Digital Transformation Initiative - In collaboration with Accenture Unlocking $100 Trillion for Business and Society from Digital Transformation ...
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Digital Transformation Initiative In collaboration with Accenture Unlocking $100 Trillion for Business and Society from Digital Transformation EXECUTIVE SUMMARY MAY 2018
FOREWORD
The world is being transformed by new technologies, which are redefining customer expectations, enabling businesses to meet these new expectations, and changing
the way people live and work. Digital transformation, as this is commonly called, has immense potential to change consumer lives, create value for business and unlock
broader societal benefits.
The World Economic Forum launched the Digital Transformation Initiative in 2015, in collaboration with Accenture, to serve as the focal point for new opportunities and
themes arising from the latest developments in the digitalization of business and society. It supports the Forum’s broader activity around the theme of the Fourth
Industrial Revolution. Since its inception, the Initiative has analysed the impact of digital transformation across 13 industries and five cross-industry topics, to identify the
key themes that enable the value generated by digitalization to be captured for business and wider society. Drawing on these themes, we have developed a series of
imperatives for business and policy leaders that look to maximize the benefits of digitalization. We have engaged with more than 300 executives (both from leading
global firms and newer technology disruptors), government and policy leaders, and academics.
Every industry has its nuances and contextual differences, but they all share certain inhibitors to change. These include the innovator’s dilemma (the fear of
cannibalizing existing revenue models), low technology adoption rates across organizations, conservative organizational cultures, and regulatory issues. Business and
government leaders should continue to work towards addressing these challenges.
A notable outcome of this work is the development of our distinctive economic framework, which quantifies the impact of digitalization on industry and society. It can be
applied consistently at all levels of business and government to help unlock the estimated $100 trillion of value that digitalization could create over the next decade. We
have already started to leverage this framework for region-specific discussions with some governments.
We are confident that the findings from the Initiative will contribute to improving the state of the world through digital transformation, both for business and wider society.
Cheryl Martin Jim Hageman Snabe Pierre Nanterme
Head of Industries, Chairman Chairman and Chief Executive
Member of the Managing Board World Economic Forum, USA Officer
World Economic Forum Accenture
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 2
GRATITUDE GOES TO OUR CEO CHAMPIONS
FOR THEIR SUPPORT
Jonas Prising Jean-Yves Charlier Arne Sorenson T.V. Narendran Bob Dudley
CEO CEO CEO CEO CEO
ManpowerGroup VimpelCom Marriott International Tata Steel BP
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 3
CONTENTS1
1 Introduction to the Digital
Transformation Initiative 2 Cross-Industry
Themes 3 In-Depth Industry
Reviews: Key Insights
4 Opportunities to Improve
the State of the World 5 Acknowledgements
1Includes updates made for the analysis conducted as part of DTI 2017-18. These updates include additional slides (slides 10-13) and updates to slides 8 and 29 4
1. INTRODUCTION TO THE
DIGITAL TRANSFORMATION INITIATIVE (DTI)
In a world where game- The past 12 months have brought a series of exciting technological
breakthroughs. Self-driving Tesla cars can now be seen on the road;
changing innovation Uber is testing autonomous taxis in Pittsburgh; Google DeepMind’s
has become the norm, Alpha Go demonstrated a leap forward in artificial intelligence with a
famous victory at the board game Go; and augmented reality hit the
the DTI provides a mainstream with the success of Pokémon Go. Game-changing
unique insight into the innovation has become the norm.
impact of technology on Digital innovation is reshaping industries by disrupting existing
business and society business and operating models. But it is also having a profound impact
over the next decade. on society, presenting a series of opportunities and challenges for
businesses and policy-makers.
This executive summary introduces the approach taken to unlocking
the value of digitalization. Over the past two years, the DTI has
developed a unique value-at-stake framework to support a consistent
way of measuring technology's impact on business and wider society.
This is covered in the section on Unlocking Digital Value to Society: A
New Framework for Growth. Bruce Weinelt
Head of Digital Transformation,
The goal is for this framework to provide a base of evidence and a World Economic Forum
common language for public-private collaboration focused on ensuring
that the benefits of digital transformation are fairly and widely shared.
Mark Knickrehm
Group Chief Executive,
Accenture Strategy
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 5
THE COMBINATORIAL EFFECTS OF
TECHNOLOGY ARE ACCELERATING CHANGE
The falling cost of Cheaper and better technology is creating a more connected world: 8
billion devices are now connected to the internet; by 2030, that number IoT and
advanced technologies is forecast to grow to 1 trillion.
smart machine
is a defining As the cost of advanced technologies continues to fall, new Big Data, analytics,
visualization
characteristic of the applications will be opened for them, as well as opportunities to
combine them in innovative ways. This unleashes "combinatorial"
digital revolution. It is Web 2.0, cloud, mobile
Cumulative capability
effects, where the capability of technologies working in tandem far
playing a major role in exceed their capabilities when deployed separately.
Web 1.0 eCommerce
accelerating innovation. Take, for example, continuous liquid interface production (CLIP): it can
produce isotropic parts with mechanical properties and surface finish
Client-server
similar to injection-moulded plastics. Carbon, a Technology Pioneer of and PCs
the World Economic Forum, is using CLIP, the cloud and analytics in a
Artificial
platform-based business model to significantly advance what used to Mainframe
intelligence
be a prototype technology into high-quality, scalable and low-cost
manufacturing.
The combinatorial effects of base technologies, such as mobile, cloud, 1950 1960 1970 1980 1990 2000 2010 2020 Time
sensors, analytics and the Internet of Things (IoT), are accelerating
progress exponentially. Technology is the multiplier. Source: World Economic Forum/Accenture analysis
Examples of the falling cost of key technologies
Drones Cost per unit DNA Sequencing Cost per unit Solar Cost per kWh*
2000 $2.7 billion
2007 $100,000 1984 $30
2007 $10 million
2013 $700 2014 $1,000
2014 $0.16
* kilowatt hour To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 6
SEVEN TECHNOLOGIES ARE TRANSFORMING THE
INDUSTRIES COVERED BY DTI RESEARCH
DTI research to date
has identified seven key
technologies that are
expected to have the
most impact among the
industries analysed.
