Davos - Digitalisation could benefit consumers more than businesses - but only if it was harnessed properly. According to findings of the World Economic Forum Digital Transformation Initiative (DTI), much of the value that digitalisation could potentially generate for society would remain trapped unless efforts were stepped up to align private-sector investment incentives with the long-term public good.
Analysis by the DTI estimated that more than half of the value that digitalisation potentially offered was in the form of societal benefits.
These included net job creation and reduced income inequality, improved health outcomes and fewer accidents, reduced carbon emissions and time and cost savings for consumers.
"The majority of the benefits of digital will accrue to society, but only if collective action is taken to assess the potential, using consistent criteria to evaluate the outcomes of specific policy actions," said Bruce Weinelt, head of the DTI at the World Economic Forum.
"A greater change in the mindset of business will also be necessary. The private sector will have to go beyond measuring performance by growth and profit, and begin to embed sustainable and trust-based business models at the heart of their strategies."
The DTI project, undertaken in collaboration with Accenture, had completed value-at-stake analyses in 10 industries to help the private sector identify opportunities for growth.
It had complemented this with a new societal value framework enabling the private and public sectors to understand and measure wider societal benefits in financial terms.
Consistent evidence
According to a statement from WEF, this provided a consistent evidence base that would help governments and businesses design regulatory and policy changes that removed investment barriers at national and regional levels.
WEF said the new societal value model had been tried in India, the UK and Denmark to engage dialogue with policy-makers. In the Indian state of Telangana, the four digital initiative models demonstrated that value generated in the next decade could be equal to 40 percent of India's GDP in 2015.
Of the benefits of digitalisation, 94% could accrue to society and the environment, as opposed to industry.
For example, digital payment solutions could improve access to financial services for small businesses, creating 4.5 million jobs and $410 billion in value to society. This would require measures to spur more investment in broadband and wider adoption of digital applications.
Mature Organisation for Economic Co-operation and Development (OECD) economies could see even greater social benefits from digitalisation than the global average. For example, the higher costs in sectors such as healthcare could result in greater savings and productivity improvements.
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In the UK, improved safety mechanisms in vehicles could reduce road fatalities by 9 percent a year, while advanced driver assistance systems could save consumers $25 billion in insurance and accident-related costs. Progress would depend on mandated supply of such systems in cars and in automotive services.
According to WEF, more broadly, further incentives and policy changes could allow digitalisation to deliver $9 trillion in economic benefits globally by addressing the United Nations Sustainable Development Goals to combat poverty, inequality and climate change.
The societal value framework included a staged approach to help companies identify the initiatives that allowed them to deliver greatest value to society while achieving long-term commercial benefits.
This comprised steps to identify the social trends of greatest relevance to companies, tracked the potential value at enterprise level and executed strategies to achieve them.
Shape strategies
"To unlock the digital revolution's full value to society, governments, businesses need to shape strategies that measure the value of innovation and investment," said Mark Knickrehm, group CEO of Accenture Strategy.
"More than just paying lip-service to shared value, this means leaders applying hard-nosed economic tools to fully understand the costs and benefits of digital transformation for business and society, while committing to enhance the role of people at work."
WEF's DTI has recommended a range of actions, including rapid reskilling and greater alignment of education with the new demands of fast-changing markets, while other action areas included public-sector investment, tax incentives, simplified regulation and measures to improve transparency in the use of data so as to encourage wider adoption of new technologies.
The DTI reports noted that while new technologies had the potential to increase economic growth, reduce inequality and promote inclusivity, they could be jeopardised by a retreat of globalisation, the rise of political populism and social instability.
Concluding that business and political leaders were at a crossroads, the reports called for responsive and responsible leadership to proactively counter forces that potentially could constrain innovation, trade and growth.