Plastic Waste: What The Ecological Revolution Means For Retailers

Tesni Fellows

A month traditionally dictated by Halloween outfits and premature Christmas decorations, October 2017 ignited the most momentous occasion yet in the war on plastic, revolutionizing a nation to act while beginning an ecological awakening for retailers.

David Attenborough’s Blue Planet disturbed viewers on a global scale, forcing them to consider the consequences and the damage of plastic waste. Highlighting harrowing truths such as “a year’s plastic wastage weighs roughly as much as all all the world’s people” signified the extent to which we need to address this issue more than ever.

Plastic-not-so-fantastic: What the ecological revolution means for retailers

Despite the tax on plastic carrier bags adopted by many retail chains, Attenborough’s influence expanded consumers’ desire to understand what more could be done to save our planet and how to change a culture. Retailers are listening and changing the forefront of their business strategies to accommodate how people want to shop, who they want to shop with, what changes they need to implement, and what this all means for the future of retail.

What can retailers do to support the demands of customers who want to eliminate plastic waste?

Be transparent: The rise of social media has been the catalyst of change in the era of digital disruption and transformation, altering consumer behavior to encourage lifestyle purchasing. This shift has advanced through increasing societal and political issues around climate change.

As consumers are made accountable for their role regarding plastic waste, they are making more conscious changes in how they shop and who they shop with. Since 2016, consumer research on where to find the “best” products has grown by 80%, illustrating the need for quality products and ethical businesses that mirror consumer principles. However, this information is not always available to the public. For example, under an EU directive, groceries and large supermarkets are subject to share the amount of plastic they put on the market annually. Nevertheless, there is no mandate that these figures are released, so customers cannot effectively choose businesses that align with their morals. Ultimately, businesses should invest in being transparent to demonstrate their support of customer demands, enabling them to retain loyal customers and win new clients. Otherwise, inevitably, they will lose out to their competition that does.

The emphasis on lifestyle purchasing is further enhanced by focusing the change on a permanent, global level. The Cleaner Britain campaign in January 2018 emphasized eliminating avoidable plastic wastage within 25 years. Despite not all retailers being ready to admit their contributions to plastic waste, the idea of being the “first” to do so during this consumerism shift brings value to their branding in the market. Many grocery chains are showcasing their plastic-free successes. For example, Bulk Market has a bring-your-own-container (BYOC) policy, Iceland has begun a five-year plan to be the first plastic-free supermarket, and most recently, Ekoplaza opened the world’s first plastic-free aisle.

This trend is filtering into other retail areas like sports, where London-based gym 1Rebel is providing reusable plastic bottles to customers. These public initiatives allow consumers to be more knowledgeable about who to trust and ultimately, who to align with. Consumers wield the power in the buying process and are driving cultural change, meaning retailers can no longer afford to hide information about what they deliver to market.

As international players in the retail industry, it’s the responsibility of corporations to be visionary leaders in these changes, too. For example, in England, plastic bags use in retail stores has dropped 85% since a 5p tax was implemented. Global players can make a difference by listening to the customer and implementing initiatives that filter down to smaller enterprises and local merchants. With every small victory, a larger cultural shift is created.

Be ethical: Transparency in business creates a paradigm of cultural and ethical changes among retailers. The concept of mindful purchasing has become one that businesses must support across all channels to demonstrate their values and willingness to support their customers. This requires retailers to be more ethical in their products and in their brand values. For example, the fashion company Batoko produces affordable swimwear solely made from recycled plastics from the oceans. This is a unique brand proposition and demonstrates that a company’s ethical culture is just as important as its products. These creative possibilities are inspiring others to do the same and enabling wider cultural changes.

Retailers can make sustainable changes in their products by choosing to work with ethical suppliers. Businesses must start asking how they can work with suppliers to create new alternatives without driving up consumer cost. How can they implement these alternatives as norms? As customers are researching more about what they buy, they are also learning more about where materials are sourced and what role different companies play in this process. The customer relationship is going beyond product-based values, placing ethics as a priority. Retailers who invest in the suppliers they work with are able to adopt more changes as brand ambassadors.

