Applying Six Digital Transformation Lessons to Regenerative Business Innovation
For the last few decades, the impacts of digital transformation on business have preoccupied leaders and recalibrated markets. The compounding and converging environmental, societal, and economic shocks of recent years are now turning the page. Looking forward, a(n) (r)evolution in business is taking shape: one that reconnects business with social and planetary health. This is less a “hot new trend” for innovation than it is a maturation of business and technologies to evolve to meet the practical reality that the fate of any business wishing to survive for the long-term is directly tied to the fate of the planet and functional society. But how?
Leaders everywhere are looking for guidance on how to respond, how to do better for their people, partners, shareholders, and planet, as well as how to connect regenerative efforts to their strategic pillars and investments.
As a research firm specializing in digital transformation, emerging technologies, and trends analysis, we’ve identified several parallel dynamics between these eras of transformation to help leaders leverage their investments and take action.
Learnings from Digital Transformation are foundations for Regenerative Business
- Prepare Now: Change is coming whether your company is ready or not
- Start with People: Organizational change begins with mindset, culture, people
- Know Your Audience: Learn the language of change
- Enjoy the Journey: Change is the journey, not the destination
- Elevate Change Agents: Those with the energy and courage to enact change
- Look Across Stakeholders: Systems change takes a village, and deep collaboration
1. Change is coming whether your company is ready or not.
Businesses resisting transformations to become more socially and environmentally aligned need look no further than the casualties of those which resisted the digital revolution of the last two decades. Looking ahead, signals of structural change abound, from compounding climate risks, to supply chain and societal instabilities, to exponential technologies. Businesses everywhere are surrounded by the inescapable: old economic and business models are simply unfit to meet the societal, environmental, and economic needs of the 21st century. Prepare now, because ignoring disruption is not an option.
2. Organizational change begins with mindset, people, and culture.
As with digital transformation, companies that deploy singular efforts, implement policies as check boxes, or impose top-down change without deep engagement and collaboration across employees will fail. People are less trusting in business and government leadership than ever, not to mention heightened skepticism of “greenwashing” or “wokewashing”. Regenerative business change, however well intentioned, is not immune to these cultural dynamics.
Start with where people are because lasting change requires hearts and minds, not top-down trend-chasing. Foundational culture change is at the core of how corporations evolve: multigenerational vision and purpose, what they value and how they create value, and how they support employees and other stakeholders. Trust is both built from leadership and accountability, and empowerment cultivated from within individuals, in the context of their lives, work, and communities.
3. Learn the language of change.
Just as “digitization” is not the same as digital transformation, or digital strategy, the shift towards regenerative business has its own nuance and complexity around language which acts as a barrier for shared understanding and action. For instance, while regeneration is often understood as an environmental objective, it is both distinct from and broader than “sustainability.”
To sustain is to effectively continue or break even, “100% less bad,” as circularity pioneer William McDonough said. To regenerate is to increase vitality, regardless of whether the system is ecological, social, economic, business, supply chain or otherwise. As with digital transformation, this systemic lens also demands stewardship and accountability across multiple business functions, not just adding a new business function.
Chasing trends with hiring fancy titles, but without cultural strategy, is another trap. For example, many companies wishing to “go digital” began hiring Chief Digital Officers to manage their websites and e-commerce, with little regard for long-term data strategy. Similarly, the recent explosion in Chief Sustainability Officers has often amounted to appointing a public face for ESG-related PR and risk and compliance exercises. Instead of adding another C-Suite or business unit for each new buzzword, a shift in mindset is needed: that a regenerative business is a strategic orientation, and leaders should be resourced, positioned, and incentivized as such.
Finally, just as Tech is notorious for its acronyms and jargon, a similar long tail of frameworks, standards, acronyms (and lack of interoperability) can leave well intentioned employees disaffected and disengaged. Language is how we communicate, and part of meeting people where they are is to align with the language of their everyday context.