Note: This list is not Artificial intelligence Autonomous Big data analytics Custom manufacturing
comprehensive and does not vehicles and cloud and 3D printing
include all the emerging
technologies (e.g. blockchain)
that were identified in only one
or two use cases across DTI
industries to date.
Internet of Things (IoT) Robots and drones Social media
and connected devices and platforms
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 7
NAVIGATING THE EXECUTIVE SUMMARY
The sections that follow Over the past two years, DTI research has focused on understanding
the impact of digital transformation in 13 industries and drawing
offer a summary of the insights from the cross-industry themes that came out of that analysis.
research into the impact
In section two of this summary, six cross-industry themes are
of digitalization on introduced. Maximizing Return on Digital describes the relationship
industry and wider between investments in digital innovation and productivity. Digital
Consumption explains how the rapidly changing expectations of
society. digital customers are forcing enterprises to reinvent themselves.
Digital Enterprise looks at how companies can respond by
rethinking every aspect of their businesses. Platform Economy
focuses on the immense impact of one type of digitally enabled
business model – business-to-business (B2B) platforms. The
adoption of new digital business and operating models is having a
profound impact on society, a theme analysed in Societal
Implications. A quantitative analysis of the impact of digitalization on
business and wider society is then introduced in the final cross-
industry theme, Unlocking Digital Value to Society.
In section three, in-depth industry reviews are presented. Thirteen
industries were analysed: Aviation, Travel and Tourism; Chemistry
and Advanced Materials; Mining and Metals; Oil and Gas;
Professional Services; Retail; Telecommunications; Automotive;
Consumer; Electricity; Healthcare; Logistics; and Media.
Finally, drawing on these cross-industry themes and industry reviews,
section four proposes a set of Opportunities to Improve the State
of the World.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 8
2. Cross-Industry Themes
MAXIMIZING RETURN ON DIGITAL:
DRIVERS OF DIGITAL INVESTMENTS
Companies are New efficiencies Customer Experience New business
investing in new and Outcomes models
technologies to create New efficiencies are still the Enhanced customer Investing in new business
new efficiencies, primary driver for large experiences are driven in models is the most difficult
enhance customer companies to invest in new various forms, depending on and least frequently targeted
experiences and build technologies. They use these how new technologies are driver, particularly for large
new business models technologies to improve existing utilized. Customized offerings companies. Moving to new
business processes and create ‘moments of truth’ and business models requires a
optimize assets and resources, support decision journeys, while cultural change that makes
thereby reducing their costs and integrated customer information innovation the focus of
enabling savings for their across platforms can increase business strategy. Concerns
customers. transaction speed. on cannibalization of existing
business need to be
addressed by concentrating
on overall consumer demand.
Click to Selected
download case
studies:
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 10MAXIMIZING RETURN ON DIGITAL:
NEW TECHNOLOGY INVESTMENT TREND
Companies are New Technology Spend – Key Findings Corporate Spending on New Technologies (2016-2020)1
% share by technology category
investing in new • IDC estimates corporate spending on new
technologies to technologies to grow by 13% CAGR to 13% CAGR
accelerate growth and $2.4 trillion between 2016 and 2020
productivity. Total 2,426
• Investments are supported by the reduced 2.500
investment spend is cost of technologies such as 3D printing 16%
Corporate spending ($ billion)
expected to increase to and Robotics 2.000 6%
$2.4 trillion by 2020, led
• While Mobile/Social remains one of the key 10%
by IoT 1,503
technologies, it is expected to lose share of 1.500
11%
overall spend from 35% to 25%, potentially 5% 25%
9%
to new technologies such as
1.000
augmented/virtual reality and cybersecurity 35%
• The growth will be led by investments in 42%
500
IoT, which is estimated to contribute 42% 41%
of the total new technology spend (~$1.0
trillion) by 2020 0
2016 2020
IoT Mobile/Social Cognitive Technologies Robotics Other
Notes
1Based on new technology spending estimates from IDC, excluding cross-industry spend ($80 billion in 2016 and $166 billion in 2020). Cognitive Technologies include AI and
Big Data Analytics)
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 11MAXIMIZING RETURN ON DIGITAL:
RETURN ON DIGITAL INVESTMENTS
Return on investment in Return on Investment by Technology (2015-2016)1,2,3
Impact of a $1 new technology investment on revenue per employee and labour productivity at the average company. E.g. $1 invested in
new technologies is combined new technologies has yielded $2.2 – or a 120% increase in revenue per employee.
