What Early Adopters Know About Sustainability and Profitability
By SAP Insights | 10 min read
Much of the conversation about sustainability today focuses on will, as in, “Do we have the will to do what’s needed before it’s too late?”
Fortunately, most companies appear to believe they do. An SAP Insights survey found that sustainability is a tool of choice for increasing revenue, improving efficiency, and reducing risk. Which means they no longer see it as a burden.
But where there is a will, there isn’t necessarily a straightforward way, especially when it comes to applying technology. Many of the technologies that will play a role in solving the sustainability problem, such as artificial intelligence (AI) and blockchain, are still in the early stages of development. Indeed, 50% of carbon emissions reductions by 2050 are predicted to come from technologies that are at the prototype or demonstration stages today, says the International Energy Agency.
Working with early stage technologies requires an early adopter mindset, including a strong tolerance for risk and readiness to change. This same mindset will come in handy as companies take on the challenge of the century: how to become more sustainable while becoming more profitable.
Yet most companies lack the temperament to risk working with early stage technologies. The survey found respondents are still heavily focused on investing in the same old things, such as cloud computing and employee collaboration tools.
And that’s a problem.
If every organization were to move all its IT systems to the cloud tomorrow, it would reduce IT carbon emissions significantly, according to a report by Accenture. But IT emissions are just one slice of an excessively big pie. And sure, Zooming cuts carbon that would otherwise belch from tailpipes or jet engines. But as a solution to global warming? Might as well hit the mute button.
The risk-takers are winning
We wanted to see whether technology early adopters are getting value despite the risks. We looked at respondents who are focusing on the technologies that have the potential or are already being used to redefine and manage the big, global emissions culprits such as energy grids, transportation systems, manufacturing, and supply chains. Specifically, we wanted to hear from companies using four categories of technologies still in their early stages of development: human-computer interaction; virtual and augmented reality; blockchain and distributed ledgers; and machine learning.
We divided respondents into three groups: those using none of the early stage technologies (26%), those using one to two (62.8%), and those using three to four (11.2%).
When comparing the three groups, we found that in general, the more early stage technologies companies use, the more likely they are to connect sustainability with their business goals. Meanwhile, the respondents using three to four early stage technologies – our early adopters – are most likely to see sustainability not as a costly bug of a burden, but rather as a feature for improving revenue and efficiency.
One of the striking differences between the early adopters and their less-adventurous counterparts is their greater commitment to sustainability as a way to improve the business.
The potential downside? The early adopters could be too confident. Their perception of the degree of risk awaiting them in the future is lower than that of other respondents. They could be right, or, in these uncertain times, they might be mistaken.
But they are prepared to take that gamble.
Sustainability as a tool for improving revenue
One of the striking differences between the early adopters and their less-adventurous counterparts is their greater commitment to sustainability as a way to improve the business. Overall, respondents are highly interested in sustainability to increase revenue along with more traditional approaches, like increasing sales to existing customers or acquiring existing businesses.
But the more early stage technologies respondents use, the more likely they are to choose sustainability as a top method for filling the coffers. In fact, respondents using three or four early stage technologies (40.8%) are significantly more likely to have chosen increasing sustainability in products and services as a top priority for gaining revenue than respondents using one or two of the technologies (34.4%) or zero (31.4%).
Sustainability offers a fresh focus on efficiency
Similarly, survey respondents overall see increasing sustainability in products and services as a path to greater efficiency. But early adopters take that faith to a higher level. Those who are using three or four early stage technologies are significantly more likely to see sustainability as one of the top ways to increase efficiency than other respondents: 44.1%, compared to 39.1% of respondents using one or two of the technologies and 38.4% of respondents using none.
That may seem counterintuitive to anyone used to thinking about sustainability as an extra cost. But it’s all about data – the lingua franca when it comes to understanding where a company stands on any metric. For instance, companies can use blockchain to track and trace products in a supply chain. And by knowing how and where suppliers are getting their materials, they can work with their partners to seek more efficient (and greener) ways of doing things while steering clear of ever-more stringent environmental regulations.
As another example, augmented reality (AR) lets oil companies avoid the cost and emissions of sending a specialist to a troubled platform in the middle of the ocean; instead, someone on-site does the repair with the expert guiding them remotely through AR glasses.
A more optimistic outlook on business transformation
The “early” in early adopters doesn’t just refer to trying new things first. It also reflects a mindset that is attuned to change. That tendency is evident in the early adopters’ ability to move forward with organization-wide change, such as business transformation.
Early adopters’ optimism about their ability to shape the future is also evident compared with those who are using fewer early stage technologies.
The survey found, for example, that the more early stage technologies companies use, the more likely they are to have already transformed some or all of the areas they planned. Nearly three-fourths (72.8%) of respondents using three or four early stage technologies have completed at least some of their transformation plans, compared to 67.1% of respondents using one or two of the technologies. Among those using none of the early stage technologies, 63.7% have done so.
Early adopters’ optimism about their ability to shape the future is also evident compared with those who are using fewer early stage technologies. Among the early adopters, 40.8% expect to have transformed all planned business areas within two years. Around one-third of respondents using one or two of the technologies (36.3%) or zero (32%) expect to be finished in the same time frame.
When change is worth the risk
If you are going to be an early adopter, you have to come to it with confidence that your risk-taking will ultimately help business performance. Here, the contrast with more risk-averse respondents is stark: 83.7% of respondents using three or four early stage technologies see business transformation making them considerably more profitable compared to 73.3% of those using one or two of the technologies and 68.7% of those who do not choose any. The gap is similar when it comes to long-term competitiveness: 84.6% of the early adopters against 75.1% of those using one or two early stage technologies and 70.7% of those using none.
A mindset for today’s reality
Obviously, not all early adopter stories are rosy. For example, even some early adopters of products from the most gotta-have-it technology company in the world, Apple, have wound up with hangovers. There’s little but pity for the first buyers of the Newton, Apple’s expensive, error-prone personal digital assistant from the ’90s. Besides its inability to discern human handwriting, the Newton also suffered from solved-problem syndrome: its main competitor was a $2 paper notepad ($2.10 with the pencil included).
When it comes to sustainability, companies are as far as they can be from a solved problem. And it doesn’t take a genius to figure out that success in this area will require both a Labrador-riding-shotgun appetite for adventure and an underappreciated-starving-artist obsession with experimentation.
And oh, the possibilities. Early adopters who apply advanced technologies to sustainability could have such a big effect on the world that they become verbs, like Google.
Even if they fail, early adopters who try to solve sustainability are unlikely to become objects of pity because they will have learned something and taught the rest of us. At this point in history, you can only be blamed if you don’t try.
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