Businesses partnering to support societal initiatives are imperative to driving change in the retail industry. Engaging socially savvy millennials allows brands to reach thousands across social channels to influence change. Business-to-business initiatives within the retail industry can also be beneficial. Within the beauty industry, the Ellen MacArthur Foundation launched The New Plastics Economy, combining a range of third-party support such as “corporations, local government leaders, academics, NGOs, and other stakeholders” to change how plastic is exchanged globally. Once small and large companies work together to create influential communities, other industries and global players are incentivized to make ethical changes, spread unified messaging across their platforms, and get involved to champion consumer demands.

Understand your customer: Businesses must understand their customers and how they shop when implementing changes across their omnichannel platforms. Reducing plastic is easier to accomplish in physical stores, such as with coffee shops Pret a Manger and Starbucks, which cuts the price of drinks when using a reusable cup. Nevertheless, going completely plastic-free must become an integral part of retail business models, both online and in store. By understanding the conscious changes consumers make in-store to reduce plastic, organizations can figure out how to apply those choices to their online purchasing.

How retailers can support the elimination of plastic waste

Retailers can help eliminate plastic waste by using recyclable materials, like cardboard boxes, for packaging. Tailoring and personalizing customer messaging and marketing campaigns via promotions, incentives, and content ensures you are building awareness about how you are making changes to reduce plastic waste. Additionally, promoting charities or industry initiatives you are supporting demonstrates your contributions to the wider change. Addressing the topic lends credibility and puts your business at the forefront of the agenda.

With brick and mortar here to stay, along with Instagram, Pinterest, and other social apps influencing consumer purchasing behavior, the omnichannel revolution demands retailers respond across all mediums and touchpoints to meet their customers’ demands. This enables businesses to be a step ahead and support consumers as effectively as possible.

For retailers to meet the customer’s ever-changing demands, they need to adapt. To do this, they need to be transparent and listen to their customers, especially with regard to options for reducing their plastic consumption across various purchasing methods.

Plastic is no longer being treated as a disposable material, and therefore we cannot treat it as a disposable issue. With customers at the helm of this cultural paradigm, businesses need to jump onboard the bandwagon or be left behind.

Learn more about Why Corporate Social Responsibility Matters.

This article originally appeared on The Future of Customer Engagement and Commerce.

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Tesni Fellows

About Tesni Fellows

Tesni Fellows is the Global Partner Marketing Associate for SAP Hybris. Her experience throughout SAP Hybris has expanded from supporting marketing initiatives across Northern Europe to strategizing, coordinating, organizing, and executing marketing campaigns across a global remit of SI, ISV, and GB partners. Having studied English Language and Political Science at Newcastle University, Tesni has also explored her passion for writing in different fields such as sport and music, contributing to her universities paper, The Courier.

Beyond Earth Day: Technology's Role In Helping Businesses Do More With Less

Daniel Schmid

Close to a billion people around the world are getting ready to celebrate Earth Day on April 22. The movement started in 1970, when millions of people marched to protest the impact of industrial development on the environment. Despite many achievements since then, and almost 2.7 billion “acts of green” registered by the Earth Day network,[i] the need for action is more acute than ever.

As the famed scientist and nobel prize winner Stephen Hawking noted “Our population and our use of the finite resources of planet Earth are growing exponentially, along with our technical ability to change the environment for good or ill.”

We have reason for concern, but also hope. New technologies could be the urgently needed accelerator to address climate change, transition to clean energy, and reduce negative environmental impacts – if we apply these wisely as a force for good instead of evil.

While all of us have a role to play in this, businesses, like SAP, have a unique one due to their reach and power to make a positive impact. We have the responsibility to stand for a higher purpose that goes beyond economic success. For SAP, it is to “help the world run better and improve people’s lives.” Together with our customers and numerous other organizations, we are working to bring this vision and purpose to life and to address the United Nations 17 Sustainable Development Goals (SDGs).

Let me pick just one example: UN Sustainable Development Goal (SDG) #12, which focuses on initiatives that “ensure sustainable consumption and production patterns.”[ii] Put simply, this means managing the world’s people and natural resources better and mitigating harm to people and the environment. Isn’t this also what enterprise resource planning (ERP) should be about?

Why does this matter?

The demand of already-constrained and finite resources is expected to rise exponentially: If the global population reaches 9.6 billion by 2050, the equivalent of almost three planets will be required to sustain current lifestyles according to the UN.[iii] Business as usual is no option in this scenario. New ways of doing more and better with less are required.