positive overall, with 3x
productivity increase 2,5
realized when 2,2
Revenue, EBITDA ($ per employee)
technologies are 2,0 1,9
deployed in combination 1,8
1,5
1,5 1,3 1,4
To understand the 1,2 1,2
1,1 1,1
application and
1,0
integration of multiple
technologies to
0,5
maximize returns,
companies need a clear
strategic objective and 0,0
Robotics Mobile/Social IoT Cognitive Combined
long-term approach to Technologies Investments
new technology
investments Revenue per employee Labour productivity (EBITDA per employee)
Notes
1) Econometric analysis based on 16,000+ companies across 14 industries with data sourced from IDC, Ovum and Capital IQ
2) Combined Investments shows the impact of investment in all four technologies combined (i.e. total amount invested in four technologies analysed)
3) Cognitive Technologies include Artificial Intelligence (AI) and Big Data Analytics
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 12MAXIMIZING RETURN ON DIGITAL:
KEY ENABLERS AND EXECUTION PRINCIPLES
Based on research and Key enablers
discussions with 2. Forward-looking skills agenda 3. Ecosystem thinking
industry leaders, there Infusing a digital mindset in the Collaborating within the value chain
workforce by making innovation the (e.g. with suppliers, distributors,
are five key enablers focus of training and hiring customers) and outside (e.g. start-
and four underlying programs ups, academia)
execution principles for
maximizing returns on 1. Agile and digital-savvy
digital leadership
Strategic vision, purpose, skills,
intent and alignment across
management levels ensure a
nimble decision-making process
4. Data access and management on innovation 5. Technology infrastructure
Strong data infrastructure and readiness
warehouse capability combined Building required technology
with the right analytics and infrastructure to ensure strong
communication tools to drive capabilities on cloud,
competitiveness cybersecurity and interoperability
Establish clear ownership Invest in use cases, Fail fast, fail Follow an outcome-
of digital investments not technologies cheap based approach
Execution principles
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 13DIGITAL CONSUMPTION: THREE BATTLEGROUNDS
FOR THE DIGITAL CUSTOMER
Enterprises need to Products and services Hyper- Ownership
constantly reinvent their to experiences personalization to access
offerings to keep up Offering products and services Customers expect and value Enabled by digital platforms,
with the rapidly evolving is no longer enough: successful increasingly personalized customers are substituting
expectations of digital companies will be the ones interactions at all points of their ownership of goods with
customers. focused on delivering the most journey, and digital technology access-based models. The
compelling experiences. In fact, is enabling companies to deliver global market for shared
56% of business leaders believe personalization economically at goods and services across
that customer experience is their scale. The challenge five key sectors is expected to
top digital transformation priority. companies face, however, is to grow to $335 billion by 2025.
understand how much Companies should evaluate
personalization customers opportunities to cater to
want, as 90% of consumers say customer preferences for
they would limit access to access-based models, before
certain types of personal data. competitors or start-ups
sweep in.
Click to Selected
download case
(Magic Bands)
studies:
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 14DIGITAL CONSUMPTION:
PRODUCTS AND SERVICES TO EXPERIENCES
Companies are recognizing that digital customers increasingly demand high-quality experiences and guaranteed outcomes,
rather than just products and services. This development is leading to new, outcome-based business models.
A Focus on Outcomes
Why outcomes matter
The low cost and easy availability of
connected sensors, coupled with
AUTOMOTIVE BANKING CONNECTED HOMES breakthroughs in data analytics, have
enabled outcome-based services to become
The connected car is enabling outcome- Self-checking, greater security, predictive Managing energy, shopping, security, a reality. In many instances, companies are
oriented experiences, such as personalized services to enhance wealth creation, and environment, entertainment, our diaries and using digital technologies to identify and
apps to help electric-car drivers minimize payment platforms are likely to be key budgeting are all becoming possible with
their electricity bills. emerging themes in personal finance. new advances in the connected home. target the outcomes that customers care
about, giving them powerful tools to improve
customer satisfaction and enhance customer
lives.
This trend becomes highly relevant in
EDUCATION HEALTHCARE RETAIL
today’s world where customers tend to adopt
Personalized, automated learning services Digital is expected to have a profound products and services that deliver real value
Personalized services and more interactive
will help deliver a tailored, individual impact on health and wellness, enabling a to them, but also use these experiences to
in-store digital experiences could help
approach based on unique needs, with the shift from population-based diagnostics and
companies provide a more integrated define their expectations across all other
ability to monitor how much a student has prescriptions to those centred on
approach to managing customer journeys.
learnt more effectively. individuals. industries.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 15DIGITAL CONSUMPTION:
HYPER-PERSONALIZATION
The hyper-personalization spectrum
Customers increasingly
Digitalization has enabled two main forms of hyper-personalization:
expected relevant,
GIVING CUSTOMERS CONTROL TO PROVIDING MORE RELEVANT
1 2
personalized
CUSTOMIZE THEIR PRODUCT / INTERACTIONS BY ANALYZING
interactions through EXPERIENCE CUSTOMER DATA
every engagement
channel. Advances in AI Create your own suit Personalized in-store
and other technologies shopping recommendations
are opening up new
Customized shoes Mobile app using machine
possibilities for hyper- learning to monitor mental-
EXAMPLES
personalization. health patients
100+ drink choices and
customization options Music tailored in real time to
mood and location
• Lower requirement for access to customer • Requires (repeat) access to customer data
data • Usage data can be captured without direct
• Requires more direct engagement from the customer intervention
IMPLICATIONS
customer (opt-in) at point of sale • Analytical capabilities to tailor personalized
• Robust and agile supply chains to provide offers and services
convenience and choice
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 16DIGITAL CONSUMPTION:
OWNERSHIP TO ACCESS
The concept of ownership to access has emerged Which sectors are most likely to be disrupted by
across a wide set of markets access-based models (grouped by net asset value)?
Factors determining the extent of access-based business models include:
A preference for access rather than ownership is now mainstream, with
more than 110 million people in North America already participating in
Underutilized Shareability Regulatory
the collaborative economy. This shift towards access-based Net asset value
capacity quotient environment
consumption patterns holds important implications for businesses,
especially for traditional revenue models.
Accommodation
Ownership to access can also generate value for society. It does so by Automotive
creating an economic system of marketplaces and platforms that unlock
High
the value of underused assets and improve resource efficiency. Construction
Luxury Apparel
Medical Equipment
Cohealo, a US-based technology company,
Medium
allows hospitals to share equipment, reducing Energy
the need to buy assets and boosting utilization Sports Equipment
rates. Cohealo says that its service has saved
hospitals $1 million to $2 million each.
Personal Care Products
Low
Food and Beverage
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 17Aireen Omar
Chief Executive Officer,
AirAsia, Malaysia
“Do not reinvent the
wheel. Partner with
experts who have
a competitive edge –
a team effort across
industry is necessary.”
