safely and more efficiently, a company, nonprofit, or government – and its employees – will benefit. Digital technologies are becoming increasingly more feasible, affordable, and desirable. The challenge for organizations now is effectively merging human talent and digital business to harness new capabilities.

How will jobs change?

What does this mean for humans in the workplace? In a previous blog, Kerry Brown showed that as enterprises continue to learn, human/machine collaboration increases. People will direct technology and hand over work that can be done more efficiently by machine. Does that mean people will go away? No – but they will need to leverage different skills than they have today.

Although we don’t know exactly how jobs will change, one thing is for sure: Becoming more digitally proficient will help every employee stay relevant (and prepare them to move forward in their careers). Today’s workforce demographic complicates how people embrace technology – with up to five generations in the workforce, there is a wide variety in digital fluency (i.e., the ability to understand which technology is available and what tools will best achieve desired outcomes).

What is digital fluency and how can organizations embrace it?

Digital fluency is the combination of several capabilities related to technology:

  • Foundation skills: The ability to use technology tools that enhance your productivity and effectiveness
  • Information skills: The ability to research and develop your own perspective on topics using technology
  • Collaboration skills: The ability to share knowledge and collaborate with others using technology
  • Transformation skills: The ability to assess your own skills and take action toward building your digital fluency

No matter how proficient you are today, you can continue to build your digital IQ by building new habits and skills. This is something that both the organization and employee will have to own to be successful.

So, what skills are needed?

In a Technical University of Munich study released in July 2017, 64% of respondents said they do not have the skills necessary for digital transformation.

Today's workplace reality

These skills will be applied not only to the jobs of today, but also to the top jobs of the future, which haven’t been imagined yet! A recent article in Fast Company mentions a few, which include Digital Death Manager, Corporate Disorganizer, and 3D Printing Handyman.

And today’s skills will be used differently in 2025, as reported by another Fast Company article:

  • Tech skills, especially analytical skills, will increase in importance. Demand for software developers, market analysts, and computer analysts will increase significantly between now and 2025.
  • Retail and sales skills, or any job related to soft skills that are hard for computers to learn, will continue to grow. Customer service representatives, marketing specialists, and sales reps must continue to collaborate and understand how to use social media effectively to communicate worldwide.
  • Lifelong learning will be necessary to keep up with the changes in technology and adapt to our fast-moving lives. Teachers and trainers will continue to be hot jobs in the future, but the style of teaching will change to adapt to a “sound bite” world.
  • Contract workers who understand how businesses and projects work will thrive in the “gig economy.” Management analysts and auditors will continue to be in high demand.

What’s next?

How do companies address a shortage of digital skills and build digital fluency? Here are some steps you can take to increase your digital fluency – and that of your organization:

  • Assess where you are today. Either personally or organizationally, knowing what skills you have is the first step toward identifying where you need to go.
  • Identify one of each of the skill sets to focus on. What foundational skills do you or your organization need? How can you promote collaboration? What thought leadership can your team share – and how can they connect with the right information to stay relevant?
  • Start practicing! Choose just one thing – and use that technology every day for a month. Use it within your organization so others can practice too.

And up next for this blog series – a look at the workplace of the future!

The computer made its debut in Hidden Figures. Did it replace jobs? Yes, for some of the computer team. But members of that team did not leave quietly and continue manual calculations elsewhere. They learned how to use that new mainframe computer and became programmers. I believe humans will always be the next big thing.

If we want to retain humanity’s value in an increasingly automated world, we need to start recognizing and nurturing Human Skills for the Digital Future.

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Traci Maddox

About Traci Maddox

Traci Maddox is the Director of the North America Customer Transformation Office at SAP, where she is elevating customer success through innovation and digital transformation. Traci is also part of the Digital Workforce Taskforce, a team of SAP leaders whose mission is to help companies succeed by understanding and addressing workforce implications of digital technology.