How to leverage sustainability to make your business more innovative
Systems Thinking and a Leap in Digital Innovation
In a podcast by expert commentators, we recently heard this statement: “Carbon accounting apart from money will be every company’s biggest concern”. And the news brought us reports on draft European legislation that will expand ESG reporting duties.
But you probably don’t need these reminders to see the writing on the wall: The future belongs to businesses that act sustainably.
In a 2022 CEO study, IBM focused specifically on the topic of sustainability. The number of managers who now make sustainability a top priority has soared by 37% over the previous year. Analyst Sheri R. Hinish believes this is owed in part to growing consumer pressure. People experience uncertainty on so many levels that they call for greater commitment. “Walk your talk”, it’s called. Businesses are being asked to account for their actions.
What is needed are strategies for sustainable management. There is a lot to be said for the fact that decision-makers who go beyond the usual field of competence and embrace new insights and leadership concepts are better able to achieve this transformation.
A METHODOLOGY THAT WILL CHANGE YOUR WORLD
A recurring buzzword that consultants like to use in this context is systems thinking.
Systems thinking is about taking a holistic view of phenomena. Among other things, this means that a system must be seen not just as the sum of its parts, but rather take into consideration the fact that the interdependencies of its various components affect the functioning and behavior of the system. Managers must also understand that their own specifics determine their perspective and thus limit their level of understanding. The goal of systems thinking is to gain the best possible understanding of the mechanisms at play and to thereby optimize the effectiveness of your actions.
If this sounds a bit like ivory tower to you, you’re not far off the mark – under various names, this approach is indeed a long-practiced cultural technique.
But it is nevertheless highly topical to the modern business world, and in fact considered a core competency in addressing the market challenges of the next decade. The reason: „In the context of highly complex problems such as tackling climate change, there is a need for holistic, systemic tools that can create exponential positive change.” (Capgemini).
We can find a practical manifestation of this methodology in systems engineering, used e.g. by auto makers to cope with the very high number of logically and structurally interwoven requirements on their vehicles. (PLM Green Alliance).
BETTER DECISIONS FOR BUSINESS, ENVIRONMENT AND SOCIETY
What systems thinking offers you personally as a decision-maker is a competency that distinguishes you within your peer group (McKinsey): “Few of today’s leaders built their careers on industry collaboration, alliances, or cross-sector partnerships. Yet it is precisely this systems-thinking mindset that will spur lasting impact as we work toward net-zero emissions.”
The methodology gives you a foundation for better decision-making for your business and its supraordinate systems – the environment, society as a whole.
You confine linear thinking to challenges where it is expedient, and you approach areas where you need entirely new solutions by way of incremental insight. This may well take more time, but it yields results appropriate to the situation or problem.
Little by little, this will help prevent you from reacting to disruptions with instruments that no longer suit our new era – a new era that is indeed the cause of the disruptions. An example: Expanding warehouse capacity to store the same materials from the same sources as before the shortage: „This is a classic retreat to the norm — and a missed opportunity. Rather than embracing complexity, re-engineering supply chains and building long-term sustainability into their business, they just reiterated a little from just-in-time supply chains. They built a buffer.“
A business that changes in a more progressive way have better chances of becoming an innovation driver – another quality that is often cited as a prerequisite to future success on the market.
DIGITALIZATION AND SUSTAINABILITY GO HAND IN HAND
Now, the question is: How can you realize this new way of thinking, these innovations, these new solutions and services? How can you comply with your reporting duties and your obligations under the ESG guidelines?
Your business needs a digital ecosystem that connects everyone from your top management to your maintenance staff and integrates all phases from product concept through to aftersales. Also, your ecosystem must act as a tool enabling efficient collaboration with external partners and institutions.
This applies irrespective of your industry segment or your business model. “Without the capabilities and information that come with digital transformations, real sustainability can never really happen. And there go your green goals, ESG accounting, and investor and consumer satisfaction.”, were SAP’s recent words of caution in the management publication SAP Insights.
Dassault Systèmes and Accenture offer a clear image of these opportunities, projecting the positive effects that can be achieved by leveraging the digital twin technology.
In this view, by 2030 digital twin technology could account for global economic benefits of 1.3 billion US$ and a reduction of CO2 emissions by up to 7.5 gigatons.
In that sense, you already hold the key to saving the world and making your business succeed: It lies in driving your digitalization forward.
We are here to support you in that effort. With our own software solutions and products by our strategic partners, Dassault Systèmes, SAP and IBM.
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