18DIGITAL ENTERPRISE: HOW TO SURVIVE
DISRUPTION AND THRIVE IN THE DIGITAL AGE
Disruption may not be bankrupting incumbents, but to succeed in the digital era, they will need to become
digital enterprises, rethinking every aspect of their business.
Digital business Digital operating Digital talent Digital metrics
models models and skills for success
Companies need to Digital leaders follow a lean To attract, retain and develop Traditional key performance
fundamentally change the way approach to both core and talent, enterprises will need to indicators are no longer
they identify, develop and launch support functions. With this in embrace cultural change, focus effective at measuring the
new business ventures. A recent mind, 90% of companies have on recruiting millennials and performance of a business in
study forecast that 30% of significantly adjusted operations adapt to new ways of working. the digital age. Leading
industry revenues will come from in the past two years. Companies need to prepare for enterprises track the metrics
new business models by 2020. greater automation, with 81% of that matter, and react to them in
managers believing that real time. Companies that
machines will make workers understand digital
more effective. transformation earn 26% more
profit than others.
Selected
case
studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 19DIGITAL ENTERPRISE:
DIGITAL BUSINESS MODELS
Traditional approaches Additional approaches
Companies can choose
from several options Build
Invest
Might be the best route:
when implementing a
• When the opportunity is related to the • Allows an established company to connect with
digital business model. company’s core business the right skills and capabilities
The following factors • If there is still time until the market's inflection • Avoids hindering entrepreneurial forces with a
point set-up focused on internal governance and
are likely to determine • If the company can hire the necessary talent reporting, which would undermine the start-
the path selected. up’s agility
Buy
Incubate/Accelerate
Usually most appropriate:
• When it is strategically imperative to “own” a • Allows for a close relationship to the funding
market company, enabling internal capabilities,
• If the market inflection point is close, and hiring infrastructure and resources to be deployed to
the right talent is not possible help the start-up
• If the new opportunity bears little relation to the • Benefits companies via increased deal flow in
company’s current business model business models and technologies
Partner
When there is no strategic need to own:
Click to • Learn more from a “digital native” about the
download market and the partner’s model
• Useful when deeper partnerships or future
White Paper acquisitions are required Source: World Economic Forum/Accenture Analysis
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 20DIGITAL ENTERPRISE:
DIGITAL OPERATING MODELS
Digital disruption is encouraging companies to re-examine their operating models. DTI research has identified five operating
models for the digital age.
ORGANIIZATION PROCESS PEOPLE CULTURE KPI
CUSTOMER-CENTRIC
Front-line Net present
Makes customer lives easier and Decentralized Front Office Client first
emphasizes front-office processes. empowerment value
EXTRA FRUGAL Supply and
Process
Thrives on a ’less is more’ culture and a Standardized manufacturing; Less is more Cost
standardized organizational structure. optimization
support functions
DATA-POWERED Centre of Supported by
Agile test and Return on
Builds intelligence around prowess in excellence / deep analytics Serendipity
analytics and software intelligence. learn investment
hub and spoke capabilities
SKYNET
Full-time
Uses machines intensively to increase Standardized Manufacturing Automation ‘Engineer’
productivity and flexibility in production. employee ratio
OPEN AND LIQUID Constant
Collaboration / Net present
Creates an ecosystem built around the Local dialogue with Sharing
‘sharing customer’. crowdsourcing value
outside world
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 21DIGITAL ENTERPRISE:
DIGITAL TALENT AND SKILLS
To stay relevant, companies should consider how their talent requirements need to evolve, to meet the skills and workforce
challenges created by rapid digitalization.
Attract, retain and Bring leadership Adapt to different
develop talent into the digital age ways of working
• Be a great place to work for • Leaders should hire • Create environments where The skills crunch
millennials. Formulate a multi- people with digital humans and robots can work
year engagement strategy. mindsets and a willingness together successfully.
Empower and incentivize the to change the status quo. Evaluate the value of
workforce through Accept failure, and move automation, establish the
development opportunities. away from the risk-averse
mindset. Finally, embrace
extent to which automation
will form the core of your 81%
say they are looking for a
• Create a workforce with digital flatter structures and move business, and invest in wider mix of skills when
skills. Whether it’s developing away from hierarchies. developing internal hiring
73%
training programs to obtain automation capabilities.
necessary skills or hiring • Foster a digital culture
digital natives, companies from the top through • Prepare for the rise of the of CEOs cite skills
need to be aware of where communication, journey on-demand workforce but shortages as a threat
to their businesses
talent is headed and how they management, visible ensure that there is enough
can help. changes, and continuous of a balance to maintain
change monitoring. corporate culture.
Source: PwC, People Strategy for the
Digital Age
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 22DIGITAL ENTERPRISE:
DIGITAL METRICS FOR SUCCESS
Many companies have discovered that traditional financial key performance indicators (KPIs) are no longer effective at
measuring the success of a business. Digital traction metrics provide invaluable insights that complement financial reporting.
Why is digital traction important?
DIGITAL TRACTION
Being able to measure digital traction – and
= find ways to boost it – is important for both
digital disruptors and established
businesses for two key reasons.
x x
1. In some scenarios, strong digital
SCALE ACTIVE USAGE ENGAGEMENT traction (e.g. a high NPS) means that
the cost of marketing falls to zero and,
• Unique visitors • Number of active users • Time on site
• Number of visitors • Monthly active users (MAU) • Net Promoter Score (NPS) in the case of a peer-to-peer business
• Number of registered users • Ratio of new users to repeat • Customer satisfaction index model, service costs could also
• MOM (month-on-month) growth users / customers • Downloads approach zero.
