Digital Transformation on Purpose

Digital technology has great potential to address many challenges facing the world, but its effects on society are being experienced at such breakneck speed that there has been little time to consider how its diffusion can serve society’s higher goals. In a series of articles over the coming months, we will explore the question of how digitalization can be done “on purpose” — that is, how we can ensure that digitalization will be a force for good, a force to transform economies so that they foster greater equity, environmental integrity, and shared global prosperity.

This article sets out to define the terms digitization, digitalization, and digital transformation so that they can serve as a framework for understanding how the digital revolution can also become a revolution for sustainable development. It represents a first step in helping leaders purposefully guide their organizations toward a better digital future.

The Digitalization Blitzkrieg

The progressive digitalization of industries is causing anxiety in C-suites around the world. Wave after wave of digitalization — publishing, music, film, banking — has disrupted multibillion-dollar industries. It is now upending retail, as companies like Amazon.com Inc. leave a trail of zombie shopping malls across the heartland. On the horizon is the disruption of sectors like energy, hotels, and transportation. Manufacturing is not far behind.

It’s no wonder that most leaders are struggling merely to come to grips with the implications of digitalization, let alone forming a clear strategy about how to deal with it. But if we can rise above the fog of digital war, a larger horizon can be seen. From our elevated view we can ask larger questions about what businesses and society want from digitalization. Questions like: “Can we pursue digitalization with a higher purpose in mind?” and “Can we steer digitalization to be a force for good, a force to transform economies so that they foster greater equity, environmental integrity, and shared global prosperity?”

Right now, two principal forces are driving digitalization. One is digital technology itself and its associated services and gadgets. Another is the invisible hand of the market responding to the evolving wants of consumers.

While these have historically been two powerful forces for progress, there are inherent limitations in their ability to steer society. First, laissez-faire markets have inequality built into them.