The fight against social injustice, so prominent in the last year, might seem completely unrelated to the global move toward digital transformation. But what if the two were intricately entwined? What if, in fact, both shifts even depended upon one another? I believe that in fact they do.
Digitizing and thus improving the pillars of what we can all agree would make a better society – healthcare, banking, insurance, education, and government – is a key way to reconcile what might otherwise seem to be the contradictions between stakeholder capitalism and shareholder capitalism. If we are going to build a better society, the path there lies through more intelligent, sensitive, and technically-sophisticated digital transformation of businesses and other institutions.
Allow me to explain.
Improving the experience of customers is the central purpose of the new digital technology “stack.” It rests on a foundation built with cloud infrastructure, and relies on instrumentation, data, and intelligence. It digests and analyzes how customers interact with a company in order to make future interactions more satisfying.
The foundation of any digital business is data–flowing from how a product or service is used and what its effects are. A data-based business steadily improves its understanding of how a person or an organization is consuming its products or services. So over time, that company can figure out how to improve outcomes for them. User-centric design will help companies create digital experiences that are beautiful, engaging, enticing, and most important of all, useful. These customer experiences can help fuel societal change. The more the designers of digital systems can discern what is actually useful to customers and citizens, the better their experience will be, not only as customers but also as citizens.
Let’s take education as an example. Universities often lose students between their freshman and sophomore years. Students stuck in the wrong major or classes often decide that college just isn’t for them. But what if the schools tracked data—how students manage their homework, how they performed on their exams, even how their brain works? This would provide a “pixelated” view of someone’s mind and help match their interests to the right courses and major. And in the end, students would become more likely to develop authentic confidence, thus helping keep them in school and ultimately changing the trajectory of their lives. Both the students and society would benefit economically and in innumerable other ways from the many sorts of gains that would come from keeping such students engaged.
Healthcare provides another clear illustration. Right now, we live in more of a sick care system. By the time someone shows up at the hospital needing care, it’s often too late. A patient’s condition may be far worse more than it would have been if healthcare professionals had intervened earlier. But if healthcare firms invested in capturing and assessing individualized data, we could migrate toward a true wellness-based system that would have massive impact for society—as well as for the bottom line for these organizations. The more companies in the healthcare ecosystem who take such a patient- and data-centric approach, the better it would be for people and society. For example, health insurance companies, sometimes called the “payers”, can play a fundamental role, and potentially reshape how they are perceived. They can capture a lot of data about each of us and help us manage our health so we can deal with disease or injuries before they become debilitating, or even prevent them in the first place. Up until now, they have processed health care claims and hoped we get better. Too often they seem to make it harder to get the services people need. But in fact their commercial interest is for us to stay healthy, which would of course be better for society.
There’s a real responsibility that comes when an organization can change outcomes based on data. It means paying attention to consequences of corporate actions that may have escaped notice in the past. But with digital recordkeeping and analysis, that becomes increasingly possible.
There are other advantages to operating a business on the modern technology stack. For example, as companies seek to become more environmentally responsible, many will discover that one of their biggest uses of energy is operating all their computers and servers. Sending much of that functionality to a cloud belonging to Amazon Web Services or Microsoft or Google enables a company to turn that burden over. Cloud companies will likely be more capable of managing their own servers sustainably, with greater economies of scale and data centers strategically located near hydropower or even cooled by being close to the Arctic. And if we are going to build a green societal future, there is no question that monitoring and managing energy use using digital tools will be central.
None of this is easy. Many companies have yet to make the tough choices about being stakeholder-centric, socially-responsible digital companies capable of delivering a true societal shift.
We are early in this process. What might be called “data-centric empiricism” will allow businesses to keep score, not just on how the business is doing, but equally importantly, on the impact its performance has on its stakeholders, including the community. Data is increasingly going to give companies a window into how it is balancing stakeholder and shareholder capitalism. No longer can a company thrive by keeping only shareholders satisfied.
When we look back in a few years, the two hallmarks of business in this era will be that digitization exploded at the same time a focus on environmental, social and governance (ESG) issues took off. They’re inextricably linked. The time is probably not far off when companies will be required to regularly report their performance on ESG issues alongside their financial report.
What will drive this change is pressure both from the top and the bottom. Societal responsibility is increasingly what employees and customers want and expect, even as a growing number of CEOs and their teams feel the same way and will themselves drive it. It means not just embracing digital transformation, but asking “How can we use our firm and our platform as a force for good?” Today’s truly modern, successful companies must bring the head and the heart together. The power of the data-driven digital technology stack makes it possible to deliver compelling customer experiences and great business results that simultaneously serve society.