in registrations • Conversion rate • Cohort retention on metrics that
• Organic user acquisition • Abandon rates matter for that business 2. Strong digital traction can boost
• Bounce rate company valuations as digital
• Sources of traffic
• Customer concentration risk
enterprises have more scalable, highly
• Churn / exit rate engaged customers than traditional
• Posts contributed companies. In a down market, these
• Photos / videos uploaded and scale effects become more
shared, and views completed
• Number of likes and shares
pronounced in investor valuations.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 23PLATFORM ECONOMY: DIGITAL B2B PLATFORMS
ENABLE THE FOURTH INDUSTRIAL REVOLUTION
Driving transformed Helping ecosystems Creating a win-win
In a platform-driven business models expand for industry and
world, enterprises and society
policy-makers need to Interactions drive scale Digital B2B platforms are blurring Platform-driven interactions
collaborate on new through network effects in industry lines and reshaping are expected to enable
digital B2B platform business industries into complex, approximately two-thirds of
initiatives to unlock the
models. Emergent innovation interconnected systems. In a the $100 trillion value at
potential of B2B and outcome-based strategies survey of 2,000 business and stake from digitalization by
platforms to deliver across platform participants information technology 2025. In contrast to other
value for society. support these models. executives, 81% believe industry technologies, society is
boundaries will become expected to gain as much
dramatically less distinct. as industry through digital
B2B platforms.
Incumbents and disruptors are creating new platform business models across industries and geographies:
Click to
download
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 24NEW STRATEGIES AND OPERATIONAL CAPABILITIES
FOR SUCCESS IN THE PLATFORM ECONOMY
Platform strategies shape operational capabilities to deliver desired
outcomes within a platform ecosystem.
• The traditional pricing New digital • To unlock value, existing
approach will metrics Platform-
Effective organizational structures
collaboration driven
progress to outcome- Ecosystem innovation must adjust by adopting
based rewards governance
Platform a "platform mindset"
sharing across Reward sharing
talent
ecosystem Sponsorship
ACCELERATING • Enterprises will need to
participants New business ECOSYSTEM Organization
OPEN foster a "collaboration-
models ACTIVATION alignment
INNOVATION
STRATEGIES first" culture to
• Performance FOR A TALENT AND
cooperate both
BEYOND Data
monitoring will need Ecosystem
PLATFORM 3 4 capabilities internally (across
WORLD
to transition to role
Foundational different business units)
relevant new digital 2 5 platform
technologies
and externally (with
metrics (e.g. Value VISION DATA AND
other enterprises and
proposition AND TECHNICAL
interactions) from 1 6 Emerging
AMBITION ELEMENTS
technologies policy-makers)
traditional ones (e.g.
customer
conversions) Strategic ENTERPRISE CAPABILITIES Operational
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 25SOCIETAL IMPLICATIONS: THREE MAJOR
IMPACTS OF DIGITAL TRANSFORMATION
Digital transformation is Employment Sustainability Trust
generating a fierce debate
among policy-makers, Current estimates of global job It has not yet been possible to Social media, user-generated
economists and industry losses due to digitalization decouple economic growth from websites and other innovations
range widely, from 2 million to an increase in emissions and have been instrumental in
leaders about its societal
as high as 2 billion by 2030. use of resources. Current increasing transparency and
impact. This analysis suggests that business practices will overcoming information
digitalization can be a net job contribute to a global gap of 8 asymmetries. However, trust in
creator in some industries. But, billion metric tons between the all technology-based sectors
with both winners and losers supply of and demand for declined in 2015. Beyond
resulting from digital natural resources by 2030, privacy and security concerns,
transformation, a huge premium translating to $4.5 trillion of lost broader ethical questions about
rests on the near-term ability of economic growth. The analysis the way organizations use
businesses to upskill suggests that digitalization digital technology threaten to
employees and shape the next could make a positive erode trust in those institutions.
generation of talent. contribution to this challenge.
Click to
download
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 26INTRODUCING VALUE AT STAKE AND DIGITAL
VALUE TO SOCIETY (DVS)
Value at stake The components of value at stake and DVS
The DTI value-at-stake
The value-at-stake analysis assesses the impact of digital initiatives
framework and DVS on industries, customers, society and the environment over the next
metric developed here decade (2016 to 2025). Over the past two years, more than 130 Example metrics
digital initiatives covering innovations as diverse as driverless cars,
offer a distinctive predictive analytics, remote healthcare and drones have been • Lives saved DVS
Society and • Carbon emissions
approach to analysed.
Environment
understanding – and • Life expectancy
Notes on methodology: Value at stake integrates all segments of
unlocking – the value an industry's value chain, capturing about 80% of revenues and Consumer • Time savings
profits. It considers the total addressable market and Benefits • Cost saving on consumption
of digitalization for adoption/penetration rates over the next 10 years, and is based on
business and society. research, industry reports, existing use cases and interviews with • Net job creation
experts. Value-driver trees are used to assess key drivers against • Median income growth
areas of impact for industry and society.
Labour
• Income disparity
Digital value to society (DVS) • Value addition (from new
A new framework, digital value to society (DVS), was created by products / services)
aggregating the key performance indicators that relate to the impact Industry • Value migration (from
of digitalization on health and safety, employment, the environment
shifting profit pools)
and customers. The graphic on the right illustrates how DVS maps to
value at stake.
VALUE AT STAKE
Value at stake and DVS are intended to provide an evidence-based
framework to encourage collaboration between enterprises and
policy-makers, and to unlock the societal benefits of digitalization.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 27UNLOCKING DIGITAL VALUE TO SOCIETY: A NEW
FRAMEWORK FOR PUBLIC-PRIVATE COLLABORATION
ILLUSTRATIVE
This distinctive economic (tailored to each industry)
framework helps INDUSTRY
Value Drivers
business leaders, IMPACT
Revenues
regulators and policy- Value Migration and
Free Cash Flows/Operating Margins
makers to unlock the Value Addition Costs
estimated $100 trillion of Allocated Capital
value that digitalization VALUE IMPACT SOCIETAL
Value Drivers
OF DIGITAL IMPACT
could generate over the TRANSFORMATION
next decade. Society and Environment
CO 2 Emissions
Lives Saved/Security
Cost Savings
Consumer Benefits
Time Savings
Net Job Creation
Labour
Injuries/Accidents Avoided
• The economic framework developed aims to quantify the impact • It provides a consistent base of evidence and set of definitions for
of digital transformation on industry and broader society. digital concepts, supporting a global, multistakeholder dialogue
• The framework is new and will be iterated further over the next about digitalization and its implications.