Digital solutions that drive efficiency and resource optimization are already helping to achieve the UN’s call to “increase net welfare gains from economic activities by reducing resource use, degradation, and pollution along the whole lifecycle while increasing quality of life.” Companies, such as Vestas and Kaiserwetter, are leveraging SAP technology to enhance access to renewable and affordable energy. Meanwhile, Vectus, for instance, applies it to conserve precious water in India.

Take food as another example. Each year about one-third of all produced food ends up in the garbage or spoils due to poor transportation and harvesting practices. That’s equivalent to 1.3 billion tons of food at a value of US$1 trillion.[iv] Which business or government cannot afford to address this?

Acting as enabler and exemplar

For many companies like SAP, it starts with leading by example through our own business practices.[v] For example, we have established sustainable, end-to-end lifecycle management of our IT equipment, which encompass sustainable procurement practices, energy efficient operations, and IT reuse and recycling.

However, the scale comes from enabling a base of 378,000 customers through our technology and solutions. Together, they produce 76% of the world’s transaction revenue and 78% of the world’s food.

The potential is huge. Precision farming solutions, such as the one for Stara, can help to maximize crop yields while minimizing the application of fertilizer, pesticides, water, and other costly resources and decreasing their environmental impact. Better forecasting of demand through the use of Big Data and next-generation ERP can help deliver perishable foods to the right markets. Our transportation management solutions can help optimize loads and routes to make food products available at the right time with minimal environmental impact. Business network, cloud procurement solutions,[vi] and the product stewardship network[vii] can help retailers, including Walmart,[viii] and consumers gain insight into food supply chains and make sustainable buying decisions. And the list goes on.

Are we done?

Definitely not. We need more purpose-driven innovation and partnerships that connect the dots and enable a truly circular economy in the future. It is not just about responsible sourcing or about recycling – it’s about thinking it the full product lifecycle from design to end of life.

Dame Ellen MacArthur, who holds the record for circumnavigating the world alone, once said: “If we could build an economy that would use things rather than use them up, we could build a future that really could work in the long term.”[ix] 

This Earth Day, I encourage everyone to step up and be part in shaping this future. As Chief Sustainability Officer at SAP, I will apply all my forces to make SAP an enabler and exemplar for sustainability and for holistic environmental, social and economic value creation. Our CEO Bill McDermott, announced today, that as part of our commitment to address SDG #13 “Climate Action” and become carbon neutral by 2025, SAP is teaming up with partners including Livelihoods Fund, Climate Partner, Plant for the Planet to plant 5 million new trees in the next seven years all over the world.

And there is even more we can do. According to the research SMARTer2030 conducted by Global e-Sustainability Initiative (GeSI) and Accenture Strategy,[x] digitizing business processes and using data to make better decisions about resource usage are essential to reduce carbon emissions. Based on the study results, as well as its own calculations and analysis,[xi] SAP came to the conclusion, that digitization in six major industries could help to save up to 7.6 gigatons emissions. That is 63% of the total of 12.1 gigatons emissions identified by the research that could be cut by 2030. An equivalent to approximately 750 billion trees. Just imagine how many more this could be if applied to all industries.

How will YOU join in? We’ve made it easy.  See how!

 

______________________________________________________________

[i] https://www.earthday.org/take-action/

[ii] http://www.un.org/sustainabledevelopment/sustainable-consumption-production/

[iii] http://www.un.org/sustainabledevelopment/sustainable-consumption-production/

[iv] http://www.un.org/sustainabledevelopment/sustainable-consumption-production/

[v] https://www.sap.com/corporate/en/company/sustainability-csr/sustainable-operations.environment.html#environment

[vi] https://www.ariba.com/about

[vii] https://wiki.scn.sap.com/wiki/display/PLM/Overview+-+SAP+Product+Stewardship+Network

[viii] https://cloudplatform.sap.com/success/walmart.html

[ix] https://www.ted.com/talks/dame_ellen_macarthur_the_surprising_thing_i_learned_sailing_solo_around_the_world/transcript?language=en#t-762180

[x] http://smarter2030.gesi.org

[xi] http://www.digitalistmag.com/resource-optimization/2015/12/17/tech-cut-emissions-save-natural-resources-03860595

