Why businesses need to be focusing on sustainable transformation, not digital transformation By Junta Nakai, Global Industry Leader, Financial Services and Sustainability at Databricks
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any restrictions in the UK have been lifted and everything has now almost completely opened up. While companies are still waiting for a full return to the office and are currently battling with implementing hybrid working contingency plans, this new phase also offers an opportunity to reflect on general business practices and other lessons learned in the pandemic. After more than a decade of businesses grappling (and in many cases failing) with digitalisation projects, it is Covid-19 that has accelerated the call for digital transformation. But at the time when digital transformation seems to have finally become a reality for more organisations, it is in fact also becoming outdated. As companies look to rebuild and grow in the wake of the pandemic, they need to be looking at the next wave of transformation – sustainable transformation.
that are essential for digital transformation, such as the cloud, big data and artificial intelligence (AI), are also the foundations for building up sustainable transformation. The key differences boil down to a re-alignment and adjustment in thinking, approach and priorities. The other most critical difference is that sustainable transformation needs to happen much faster. Companies don’t have the luxury of a decade to turn this around. Investors, consumers and regulators demand it today. Digital transformation boiled down to the need for efficiency, agility and ultimately, retiring those legacy IT systems. This is essentially about profit maximisation – in the short term. Sustainable transformation builds on top of this need for efficiency and agility but also expands out to changing operational requirements, restructuring the organisation and strategic planning. Sustainable transformation leverages the digital and tech infrastructure from digital transformation but then requires layering on those different priorities and mindsets.
Building on the digital foundations
Thinking about the wider picture
Firstly, before outlining what sustainable transformation is and how to make this shift, it’s important to highlight that this does not mean digital transformation is wholly obsolete – in fact, digital transformation is the necessary precursor to sustainable transformation. The same elements
With digital transformation focusing on profit maximisation, shareholders are satisfied. Sustainable transformation on the other hand looks at maximising benefits for all stakeholders – from shareholders to customers, employees and importantly, the environment. This notion is otherwise
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known as ‘stakeholder capitalism’. The goal is not quick wins but sustainable profits and in fact, formulating business models and making informed business decisions to avoid actions that may in fact later damage the business. A mining company is a good example to illustrate this. To maximise profits, a mining company could solely dig in the most efficient manner but this would mean that all minerals would quickly be extracted. When the last of the materials is extracted there would be no more source of profits and shareholders would lose out. This is before you even begin to consider the impact on the environment, the land for local inhabitants and indeed, the wealthfare of employees working on the mines. For the case of a mining company, a more sustainable approach would consider other
