Digital Purpose: The road to a healthier business

High levels of tech adoption once set companies apart. But no more. At least not on their own.

Our recent Digital Radar research evaluated how well technology meets its primary goal for a business. This might mean increasing revenue, innovation, or fostering more customer engagement.

We discovered two things. At a certain point there are diminishing returns from adopting more technology. But those companies that focus on how their actions impact stakeholders, including society and the planet, tend to receive more from their technology.

It’s no surprise that focusing on environmental, social, and governance (ESG) strategies results in better outcomes for business. And there are many ways that companies have made a positive impact. Fashion brands like Patagonia and Icicle have built up a following of loyal customers more interested in mission than price point. Patagonia, a benefit corporation, is active in politics and environmental issues. Walmart’s bid to remove harmful chemicals from its products has had an ESG snowball effect on the retail industry. In 2019, Walmart, Apple, and Target earned ‘A’ ratings on their chemical policies, with the non-profit Safer Chemicals, Healthy Families citing their contribution to chemical safety in the U.S. And a new Goldman Sachs policy says that every company the firm takes public with an IPO must have at least two board members that are either a woman or a person of colour. The effect on the bottom line? Since 2016, the median return rate for firms with all-male boards was 2%; firms with at least one woman on the board had a median return rate of 19%.

Our research found that there is also a positive link between technology performance and ESG. Firms with high ESG and technology adoption have an effectiveness score of 73%, whereas those with just high levels of adoption score 23%. While we can’t prove causation, it’s clear that businesses that focus on ESG also tend to get more out of their technology.

We believe this is because the culture, methods, and skills required to do ESG well match up to those that deliver effective technology implementations. In a nutshell, that means putting humans at the centre of your plans. For example, in our Agile Radar research released last year, we found that upskilling and the use of advanced collaboration platforms can increase business growth potential by as much as 63%. The high performers in that study also inculcated ways of working with humans front and centre and were faster and more innovative as a result. CVS Health is one such example. The American behemoth focuses its technology adoption on sustainability, equity, and customer experience. Company shares advanced more than 30% in 2021 alone.

The four pillars of new-age digital purpose

To benefit from this link, firms should weave purpose into everything they do, through the following four steps.

1. Integrate experience into the operating model

Human experience is the new driver of value creation. To get ahead, firms can adopt computational design to quantify these experiences, with a combination of qualitative thick data and quantitative big data. Only then can firms meet the diverse needs of all stakeholders.

2. Elevate the human element across the lifecycle

“Good” products like safe chemical detergents and sentient, inclusive AI systems have one thing in common. They focus on the human element throughout project delivery. Humans are central to design, development, modernisation, and ultimately, value creation. Good products are built with ethics in mind, with careful thought given to human fears and anxieties.

3. Build diverse, dedicated teams so that tech solutions meet the needs of all

Purpose-driven culture is created through intellectually diverse teams that have a shared, dedicated purpose. This ensures that solutions are designed through different lenses, which makes them effective in meeting the needs of all people.

4. Measure initiatives using ESG targets

Better digital purpose is impossible without a way to measure it. Thankfully, experience and ESG have become more metrics driven. Science-based targets have evolved to formally measure environmental attributes like emissions and ethical governance. This scientific approach is also converting the qualitative world of social responsibility and diversity into results-oriented, actionable programmes linked to operational and financial goals. To set high environmental impact goals, companies can work with the Science-Based Targets initiative (SBTi), a non-profit that ensures companies are consistent with meeting the Paris Agreement’s goals of limiting warming to 1.5 degrees Celsius.

More leaders are concluding that purpose and profit mutually reinforce value creation. To get the best out of their technology, they should also start putting the environment, society, and the planet at the front and centre of their business. The cultural change this instils will make them more productive and innovative and will inspire a new generation to follow suit.