Comments

Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Konstanze Werle

About Konstanze Werle

Konstanze Werle is a Director of Industries Marketing at SAP. She is a content marketing specialist with a particular focus on the travel and transportation, engineering and construction and real estate industries worldwide. Her goal is to help companies in these industries to simplify their business by sharing latest trends and innovation in their industry.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Angelica Valentine

About Angelica Valentine

Angelica is the Marketing Manager at Wiser. Wiser collects and analyzes online and in-store data with unmatched speed, scale and accuracy. She is experienced in strategy and creation for cross-channel content. Angelica is passionate about growing engagement and conversion rates through excellent content. Her work has also appeared on VentureBeat, Bigcommerce, Retail Touchpoints, and more. She holds a Bachelor’s degree in Sociology from Barnard College of Columbia University in New York City.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Uli Muench

About Uli Muench

Uli Muench is Global Vice President of the Automotive Industry Business Unit at SAP.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Shawn Slack

About Shawn Slack

Shawn Slack is the Director of Information Technology and Chief Information Officer for the City of Mississauga.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Daniel Schmid

About Daniel Schmid

Daniel Schmid was appointed Chief Sustainability Officer at SAP in 2014. Since 2008 he has been engaged in transforming SAP into a role model of a sustainable organization, establishing mid and long term sustainability targets. Linking non-financial and financial performance are key achievements of Daniel and his team.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Michael Laprocido

About Michael Laprocido

Mike Laprocido serves as a Strategic Industry Advisor for SAP. He is responsible for developing thought leadership and driving SAP solution adoption in the chemical and oil and gas industries. With over three decades in various executive roles at BP Oil, BP Chemicals, Kuraray America, Panda Energy and IBM prior to joining SAP, Mike has gained a broad and deep industry knowledge base that he leverages to help his clients to innovate and transform their business through the application of digital technology.

99 Mind-Blowing Ways The Digital Economy Is Changing The Future Of Business

Vivek Bapat

Paying with smartphone in restaurant --- Image by © Tomas Rodriguez/Corbis The digital economy is steadily revolutionizing every aspect of our lives. We all sense it – how we live, play, and work will never be the same again. In the past, enterprise software used to be about making existing work more efficient. Now, the opportunity for software is to transform and reimagine how we do everything. However, do we truly understand the impact of this new world order?

With this very question mulling in the recesses of their minds, my friends at SAP pulled together a comprehensive report on the trends, opportunities, and predictions about the future of business in the digital economy. Here is a small snapshot of their observations.

1. The nature of work and employee expectations are evolving

2. Gen Z will further change the future of work by the end of this decade

3. The Internet of Things (IoT) is one of the most valuable and influential advancements

4. Businesses are no longer the sole creator of a brand – it is co-created by consumers

5. Access to technology will change the competitive landscape

No matter your industry, position, generation, or location, you have the ability to influence how the digital economy impacts your corner of the world. Find out how you can drive transformational change. Check out the SlideShare “99 Facts on The Future of Business in the Digital Economy” below.

 

Some say the digital economy is transforming us into a more altruistic society. Learn what that means for business in the video Collaborative Economy: It’s Real and It’s Disrupting Enterprises.

Comments

Hack the CIO

By Thomas Saueressig, Timo Elliott, Sam Yen, and Bennett Voyles

For nerds, the weeks right before finals are a Cinderella moment. Suddenly they’re stars. Pocket protectors are fashionable; people find their jokes a whole lot funnier; Dungeons & Dragons sounds cool.

Many CIOs are enjoying this kind of moment now, as companies everywhere face the business equivalent of a final exam for a vital class they have managed to mostly avoid so far: digital transformation.

But as always, there is a limit to nerdy magic. No matter how helpful CIOs try to be, their classmates still won’t pass if they don’t learn the material. With IT increasingly central to every business—from the customer experience to the offering to the business model itself—we all need to start thinking like CIOs.

Pass the digital transformation exam, and you probably have a bright future ahead. A recent SAP-Oxford Economics study of 3,100 organizations in a variety of industries across 17 countries found that the companies that have taken the lead in digital transformation earn higher profits and revenues and have more competitive differentiation than their peers. They also expect 23% more revenue growth from their digital initiatives over the next two years—an estimate 2.5 to 4 times larger than the average company’s.

