Digital and society: Key questions for business leaders and policymakers
To move the dial on digital and society, concerted action is needed from business leaders, policymakers and regulators.
One of the central aims of the World Economic Forum’s multi-year Digital Transformation of Industries (DTI) initiative is to develop an evidence-based approach to understanding the impact of digitalization on society. To that end, we have conducted a detailed quantitative analysis of the value at stake from digital transformation for four industries (automotive, consumer, electricity and logistics).
In each case, we have calculated projections of the potential value of digitalization to the industry itself and emerging sources of value for society, as measured by an intentionally narrow set of indicators. As the DTI program moves forward, this analysis will be refined and improved – and we welcome feedback to help build on these early findings.
Our analysis shows that the digital transformation of industries can make a positive contribution over the next decade:
- Just four industries (automotive, consumer, electricity and logistics) have the potential to create $8.4 trillion in value for industry and $12.7 trillion in value for society between 2016 and 2025.
- Scaled up beyond these four industries, the size of the prize could be as much as $100 trillion in ‘combined value’ for both industry and society by 2025.
- As an example of combined value in the electricity industry, optimizing the grid to manage real-time supply and demand, worth $191 billion for industry, offers more than three times the benefit to society, with $623 billion potential value from cost savings to the customer and fuel emissions avoided. Industry is benefitted through less waste and higher margins and is benefitted through lower utility bills and transition to a low-carbon electricity system.
The digital transformation of industries can also help contribute positively to a number of areas that are of concern to policymakers. For example
- Employment: The digital transformation of just two industries (logistics and electricity) could create a total of up to 5.7 million jobs worldwide between 2016 and 2025. Crucially, the overall impact of digital transformation across the industries we analyzed was a net gain of 2.1 million by 2025.
- Emissions reduction: Digital initiatives in the electricity, logistics and automotive industries could realize an estimated 26 billion metric tons of net avoided CO2 emissions, helping facilitate the transition to a more sustainable economy.
- Health and well-being: If usage-based insurance/telematics solutions were to become mandatory in cars, approximately 1.1 million lives could be saved between 2016 and 2025.
- Productivity: Digital initiatives in the consumer industries are likely to reduce costs paid by consumers and improve productivity. Our analysis estimates up to $3.1 trillion in productivity gains could be added to the global economy by 2025. This amounts to 338 billion hours; equivalent to 20 minutes of time saved per day for all US citizens over that time frame.
However, realizing this combined value for both industry and society requires concerted action by business leaders and policymakers alike. The following key questions can help point the route to success for digital and societal transformation:
Societal implications is one of four cross-industry themes (along with digital consumption, digital enterprise, and platform governance) that have been the focus of the World Economic Forum’s Digital Transformation of Industries (DTI) 2016 project. An overview of the DTI program can be found here.
Our in-depth analysis of the societal implications cross-industry theme is available in a white paper, which can be downloaded here.
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