

Grand Transformations
/ Leading at the Intersection of the Three Grand Transformations
The business world is ever-changing, and companies must adapt to the shifting standards, wishes from customers and clients as well as the overall business environment. With 40% of CEOs believing that their current trajectory and path will not be economically viable in the next decade, transformation is crucial for companies to sustain.
In our forthcoming ‘State of Transformation Report’, we explore how transformations around the world are progressing, how leading at the intersection of the three grand transformations of our time is becoming a pivotal leadership trait.
Figure 1
/ Current Paths and their Relevance in Future

Source: bluegain Analysis [2023]

/ SYNERGIES BETWEEN DIGITAL TRANSFORMATION AND BUSINESS MODEL TRANSFORMATION:
60% of companies that have successfully undergone digital transformation say they have also transformed into new business models. bluegain’s analysis of 250 digital initiatives worldwide shows that most companies still focus exclusively on process automation and increasing efficiency. In contrast, only a minority of organizations are transforming the operating model or even the business model. Digital transformation at the level of a business model transformation is the most comprehensive approach to digitalization and requires that digital technologies have become an integral part of the company’s value-creation architecture and that new ways have been established to deliver value to customers and capture value for the organization and other stakeholders. Microsoft is an example of such a business model transformation, as under Satya Nadella, the company has transformed from a Windows-based software company to a cloud platform company that works across technologies and collaborates with partners and ecosystems like LinkedIn and GitHub and has become a major player in artificial intelligence. Microsoft’s stock has risen almost 1,000% since Satya Nadella became CEO in 2014 and the company has shifted from upfront licensing to recurring subscription revenue. As we can see, there is an important difference between digitalizing the existing business model and digitally transforming to a new business model. While process automation, reimagination and operating model change can often be done locally in one department, a business model transformation spans all departments and business functions. It requires NEW LEADERSHIP and the support of the executive board(s) and can then be a highly effective lever to drive the digital transformation systematically and coherently.
/ SYNERGIES BETWEEN SUSTAINABILITY TRANSFORMATION AND DIGITAL TRANSFORMATION:
While digital transformation remains the top priority for Board members, sustainability now ranks second. Yet many executives still view sustainability and technology as separate priorities and even as opposing goals. The opposite is true, as the interplay between digitization and sustainability opens up brilliant opportunities to create a greener economy and society. Fundamentally, verified data, analytics, and artificial intelligence help set clear standards, paint an accurate picture of sustainability progress, and drive circular business models. Digital twins of the organization & supply chain enable transparency and traceability of resources and products along the supply and value chain/network. Digital tagging and blockchain enable closing and improving the loop and capturing the value from the loop for all stakeholders – in a verified way. Quantum computing in R&D has the potential to accelerate research and development processes by better simulating complex chemical and biological phenomena, such as molecular structures. And digital platforms and ecosystems are the key means to orchestrate ecosystems for collaborative climate action across industries. Companies also need to be aware of the environmental issues associated with increased use of technology. 3.7% of total greenhouse gas emissions are caused by the Internet ecosystem. This needs to be mitigated through green data centers, green cloud technology services, and reuse of technology components. While challenging, these initiatives will prove to be very rewarding as they open up greater opportunities for long-term value creation for all stakeholders. CEOs who understand that they are increasingly expected to help solve the world’s challenges are in a better position.
/ SYNERGIES BETWEEN SUSTAINABILITY TRANSFORMATION AND BUSINESS MODEL TRANSFORMATION:
The importance of sustainability is increasingly being recognized by shareholders, who are trying to mitigate both financial and ESG risks. This trend is encouraging the exploration of new business models such as circularity and product sharing. In a circular business model, businesses form a value network that creates a closed, zero-waste cycle through recycling or reusage of products. Another more sustainable business model is ‘everything-as-a-service’ (XaaS) that operates on the premise that customers are more interested in outcomes than ownership, which promotes efficiency and reduces waste, as fewer products need to be manufactured. Compliance with Environmental, Social, and Governance (ESG) standards is not only a moral imperative but also presents opportunities for future-proofing businesses. Businesses that align with ESG compliance can attract a wider customer base and increase product demand. In fact, 88% of consumers are more loyal to a company that is committed to social or environmental causes, especially if the offering as such helps to promote new sustainable and grandchild-friendly behaviors. We are now entering a phase where sustainability is a good way of doing business. Hence, it is not about how you spend your profit, but how you earn your money. Such sustainability-focused business models offer the opportunity to increase both business and sustainability impact: 61% of companies seeking an integrated digital sustainability transformation already generate more than 10% of their revenue from these new business models, and nearly 80% expect to do so in three years.
Stay tuned for our forthcoming state of transformation report. What is already clear today, is that digital transformation, sustainability transformation, and business model transformation should be treated in an integrated fashion to reap their full benefits.
Figure 2
/ Intersection of the three grand transformations

Source: bluegain Analysis [2023]

/ ABOUT THE AUTHOR
- 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.
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