But the market is grading on a steep curve: this same SAP-Oxford study found that only 3% have completed some degree of digital transformation across their organization. Other surveys also suggest that most companies won’t be graduating anytime soon: in one recent survey of 450 heads of digital transformation for enterprises in the United States, United Kingdom, France, and Germany by technology company Couchbase, 90% agreed that most digital projects fail to meet expectations and deliver only incremental improvements. Worse: over half (54%) believe that organizations that don’t succeed with their transformation project will fail or be absorbed by a savvier competitor within four years.

Companies that are making the grade understand that unlike earlier technical advances, digital transformation doesn’t just support the business, it’s the future of the business. That’s why 60% of digital leading companies have entrusted the leadership of their transformation to their CIO, and that’s why experts say businesspeople must do more than have a vague understanding of the technology. They must also master a way of thinking and looking at business challenges that is unfamiliar to most people outside the IT department.

In other words, if you don’t think like a CIO yet, now is a very good time to learn.

However, given that you probably don’t have a spare 15 years to learn what your CIO knows, we asked the experts what makes CIO thinking distinctive. Here are the top eight mind hacks.

1. Think in Systems

A lot of businesspeople are used to seeing their organization as a series of loosely joined silos. But in the world of digital business, everything is part of a larger system.

CIOs have known for a long time that smart processes win. Whether they were installing enterprise resource planning systems or working with the business to imagine the customer’s journey, they always had to think in holistic ways that crossed traditional departmental, functional, and operational boundaries.

Unlike other business leaders, CIOs spend their careers looking across systems. Why did our supply chain go down? How can we support this new business initiative beyond a single department or function? Now supported by end-to-end process methodologies such as design thinking, good CIOs have developed a way of looking at the company that can lead to radical simplifications that can reduce cost and improve performance at the same time.

They are also used to thinking beyond temporal boundaries. “This idea that the power of technology doubles every two years means that as you’re planning ahead you can’t think in terms of a linear process, you have to think in terms of huge jumps,” says Jay Ferro, CIO of TransPerfect, a New York–based global translation firm.

No wonder the SAP-Oxford transformation study found that one of the values transformational leaders shared was a tendency to look beyond silos and view the digital transformation as a company-wide initiative.

This will come in handy because in digital transformation, not only do business processes evolve but the company’s entire value proposition changes, says Jeanne Ross, principal research scientist at the Center for Information Systems Research at the Massachusetts Institute of Technology (MIT). “It either already has or it’s going to, because digital technologies make things possible that weren’t possible before,” she explains.

2. Work in Diverse Teams

When it comes to large projects, CIOs have always needed input from a diverse collection of businesspeople to be successful. The best have developed ways to convince and cajole reluctant participants to come to the table. They seek out technology enthusiasts in the business and those who are respected by their peers to help build passion and commitment among the halfhearted.

Digital transformation amps up the urgency for building diverse teams even further. “A small, focused group simply won’t have the same breadth of perspective as a team that includes a salesperson and a service person and a development person, as well as an IT person,” says Ross.

At Lenovo, the global technology giant, many of these cross-functional teams become so used to working together that it’s hard to tell where each member originally belonged: “You can’t tell who is business or IT; you can’t tell who is product, IT, or design,” says the company’s CIO, Arthur Hu.

One interesting corollary of this trend toward broader teamwork is that talent is a priority among digital leaders: they spend more on training their employees and partners than ordinary companies, as well as on hiring the people they need, according to the SAP-Oxford Economics survey. They’re also already being rewarded for their faith in their teams: 71% of leaders say that their successful digital transformation has made it easier for them to attract and retain talent, and 64% say that their employees are now more engaged than they were before the transformation.

3. Become a Consultant

Good CIOs have long needed to be internal consultants to the business. Ever since technology moved out of the glasshouse and onto employees’ desks, CIOs have not only needed a deep understanding of the goals of a given project but also to make sure that the project didn’t stray from those goals, even after the businesspeople who had ordered the project went back to their day jobs. “Businesspeople didn’t really need to get into the details of what IT was really doing,” recalls Ferro. “They just had a set of demands and said, ‘Hey, IT, go do that.’”

Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants.