Click to
year, but it can already be applied at all levels of government and • Proof of concept of the framework for 11 industries was achieved
download business, helping stakeholders to make the right decisions to and its application successfully piloted on a national/state level (in the
White Paper deliver the full potential of digital transformation. United Kingdom, Denmark, India, and the Indian state of Telangana).
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 28FOCUS ON DIGITAL DENMARK: UNLOCKING MORE
THAN $10 BILLION OF VALUE IN 2025
Engagement with the Value at stake from digital transformation initiatives in Denmark
Danish government is a ($bn in 2025)
successful example of
how a value-at-stake Digital Opportunity Areas Impact to Society (select “The World Economic Forum’s Value-at-
indicators) Stake model has provided a new
approach was used to framework to assess the value of digital
identify and prioritize transformation, for people, business and
2,7 2,0
digital opportunities and E-commerce Creation of 4,600 jobs in 2025 society. The analysis shows great benefits
perform deep-dives and from digitization and that the value added
$2.8 bn saved by consumers to business will be substantial but that it
value-at-stake analyses. Connected due to savings on fuel,
2,8 0,5 will be even greater for individuals and
Mobility Services parking, vehicle purchase,
crash cost and maintenance society as a whole. The new framework
The Danish government was carried out for The Danish Digital
released their national 0,3 2,9
$0.3 bn manufacturing cost
Growth Panel which in May 2017
Manufacturing reduction passed to
digital strategy in May consumers delivered 33 recommendations to the
2017 which included the Danish government on how to become at
opportunities identified 1,2 0,1 7,700 life years saved led by digital frontrunner.“
Healthcare
virtual healthcare
as part of this Martin Madsen
engagement Head of Division,
$0.7 bn savings from
Electricity: 0,7 decreased energy
Ministry of Business, Industry and
Smart Grid consumption and prices Financial Affairs
Value to Society Value to Business
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 293. In-Depth Industry Reviews: Key Insights
AVIATION, TRAVEL AND TOURISM:
DIGITAL THEMES AND INITIATIVES
The industry has been at the forefront of digital disruption in recent years, changing the way people travel. However, the
sector should brace itself for another wave of digital transformation.
Living Travel Enabling Travel Digital Enterprise Safety and Security
Experience Ecosystem
Travellers will experience Digital platforms enabling Innovations such as 3D As identity management
seamless journeys tailored ecosystem alliances will printing, artificial intelligence, transitions to digital, a
to their habits and continue to emerge, as IoT, virtual reality and digital collaborative effort to boost
preferences, and travel will asset- and information- platforms will transform cybersecurity and protect
blend seamlessly with other sharing become operations and the traveller data privacy will be
everyday activities. increasingly important from workforce. Key initiatives crucial to maintain customer
Important initiatives are a B2B perspective. Key include Smart Manufacturing, trust and public safety.
Travel Centricity, Seamless initiatives are Ecosystem Intelligent Assets and Next Major initiatives are Data
Customer Journey and End- Convergence, Battle for Generation Workforce. Dilemma, Modern Security
to-End Propositions Customer Mindshare and Environment and
Diffusion of Ownership. Ubiquitous Tourist Safety.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 31AVIATION, TRAVEL AND TOURISM:
UNLOCKING VALUE
The digitalization of AVIATION, TRAVEL AND TOURISM:
aviation, travel and Value at stake for industry and wider society, by digital theme (cumulative 2016-2025)
tourism could unlock
Potential Potential Total Value Emissions Net Impact
$1 trillion of value for Business Impact Societal Impact at Stake Reduction on Jobs
the industry and society ($ billion) ($ billion) ($ billion) (million tonnes CO2) (000s)
over the next decade. Living Travel
100 165 265 -- 270
Societal benefits include Experiences
cost and time savings Enabling Travel
105 380 485 107 (940)
for consumers and Ecosystem
reduced environmental
Digital Enterprise 190 20 210 143 (100)
footprints.
Safety and Security 10 140 150 -- (10)
Total 405 705 1,110 250 (780)
Unlocking Societal Value: End-to-End Propositions
End-to-end propositions are starting to overhaul traditional methods of booking elements of a journey separately. Fully integrated and
Click to personalized travel experiences can be booked more quickly and easily. It could even be possible to create a push model for booking
download travel, where travellers are sent a proposition, based on events in their calendar and past travel preferences, before even starting to
White Paper search for airfares or accommodation. All operational tasks would be handled in a smart machine-learning environment, with feedback
loops continuously improving the service.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 32CHEMISTRY AND ADVANCED MATERIALS:
DIGITAL THEMES AND INITIATIVES
Digitalize the Go Beyond the Collaborate in
The industry’s contributions Enterprise Molecule Ecosystems
allow other sectors to turn
innovations into sophisticated Advanced digital technologies, Digitalization presents the Accelerated innovation cycles
products that enable such as the Industrial Internet of industry with opportunities to will drive the industry to build
Things, automation, analytics and launch new digitally enabled flexible and interconnected
digitalization. Three themes
artificial intelligence, will take core offerings, create outcome- innovation ecosystems. Intense
are central to the sector’s own operational functions to the next oriented business models and collaboration and data sharing
efforts to capture the value level (e.g. research and improve customer interaction. along the value chain will help
of digital transformation. development [R&D], Major initiatives are Digitally to better address customer
manufacturing and supply chain), Enabled Offerings and requirements and manage
and will augment workforce Business Models, Advanced volatility. Key initiatives include
capabilities. Key initiatives are Customer Interaction, and Innovation Ecosystem and
Digital R&D, Digital Supply Accelerated Circular Economy. Value Chain Collaboration.