4. Change is the journey; not the destination.
The word “vitality,” by its very nature, signals continual growth and evolution in order to remain viable, useful, and full of energy and life. Whether digital transformation or regenerative business, neither is an end goal. Both are ways of learning into the future. Author of Building Regenerative Cultures, Daniel C. Wahl explains:
“One of the essences of being regenerative is that it’s about developmental and evolutionary processes…A developmental understanding understands that this is a journey that will never end because the context changes, global situations change, supply options change, so the minute we begin to position it as an ongoing learning journey in which we need collaboration and collective intelligence to enable, we travel in a different way. We put less emphasis on the solutions and more emphasis on the questions. We stop pretending that any solution or any answer to the questions we ask along the way will be final.”
This questions-over-solutions insight also invites leaders to re-think assumptions, because they too are changing. Just as digital transformation created massive disruption to companies which ignored it, it also unleashed a new paradigm for designing, managing, measuring, and monetizing business. Consider as one example, how software is not just transforming the function and “smarts” of cars, but how they are designed, constructed, serviced, electrified, monetized, shared, potentially the experience of driving itself. Business models which optimize on data have radically changed our assumptions around cars and mobility.
Business models which, by design, optimize on environmental and societal benefits, alongside economic gains– and leverage technologies to scale up and out– will catalyze a waterfall of systemic changes rendering traditional business assumptions obsolete.
5. Elevate change agents.
The people with intrinsic energy to bring about new ideas, structures, activities, and partners are some of the most important levers for change within an organization. Regardless of transformation, be it digital or regenerative, it is the individuals who realize that simply being passionate about data and technologies, climate or social justice is not enough. They must do the hard work of managing change, helping others in the organization learn, unlearn, and adopt new ways of thinking.
In our research, we’ve found that these people occupy myriad departments, not always those associated with business transformation, such as IT. Though no one department or role should “own” digital regeneration, it is common to see related innovation and experimentation emerge in functions like Supply Chain, Operations, Marketing, Finance, and others. Here the recommendation is to empower these agents to “re-think” in the contexts of their specific functions, and to foster wider participation by encouraging and rewarding re-invention of how work gets done and how innovation is co-created.
6. Systems change takes a village.
Perhaps the most important lesson businesses should embrace from both digital and regenerative transformation is how crucial collaboration and co-creation are to bring about better models. Organizations must cast a wide net, both internally across business functions, and with multiple stakeholders far beyond the organization itself. This imperative stems from the recognition that no single entity has all the answers– what are the needs, pains, local requirements, unseen opportunities and risks of new designs– and that dynamics change.
Internally, no one “owns” transformation, but everyone has a stake. Just as digital transformation is not the job of IT, Marketing, or any single function, regenerative business transformation does not belong to the Head of Sustainability, HR, or Supply Chain. Both require the multi-disciplinary perspectives and partnership often inherent in business structures like Centers of Excellence (CoEs), Innovation teams, or Ecosystem Outreach roles. Externally, multi-stakeholder engagement across customers, partners, communities, government, and environment is instrumental to an expanded business approach which drives collaborative decisions, balances multiple priorities, and measures “progress” through a wider lens.
Ecosystem approaches to innovation are critical for business success: the more diverse the ecosystem, the greater the resilience. Many companies we’ve analyzed are tapping innovation funnels – dedicated internal and external infrastructure and processes for learning and adapting– they developed for digital innovation, to accelerate their efforts in sustainability and regeneration.
The Lesson Yet Learned
The immense disruptions of recent years have only underscored the inadequacy of simply applying new tools to obsolete and extractive systems and business assumptions. Innovation is not about the tools, but to what ends and what structures are we applying our tools. As companies invest in today for the future, true transformation is about intentionally redesigning business to use data and technology to support not only increased profits, but also innovation that benefits social and planetary systems.
This article first appeared on Kaleido Insights.