But that was then. Now software has become so integral to the business that nobody can afford to walk away. Businesspeople must join the ranks of the IT consultants. “If you’re building a house, you don’t just disappear for six months and come back and go, ‘Oh, it looks pretty good,’” says Ferro. “You’re on that work site constantly and all of a sudden you’re looking at something, going, ‘Well, that looked really good on the blueprint, not sure it makes sense in reality. Let’s move that over six feet.’ Or, ‘I don’t know if I like that anymore.’ It’s really not much different in application development or for IT or technical projects, where on paper it looked really good and three weeks in, in that second sprint, you’re going, ‘Oh, now that I look at it, that’s really stupid.’”

4. Learn Horizontal Leadership

CIOs have always needed the ability to educate and influence other leaders that they don’t directly control. For major IT projects to be successful, they need other leaders to contribute budget, time, and resources from multiple areas of the business.

It’s a kind of horizontal leadership that will become critical for businesspeople to acquire in digital transformation. “The leadership role becomes one much more of coaching others across the organization—encouraging people to be creative, making sure everybody knows how to use data well,” Ross says.

In this team-based environment, having all the answers becomes less important. “It used to be that the best business executives and leaders had the best answers. Today that is no longer the case,” observes Gary Cokins, a technology consultant who focuses on analytics-based performance management. “Increasingly, it’s the executives and leaders who ask the best questions. There is too much volatility and uncertainty for them to rely on their intuition or past experiences.”

Many experts expect this trend to continue as the confluence of automation and data keeps chipping away at the organizational pyramid. “Hierarchical, command-and-control leadership will become obsolete,” says Edward Hess, professor of business administration and Batten executive-in-residence at the Darden School of Business at the University of Virginia. “Flatter, distributive leadership via teams will become the dominant structure.”

5. Understand Process Design

When business processes were simpler, IT could analyze the process and improve it without input from the business. But today many processes are triggered on the fly by the customer, making a seamless customer experience more difficult to build without the benefit of a larger, multifunctional team. In a highly digitalized organization like Amazon, which releases thousands of new software programs each year, IT can no longer do it all.

While businesspeople aren’t expected to start coding, their involvement in process design is crucial. One of the techniques that many organizations have adopted to help IT and businesspeople visualize business processes together is design thinking (for more on design thinking techniques, see “A Cult of Creation“).

Customers aren’t the only ones who benefit from better processes. Among the 100 companies the SAP-Oxford Economics researchers have identified as digital leaders, two-thirds say that they are making their employees’ lives easier by eliminating process roadblocks that interfere with their ability to do their jobs. Ninety percent of leaders surveyed expect to see value from these projects in the next two years alone.

6. Learn to Keep Learning

The ability to learn and keep learning has been a part of IT from the start. Since the first mainframes in the 1950s, technologists have understood that they need to keep reinventing themselves and their skills to adapt to the changes around them.

Now that’s starting to become part of other job descriptions too. Many companies are investing in teaching their employees new digital skills. One South American auto products company, for example, has created a custom-education institute that trained 20,000 employees and partner-employees in 2016. In addition to training current staff, many leading digital companies are also hiring new employees and creating new roles, such as a chief robotics officer, to support their digital transformation efforts.

Nicolas van Zeebroeck, professor of information systems and digital business innovation at the Solvay Brussels School of Economics and Management at the Free University of Brussels, says that he expects the ability to learn quickly will remain crucial. “If I had to think of one critical skill,” he explains, “I would have to say it’s the ability to learn and keep learning—the ability to challenge the status quo and question what you take for granted.”

7. Fail Smarter

Traditionally, CIOs tended to be good at thinking through tests that would allow the company to experiment with new technology without risking the entire network.

This is another unfamiliar skill that smart managers are trying to pick up. “There’s a lot of trial and error in the best companies right now,” notes MIT’s Ross. But there’s a catch, she adds. “Most companies aren’t designed for trial and error—they’re trying to avoid an error,” she says.

To learn how to do it better, take your lead from IT, where many people have already learned to work in small, innovative teams that use agile development principles, advises Ross.

For example, business managers must learn how to think in terms of a minimum viable product: build a simple version of what you have in mind, test it, and if it works start building. You don’t build the whole thing at once anymore.… It’s really important to build things incrementally,” Ross says.