Chain, Digital Plant and
Augmented Workforce.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 33CHEMISTRY AND ADVANCED MATERIALS:
UNLOCKING VALUE
Digitalization CHEMISTRY AND ADVANCED MATERIALS:
could unlock about Value at stake for industry and wider society, by digital initiative (cumulative 2016-2025)
$550 billion of value for Societal
the industry and wider Industry $ billion
society over the next
Digital R&D 28-31 Unlocking Societal Value:
decade. Positive
societal impacts include Digital Plant
Digital Plant 2-4 35-60
reduced emissions and Further digitalizing assets and equipment
with, for example, smarter sensors, allows
lower injury rates in the companies to monitor asset condition and
industry workforce. Digital Supply Chain 40-70 continuously process quality, throughput
However, these were and emissions. Assets can send signals on
their status and performance which, in
the smallest societal Augmented Workforce 85-120 combination with real-time analytics and
gains from the in-memory computing, enable immediate
intervention to prevent equipment failures
industries analysed. Digitally Enabled Offerings and 110-250 and breakdowns. Combining real-time asset
Business Models condition information with predictive
analytics allows companies to predict
Advanced Customer Interaction 10-20 the likelihood of asset failures and plan
maintenance accordingly. This initiative
Click to can generate significant societal benefits,
download 2-4 308-551 including reducing CO2 emissions by
Total up to 100 million tonnes.
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 34MINING AND METALS:
DIGITAL THEMES AND INITIATIVES
The industry is embracing the opportunities of digital transformation and facing up to its challenges. Four themes will help
players to capture value for the industry and wider society.
Automation, Robotics Digitally Enabled Integrated Enterprise, Next-Generation
and Operational Workforce Platforms and Analytics and
Hardware Ecosystems Decision Support
Digitally enabled hardware Connected mobility, as well This theme concerns Algorithms and artificial
tools are going to perform as virtual and augmented linking operations, IT intelligence can process
or improve activities reality, can empower field, layers, and devices or data from sources within
traditionally carried out remote and centralized systems that are currently and beyond the traditional
manually or with human- workers in real time. Key separate. Important value chain to provide real-
controlled machinery. initiatives are Connected initiatives are IT/OT time decision support and
Major initiatives include Worker and Remote Convergence, Asset future projections. Key
Autonomous Operations Operations Centre. Cybersecurity and initiatives are Advanced
and Robotics, 3D Printing Integrated Sourcing, Data Analytics and Simulation
and Smart Sensors. Exchange, Commerce. Modelling and Artificial
Intelligence.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 35MINING AND METALS:
UNLOCKING VALUE
Digitalization could MINING AND METALS:
unlock more than $400 Value at stake for industry and wider society, by digital initiative (cumulative 2016-2025)
billion of value in Potential Potential Total Value Emissions Net Impact
industry and societal Business Impact Societal Impact at Stake Reduction on Jobs
($ billion) ($ billion) ($ billion) (million tonnes CO2) (000s)
benefits, which include
Smart Sensors 34 8 42 161 (40)
lives saved, fewer
Autonomous Operations & Robotics 56 19 75 396 (60)
injuries and lower
emissions. 3D Printing -- 3 3 35 --
Connected Worker 85 -- 85 -- (201)
Remote Operations Centre 77 7 84 16 (12)
Asset Cybersecurity 21 -- 21 -- --
Integrated Platforms 37 69 106 -- (5)
Advanced Analytics 11 -- 11 -- (13)
Total 321 106 427 608 (330)
Unlocking Societal Value: Connected Worker
Connected worker technologies have numerous applications in the industry. For instance, equipping workers with connected, intelligent
Click to wearables and mobile devices allows mine and plant management to capture critical information in real time. This also enables
download seamless communication; immediate, remote expert assistance, diagnosis and real-time guidance; and "follow-complete-document"
workflows that can be carried out directly in the field. Through better tracking of individuals, especially in dangerous events, it is
White Paper estimated that up to 500 lives could be saved and more than 20,000 injuries prevented over the next decade.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 36Duncan Wanblad
Chief Executive Officer,
Base Metals and
Minerals, Anglo
American, South Africa
“Our ageing workers
know the mines and our
young guys know
digital. When we have
been able to have
a cohesive cross-
generational team,
it has been stellar.”
37OIL AND GAS:
DIGITAL THEMES AND INITIATIVES
The industry has a chance to move from incremental, digitally driven operational improvements to a broader embrace
of digital technologies. Four themes will play a leading role in this transformation.
Digital Asset Life Circular Collaborative Beyond the Barrel Energizing New
Cycle Management Ecosystem Energies
Connecting end-to-end Digitalization will help with Digital technologies open Digitalization promotes new
operations across the value advanced and innovative new avenues for customer energy sources and carriers,
stream can ensure that all collaboration models between engagement and provide and innovative models for the
systems, equipment, sensors and producers, suppliers and society, additional services that help optimization and marketing of
data are communicating and as well as making operations create new and innovative energy. The Oil and Gas
learning from actions. This will transparent and driving out business models. Important industry must understand the
lead to increasing efficiency, inefficient practices. Major initiatives are Digital full impact of this, and stay
productivity and compliance with initiatives are 3D Printing and Customer Services and connected with millennials.
health, safety and environmental Blockchain / Smart Contracts. Omnichannel Retail and Key initiatives include
standards. Key initiatives are New Experience-based Services. Consumer Energy Choices.
