The three major transformations do not converge but must be steered individually. However, it is crucial to understand the cause-and-effect relationships between the transformations and, above all, their bridging points to drive innovation and trust. 

The Intersection of Digital & AI and Sustainability & Circularity Transformations

The three grand transformations of our time, Digital & AI Transformation, Sustainability & Circularity Transformation, and Business Model Transformation are recalibrating economies, reshaping industries and setting new balances of power. They are separate transformations that must be addressed individually while understanding their cause-and-effect relationships. By additionally identifying the bridging points between them, companies can, for example, use digital transformation as an accelerator to achieve sustainability goals, e.g. AI improves renewable energy and reduces emissions by ~1.8 Gt CO2 annually [WEF], and tap into new business models such as ‘anything as a service’ to promote economic, environmental and social impact on a large scale as an overall result.

Rethinking AI: Augmenting Human Capabilities and Unlocking New Monetization Streams

No Boardroom discussion without mentioning AI but often an overrepresentation of automation discussions focusing solely on efficiency gains can be observed. However, GenAI’s true potential lies in augmentation, namely enabling employees’ human capabilities, bringing them on a steep learning curve and turning them into expert performers in a short timeframe. When companies leverage both – automation and augmentation – they can even create a virtuous cycle – a flywheel effect – that drives significant impact. For example, AI can enhance decision-making, improve efficiency, and enable new capabilities, all while empowering human workers.

However, the current hype around generative AI and the idea of an ‘agentic AI layer’ as a suite of tools and capabilities, replacing traditional business processes productized in software applications, may be overstated. While AI is transformative, the need for trust in business processes when making delegation decisions should not be underestimated, and the lack of real-world data to train models brings us closer to a plateau effect. In fact, compute infrastructure is emerging as the ‘most valuable commodity in the world’ with nations investing heavily in high-performance computing and quantum computing to secure their foundation of next-generation economic growth, sovereign power and international influence.

AI is not just a technological tool – it is also a driver of new business models. At its core, a business model is about creating, delivering, and capturing value. AI enables businesses to do this in more dynamic and nuanced ways. Here are three examples:

• Zest AI: This company optimizes the lending process for lenders by using AI to analyze alternative, unstructured data, such as utility payments, to serve underserved customer groups. By improving the quality of credit decisions, Test AI monetizes a previously untapped market.
• Amazon Logistics: Amazon’s world-class logistics capabilities include AI-driven inventory prediction. By identifying surplus warehouse capacity in real time, Amazon sells this capacity to third-party sellers, creating a new revenue stream.
• Fero Labs: This company uses explainable AI to dynamically optimize manufacturing processes in real time, e.g. by adjusting recipes in real time to minimize material waste without compromising quality. This enables outcome-based business models where customers pay for performance rather than products.

These examples illustrate how AI can transform value capture, enabling businesses to monetize opportunities that were previously inaccessible.

Rethinking Circularity: Closing the Loop and Capturing Value Sustainably

The fundamental idea of circularity is to close the loop. However, many companies focus disproportionately on recycling and reprocessing – the outer loop – and neglect the potential of repair and refurbishment processes in the inner loop, which create greater added value. With the right to repair now enshrined in EU law, repair and refurbishment processes are moving from a context to a core competence and can move from a cost center to a profit center, enabling companies to adopt ‘everything as a service’ or even outcome-based business models.

In the context of circular business models, two decisions are of central importance. Firstly, who is responsible for maintaining the equipment – the customer or the supplier/provider? Secondly, who is the owner of the equipment – the customer or the supplier/provider? This has significant implications for the business model. Here are three examples of how companies are capturing the value from circularity:

• Consumer Products Company: A toothbrush manufacturer transformed its repair process from an outsourced, unprofitable context process into a digitally scalable core process that benefits both the environment and business outcomes and sets a powerful example for other companies to follow. By offering repair-as-a-service, the company built sticky, trust-based relationships with its customers.
• Fristads Professional Workwear: With its ‘sustainability-as-a-service’ offering, it provides its corporate customers’ employees with safety clothing and takes it back for refurbishment. Fristads supports the use of the existing clothing for as long as possible and monetizes the resale of the refurbished or repaired clothing, creating a sustainable business model.
• Philips Lighting/Signify: At Schiphol Airport in Amsterdam, the company changed its business model from selling lamps to a ‘lighting-as-a-service’ offering. With a focus on results-oriented performance, the company retains ownership of the lighting equipment and provides the service of optimal lighting quality. This model incentivizes efficiency and sustainability as the supplier has a natural interest in continuous optimization. Schiphol Airport was able to reduce its electricity consumption by 50% without any upfront investment.

The future of business lies at the intersection of three grand transformations – AI & Digitalization, Sustainability & Circularity, and Business Model transformation. By understanding the cause-and-effect relationships and bridging points, companies can unlock new opportunities, drive innovation and build trust with stakeholders. Companies need to adopt a future-focused mindset and use AI and sustainability to redefine how value is created, delivered and captured. The division in the value creation process will be renegotiated between customers, who create value themselves with the help of AI, and suppliers, and last but not least ecosystem partners. However, success will require more than just the adoption of technology – it will require a commitment to ethical practices, human-centered design and sustainable value creation.

Key Takeaways for Business Leaders

• FROM TECHNOLOGY TO TRUST: In times, when so-called ‘AI-First-Strategies’ are back, it is important to remind ourselves that technology is only a means to an end. The true north is to create impact at scale, which can be business, environmental and social in nature. In this sense, use cases are the ‘ultimate currency of any successful transformation’. Sometimes this can even mean that AI comes last. But it always means: trust first.
• FROM GENERAL CIRCULARITY TO INNER LOOP: The circular economy is about closing the loop, yet the strategic focus is too often still on outer loops such as recycling + re-manufacturing, while inner loops with refurbishment + repair management have greater impact. Trust in suppliers and ownership delegation, can bridge to the transformation to new business models such as anything-as-a-service or outcome-based business models with strong incentives for minimizing resource/energy consumption.
• LEARNING & HUMAN AUGMENTATION: Gen AI can augment human skills and substantially accelerate empowerment so that we can get closer to the old dream of ‘learning organization’. The intelligent combination of augmentation and automation can even create a virtuous circle or a flywheel effect. Hence, going forward, we should look at AI responsibly with role/job as a portfolio of a variety of tasks, where some tasks can be delegated to augmentation AI, other to automation AI, and others require human oversight and originally human competences.

It is an appropriate time for leaders to hit the ‘pause button’ and reflect on whether their current leadership strategy is working – and, more importantly, whether their approach to technology and sustainability is enabling them to manage the complexity of the modern world and lead in the new era of business.

This speech was delivered by Dr. Carsten Linz at bluegain’s Exclusive CxO Luncheon 2025 during the World Economic Forum’s Annual Meeting in Davos.

/ ABOUT THE SPEAKER

• Dr. Carsten Linz is the CEO of bluegain. Formerly Group Digital Officer at BASF and Business Development Officer at SAP, he is known for building €100 million businesses and leading large-scale transformations affecting 60,000+ employees. He is represented on boards including Shareability’s Technology & Innovation Committee and Social Impact. A member of the World Economic Forum’s Expert Network, Dr. Linz is also a published author who shares his expertise as an educator in executive programs at top business schools.