Flexibility and the ability to capitalize on accidental discoveries during experimentation are more important than having a concrete project plan, says Ross. At Spotify, the music service, and CarMax, the used-car retailer, change is driven not from the center but from small teams that have developed something new. “The thing you have to get comfortable with is not having the formalized plan that we would have traditionally relied on, because as soon as you insist on that, you limit your ability to keep learning,” Ross warns.

8. Understand the True Cost—and Speed—of Data

Gut instincts have never had much to do with being a CIO; now they should have less to do with being an ordinary manager as well, as data becomes more important.

As part of that calculation, businesspeople must have the ability to analyze the value of the data that they seek. “You’ll need to apply a pinch of knowledge salt to your data,” advises Solvay’s van Zeebroeck. “What really matters is the ability not just to tap into data but to see what is behind the data. Is it a fair representation? Is it impartial?”

Increasingly, businesspeople will need to do their analysis in real time, just as CIOs have always had to manage live systems and processes. Moving toward real-time reports and away from paper-based decisions increases accuracy and effectiveness—and leaves less time for long meetings and PowerPoint presentations (let us all rejoice).

Not Every CIO Is Ready

Of course, not all CIOs are ready for these changes. Just as high school has a lot of false positives—genius nerds who turn out to be merely nearsighted—so there are many CIOs who aren’t good role models for transformation.

Success as a CIO these days requires more than delivering near-perfect uptime, says Lenovo’s Hu. You need to be able to understand the business as well. Some CIOs simply don’t have all the business skills that are needed to succeed in the transformation. Others lack the internal clout: a 2016 KPMG study found that only 34% of CIOs report directly to the CEO.

This lack of a strategic perspective is holding back digital transformation at many organizations. They approach digital transformation as a cool, one-off project: we’re going to put this new mobile app in place and we’re done. But that’s not a systematic approach; it’s an island of innovation that doesn’t join up with the other islands of innovation. In the longer term, this kind of development creates more problems than it fixes.

Such organizations are not building in the capacity for change; they’re trying to get away with just doing it once rather than thinking about how they’re going to use digitalization as a means to constantly experiment and become a better company over the long term.

As a result, in some companies, the most interesting tech developments are happening despite IT, not because of it. “There’s an alarming digital divide within many companies. Marketers are developing nimble software to give customers an engaging, personalized experience, while IT departments remain focused on the legacy infrastructure. The front and back ends aren’t working together, resulting in appealing web sites and apps that don’t quite deliver,” writes George Colony, founder, chairman, and CEO of Forrester Research, in the MIT Sloan Management Review.

Thanks to cloud computing and easier development tools, many departments are developing on their own, without IT’s support. These days, anybody with a credit card can do it.

Traditionally, IT departments looked askance at these kinds of do-it-yourself shadow IT programs, but that’s changing. Ferro, for one, says that it’s better to look at those teams not as rogue groups but as people who are trying to help. “It’s less about ‘Hey, something’s escaped,’ and more about ‘No, we just actually grew our capacity and grew our ability to innovate,’” he explains.

“I don’t like the term ‘shadow IT,’” agrees Lenovo’s Hu. “I think it’s an artifact of a very traditional CIO team. If you think of it as shadow IT, you’re out of step with reality,” he says.

The reality today is that a company needs both a strong IT department and strong digital capacities outside its IT department. If the relationship is good, the CIO and IT become valuable allies in helping businesspeople add digital capabilities without disrupting or duplicating existing IT infrastructure.

If a company already has strong digital capacities, it should be able to move forward quickly, according to Ross. But many companies are still playing catch-up and aren’t even ready to begin transforming, as the SAP-Oxford Economics survey shows.

For enterprises where business and IT are unable to get their collective act together, Ross predicts that the next few years will be rough. “I think these companies ought to panic,” she says. D!


About the Authors

Thomas Saueressig is Chief Information Officer at SAP.

Timo Elliott is an Innovation Evangelist at SAP.

Sam Yen is Chief Design Officer at SAP and Managing Director of SAP Labs.

Bennett Voyles is a Berlin-based business writer.

Read more thought provoking articles in the latest issue of the Digitalist Magazine, Executive Quarterly.
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CEO Priorities And Challenges In The Digital World

Dr. Chakib Bouhdary

Digital transformation is here, and it is moving fast. Companies are starting to realize the enormous power of digital technologies like artificial intelligence (AI), Internet of things (IoT) and blockchain. These technologies will drive massive opportunities—and threats—for every company, and they will impact all aspects of business, including the business model. In fact, business velocity has never been this fast, yet it will never be this slow again.