Era of Automation, Advanced
Analytics and Modelling and
Connected Worker.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 38OIL AND GAS:
UNLOCKING VALUE
Digitalization could OIL AND GAS:
unlock up to $2.5 trillion Value at stake for industry and wider society, by digital theme (cumulative 2016-2025)
of industry and societal
Potential Potential Total Value Emissions Net Impact
value. Societal benefits Business Impact Societal Impact at Stake Reduction on Jobs
include reduced ($ billion) ($ billion) ($ billion) (million tonnes of CO2e) (000s)
emissions and $170 Digital Asset Life
745 110 855 370 (114)
billion in cost savings Cycle Management
for customers. Circular Collaborative
Ecosystem
30 0.5 31 2 --
Beyond the Barrel 100 27 126 12 21
Energizing New
Energies
70 500 570 900 35
Total 945 637 1,582 1,284 (57)
Unlocking Societal Value: Consumer Energy Choices
Click to The shift to new energy sources could reduce CO2e emissions by 900 million tonnes. This initiative could also
download add about 35,000 jobs, as generation from renewables, rather than fossil fuels, tends to be more people-
White Paper intensive. Several super majors are already taking steps to mitigate this trend's impact on their businesses by
investing in green or alternative energy (but this has been excluded from our value-at-stake analysis).
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 39PROFESSIONAL SERVICES:
DIGITAL THEMES AND INITIATIVES
Disruptive technologies are fundamentally changing the economics of Professional Services. Four themes will be central to
capturing digital value for the industry and wider society.
Business Model Intelligent Digital Agility Talent
Transformation Automation Empowerment
Digitalization empowers firms Emerging technologies such as Companies with an agile In a digitalized world, there is
to change every facet of how blockchain, artificial intelligence work culture and smart a need to reimagine what it
they go to market, including and deep learning are infrastructure can react means to be an employee
their services, value augmenting professionals’ quickly and adapt strategies and revisit the employee
proposition, target customers abilities to “do”, “think”, “learn” and processes to disruptive value proposition for the
and prices. Key initiatives are and “feel”. Major initiatives events. Important initiatives workforce. Key initiatives
Enhancing Go-to-Market include Modularizing Work and are Developing a Flexible include Reimagining Hiring,
Strategy and Fostering a Augmenting Human Intelligence. Workforce, Nurturing an Training Talent and Designing
Digital Environment. Agile Culture and Investing the Employee Experience.
in Smart Infrastructure.
Case studies:
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 40PROFESSIONAL SERVICES: AUGMENTING HUMAN
CAPABILITIES THROUGH NEW TECHNOLOGIES
Expertise is the TECHNOLOGIES ARE AUGMENTING PROFESSIONALS’ ABILITIES TO “DO”, “THINK”, “LEARN” AND
primary product of “FEEL”
Professional Services.
THINK DO
Machines are
augmenting key human Insight Generation Communication
Kensho Quill (Narrative Science), Amelia
capabilities so that
expertise can be Creativity Presentation
provided to clients Project Dreamcatcher, BeamPro, Magic Leap
Rembrandt
more efficiently, using Organization
combinations of humans Cognition Amy Ingram (x.ai)
and machines. Watson, DeepMind
FEEL
Memory
Robo Brain Relationship Building
Crystal, LinkedIn
LEARN
Empathy
Pepper
Instinct
Click to Uniquely human
download Note: The degree to which human capabilities are
being augmented by technology is indicated by the Appearance
White Paper ideograms next to each capability.
Sophia
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 41RETAIL:
DIGITAL THEMES AND INITIATIVES
Technology will transform retail’s end-to-end value chain. The level of change in the next 10 years will far surpass what has
been seen in the past 40 years.
Maintain Engagement Rapidly Adopt Evolve Business Manage Societal
with the Empowered Disruptive Models and Key Impacts
Customer Technologies Capabilities
Empowered consumers Eight emerging technologies* Emerging business models Transformation in the retail
demand to be actively involved will be particularly disruptive will fundamentally alter the sector has implications for
at every stage of their decision- over the next decade. Though retail landscape, impacting labour, the environment and
making journey and expect the pace of their development subcategories to varying local communities, which
increasing levels of choice, will vary, all will impact the degrees. The right capabilities will need to be managed.
control and convenience. value chain, and rapid will be needed to compete in
adoption will be critical. this evolving environment.
Case studies:
go
* The eight technologies are the IoT, autonomous vehicles/drones, robotics, 3D printing, artificial intelligence (AI), augmented reality / virtual reality, digital traceability and blockchain.
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 42RETAIL:
FRAMEWORK FOR ANALYSING TRANSFORMATION
Empowered Consumers
4 1 • The consumer equation of Cost + Choice + Convenience is becoming more complex thanks
to the additional dimensions of Control + Experience.
• Incumbents must open up their value chain to consumers, enabling them to participate and
control a greater span of their experience.
Disruptive Technologies
Societal Impacts Empowered • Based on their widespread application, resulting efficiencies and impact on labour, AI /
Consumer machine learning, autonomous vehicles / drones, IoT and robotics will be the four most
transformational technologies to the industry (among the eight assessed).
Future of
Retail for Transformative Business Models
Consumer • If current year-on-year growth is sustained, e-commerce could reach penetration rates of
Industries more than 40% in 2026 (in digitally developed markets), which will drive $600 billion in value
for business.
2 • Four key business models will proliferate: Sharing Economy, Smart Replenishment, Curated
3
Subscription, and Do It for Me. Sharing Economy will drive the highest value at stake, with
$1.7 trillion of value for society.
Key Capabilities
• Intra- and extra-industry partnerships will be critical for developing ecosystems to remain
Disruptive competitive in the future.
Business Models and
Key Capabilities
Technologies • Last-mile delivery infrastructure currently comprises 25% of the total cost of delivery and
must become more efficient.
Direct Impact Societal Impacts
• Public-private partnerships will be critical for managing the impacts on the workforce, the
Click to Indirect Impact
environment and local communities.
download
White Paper
To find out more about the DTI project, visit http://reports.weforum.org/digital-transformation 43You can also read
