Introducing the Digital Transformation Initiative
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In a world where game-changing innovation has become the norm, the Digital Transformation Initiative (DTI) provides a unique insight into the impact of new technology on business and society over the next decade.
The past 12 months brought such an array of exciting new ideas to market that it is now almost ‘normal’ to expect game-changing innovations to come off the product line every week.
The first commercial self-driving car hit the road, courtesy of Tesla; so did Uber’s driverless taxis. Just recently, Amazon completed its inaugural Prime Air drone delivery to a customer in the United Kingdom. Facebook (FAIR) and Google (TensorFlow) created open-source repositories to accelerate machine learning research, while radiologists used deep learning to improve early identification of Parkinson’s disease in medical scans. The next major wave of innovation is now pegged on virtual reality (VR) and augmented reality (AR), where Microsoft’s HoloLens is already breaking new ground.
The base technologies that have made all of this possible (e.g. mobile, cloud, sensors, analytics and the Internet of Things) also unleash combinatorial effects that accelerate progress exponentially. This is the context in which digital innovation is now disrupting business and operating models, and making some profound impacts on society.
The Digital Transformation Initiative
To maximize the opportunities surrounding digital innovation, the World Economic Forum launched the Digital Transformation Initiative in 2015. A collaborative project with Accenture, the initiative has already assessed the impact of digitalization on 13 industries and across five cross-industry topics. This work has brought us into direct contact with more than 300 executives, policy-makers and experts, who have helped uncover some key themes for ensuring the value of digitalization is captured by both business and society.
Over the past two years, the initiative has developed a value-at-stake framework to provide an evidence base and a common language for public-private collaboration focused on ensuring that the benefits of digital transformation are fairly and widely shared. At the heart of this framework is a new concept, digital value to society, which provides a helpful metric for measuring, optimizing and communicating the societal impact of digital investments.
To date, this work has confirmed that digitalization has immense potential: we estimate it could deliver around $100 trillion in value to business and society over the next decade. There are barriers to its realization – e.g. unfit regulatory frameworks, infrastructure gaps, a lack of public trust in new technologies – but, if stakeholders are incentivized correctly, the majority of that value should accrue to society.
The value of digitalization across the industries analysed by the Digital Transformation Initiative.
Over the past two years, our research has generated some important findings about the pace, scale and impact of digital transformation:
- Customers have developed an insatiable demand for speed, convenience and on-demand access. Sharing economy and outcome-based business models have an important role to play in meeting the expectations of ‘digital’ customers.
- Business models that have been successful for decades are being disrupted by digital innovation. New business models only accounted for a 1-5 % share of total revenues in 2015, but are expected to be responsible for 30% of total revenues by 2020. Few incumbents are being bankrupted by digital disruption but established companies may need to rethink every aspect of their business and operating models to thrive in the digital age.
- The societal benefits of digitalization (e.g. lives saved through lower accident rates; reduced CO2 emissions; and improved health outcomes) are not guaranteed. Where digitalization is expected to create far more value for society than business, a lack of appropriate incentive structures means that the potential windfall for society from digitalization could become ‘trapped’ value. In these instances, businesses, regulators and policy-makers will need to collaborate to maximize value for business and wider society.
The Digital Transformation Initiative in 2017
The DTI’s aim now is to move beyond the research and further develop a multistakeholder dialogue that broadens understanding of digitalization’s implications and helps realize its benefits.
To this end, in 2017 we intend to maximize the initiative’s impact by focusing on three areas: widening the scope of our analysis; strengthening the value-at-stake framework; and identifying and sharing best practices. Central to these efforts will be an open-source, digitally enabled platform to help stakeholders run their own value-at-stake assessments.
Success in these areas will bring us further along the path towards achieving the DTI’s ultimate objective: helping the global community deliver a digital revolution that unlocks new levels of prosperity for all in society.