To move quickly, companies need to be clear on what they want to achieve through digital transformation and understand the possible roadblocks. Based on my meetings with customer executives across regions and industries, I have learned that CEOs often have the same three priorities and face the same three challenges:

1. Customer experience – No longer defined by omnichannel and personalized marketing.

Not surprisingly, 92 percent of digital leaders focus on customer experience. However, this is no longer just about omnichannel and personalized marketing – it is about the total customer experience. Businesses are realizing that they need to reimagine their value proposition and orchestrate changes across the value chain – from the first point of interaction to manufacturing, to shipment, to service – and be able to deliver the total customer experience. In some cases, it will even be necessary to change the core product or service itself.

2. Step change in productivity – Transform productivity and cost structure through digital technologies.

Businesses have been using technology to achieve growth for decades, but by combining emerging technologies, they can now achieve a significant productivity boost and reduce costs. For this to happen, companies must first identify the scenarios that will drive significant change in productivity, prioritize them based on value, and then determine the right technologies and solutions. Both Mckinsey and Boston Consulting Group expect a 15 to 30 percent improvement in productivity through digital advancements – blowing the doors off business-as-usual and its incremental productivity growth of 1 to 2 percent.

3. Employee engagement – Fostering a culture of innovation should be at the core of any business.

Companies are looking to create an environment that encourages creativity and innovation. Leaders are attracting the needed talent and building the right skill sets. Additionally, they aim for ways to attract a diverse workforce, improve collaborations, and empower employees – because engaged employees are crucial in order to achieve the best results. This Gallup study reveals that approximately 85 percent of employees worldwide are performing below their potential due to engagement issues.

As CEOs work towards achieving these three desired outcomes, they face some critical challenges that they must address. I define the top three challenges as follows: run vs. innovate, corporate cholesterol, and digital transformation roadmap.

1. Run vs. innovate – To be successful you must prioritize the future.

The foremost challenge that CEOs are facing is how they can keep running current profitable businesses while investing in future innovations. Quite often these two conflict as most executives mistakenly prioritize the first and spend much less time on the latter. This must change. CEOs and their management teams need to spend more time thinking about what digital is for them, discuss new ideas, and reimagine the future. According to Gartner, approximately 50 percent of boards are pushing their CEOs to make progress on digital. Although this is a promising sign, digital must become a priority on every CEOs agenda.

2. Corporate cholesterol – Do not let company culture get in the way of change.

The older the company is, the more stuck it likely is with policies, procedures, layers of management, and risk averseness. When a company’s own processes get in the way of change, that is what I call “corporate cholesterol.” CEOs need to change the culture, encourage cross-team collaborations, and bring in more diverse thinking to reduce the cholesterol levels. In fact, both Mckinsey and Capgemini conclude that culture is the number-one obstacle to digital effectiveness.

3. Digital transformation roadmap – Digital transformation is a journey without a destination.

Many CEOs struggle with their digital roadmap. Questions like: Where do I start? Can a CDO or another executive run this innovation for me? What is my three- to five-year roadmap? often come up during the conversations. Most companies think that there is a set roadmap, or a silver bullet, for digital transformation, but that is not the case. Digital transformation is a journey without a destination, and each company must start small, acquire the necessary skills and knowledge, and continue to innovate.

It is time to face the digital reality and make it a priority. According to KPMG, 70 percent to 80 percent of CEOs believe that the next three years are more critical for their company than the last fifty. And there is good reason to worry, as 75 percent of S&P 500 companies from 2012 will be replaced by 2027 at the current disruption rate.

Download this short executive document. 

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Dr. Chakib Bouhdary

About Dr. Chakib Bouhdary

Dr. Chakib Bouhdary is the Digital Transformation Officer at SAP. Chakib spearheads thought leadership for the SAP digital strategy and advises on the SAP business model, having led its transformation in 2010. He also engages with strategic customers and prospects on digital strategy and chairs Executive Digital Exchange (EDX), which is a global community of digital innovation leaders. Follow Chakib on LinkedIn and Twitter