Taking the Right Measures
To make a sustainability change, with impact, measuring and observability must come first.
Remember when fuel usage and driving efficiency information started to appear in car dashboards, and how it for many drivers over time led to a more aware and fuel-conscious driving? Drivers started seeing the impact of a change in their driving on fuel economy. Later those features evolved into an option for drivers to use fuel-efficient driving mode - an optimization feature. The message here is: you can’t start making better choices unless you know or see the impact of the choices.
If you have read some of my previous blog posts, you might have noticed a lot of focus on how the pandemic accelerated digitization by years. Ready or not, enterprises were propelled into digital outreach, creating competitive digital experiences, finding new ways to engage customers in a leveled digital playing field. Moreover, digitization drives organizational pressures and my posts highlighted among other things that organizations need to invest in customer success as a new revenue center and need to change their business towards customer-journey driven. This is still very relevant in 2022, as the enterprises are continuously heavily focused on getting there and getting there efficiently (i.e., by moving to cloud and outsourcing non-core business operations to SaaS services, etc.).
But in 2022, Sustainability has risen on the corporate KPI lists. However, with all this focus on sustaining their business and de-risking the service with regards to potential loss of customer loyalty, due to a less personal experience in a digital realm, it feels like lightyears before enterprises will get a chance to focus on sustainability. Yet it is so present elsewhere in the world - regulations are already coming out in the EUand consumer’s behaviors are shifting.
If you read this blog post on the topic of sustainability, you might agree that enterprises should worry about sustainability sooner rather than later. Not just because it is the right thing to do, but also because it will impact their near-future business just as much as the digitization movement.
Regulations are coming down the pipe
Decision behaviors are changing: Millennials have already become the leading force of consumers, and at the same time, entered decision positions as they grow their careers.
Competitiveness: The Gen Z and Millenials are also clearly seeking “the right and impactful employers'.”
Investors have started caring a lot about sustainability goals and tracking
This leads me to believe that enterprises should concern themselves, sooner rather than later, with accelerating sustainability investments. To win now so that they can have a seat at the table tomorrow.
I see a gap. Enterprises are focusing on digitization to survive and thrive now, but they are forgetting, or temporarily forgoing, how sustainability will impact their future business. I base this on recent investigations I have done and a survey we sent out to our valued DNX Executive Advisory Board. The results showed that sustainability goals (in the US) were not the highest concerns just yet. But when we scratched the surface in follow-up discussions, it seemed like organizations didn't really know where to start or how to get the visibility to make insightful adjustments or where to allocate budgets for impactful sustainability projects.
I also studied management consulting strategies on the topic. Among others, BCG’s sustainability material, particularly some talks and articles by Charlotte Degot, who shared her perspective on what will matter as organizations move forward. This recent reading has convinced me that observability and transparency will be the first step. It is an important step that will increase in urgency in just a few years. Organizations will rapidly have to start reshaping their image, taking their responsibility publicly or to auditors and investors, and further fuel customer and employee loyalty among younger generations. To get there, they need to start measuring and making improvements. In certain cases, consumers are demanding transparency today, so organizations have to get ready for that immediately.
It all makes sense when you think about it. You can’t create actions with impact if you do it blindly. You need to know what is going on before you act. You need to measure then analyze. You need data. With data comes machine learning (ML, a.k.a. “AI”). But what I don’t know just yet is what entrepreneurs are thinking in this area. How do you think enterprises can efficiently get to the data? What data will matter, and why will this particular data help the company's visibility? After all, an ML model is just as good as the data you feed it, so the data providers or generators will be key. Would you agree?
A good example close to heart is ICEYE. ICEYE provides low altitude images that can help determine environmental impact over time in various geographical areas and scenarios. It can also help in the acute challenge of audit and regulation of CO2 offset solutions (forest and seaweed farming) for accurate accountability. But what else can help enterprises’ data collection and accuracy, and how will your innovation or startup help collect it? The ML will be easy once you have the data. ML has mostly commoditized today with all the open source projects available, thanks to the big data evolution over the last 10+ years and thanks to cost-efficient hardware and cheap distributed compute power. But the data… whoever comes up with how to collect the data and how to validate its accuracy will have a good seat at the table. Accurate data - across supply chains, across company travel, across employee behaviors and energy usage, across production - and then making it actionable insights for sustainability impact. I think the first hurdle for enterprises is the struggle with what data to capture and how. The data is also in some cases large and non-structured. So ML will have to be used to detect patterns where humans cannot. Soon after this wave of understanding their situation, I predict there will be a follow-on need to have ML-assisted impact simulations. Should we do X or Y? What would have the better outcome?
In summary: enterprises are not sustainability experts, but ML over the right data holds big promise to help and hence has a huge market ahead. With the massive changes coming down the compliance and regulatory pipes and the new challenges caused by changes in consumer demands, visibility - with a little ML on top - will have a great opportunity ahead. Once the enterprises find their feet in digitization, and can master to look ahead at the next wave of must-do’s, sustainability insight and data providers will get the front seat.
To make a sustainability change, with impact, measuring and observability must come first. What do you think is next?