Accenture: How digital innovations disrupt a wasteful world
We are used to hearing how resource-intensive the digital world is: All these new tablets, smartphones and computers are using up more energy and raw materials. But attitudes are changing. We seem to have reached such a tipping point in the communications revolution that it's opening up practical potential for radically different business models to become the norm — namely, sustainable ones.
At Accenture, we have identified six circular business models which build on the principles of zero-waste thinking by making it practical and profitable. As well as being sustainable, they have significant competitive attractions in the disruptive new world that is emerging: They have circular advantage and they're scaling up fast. One catalyst of these business models is technological trends that are disrupting traditional models.
Perhaps the most striking such trend is that the number of machines connected to the Internet has long surpassed the number of people. About 15 billion devices are expected to be connected by 2015 and a staggering 75 billion by 2020, according to IHS, a service provider in the technology industry. Add to this global mobile-phone penetration topping 90 percent, with penetration greater than 125 percent in Europe, and you get the impression of a critical mass being reached. Social networking continues to march onward with trends in urbanization and Internet connectivity, but is not restricted to famous platforms such as Facebook, Twitter and Weibo. Finally, the potential of cloud computing and big data analytics are only just beginning to be realized by large organizations while major investment pours in. So we see a "big five" of technological trends:
1. Machine to Machine (M2M) communication
3. Social technology
4. The cloud
5. Big data
But how are these five trends contributing to the adoption of circular advantage? Two key ways are the rise of the sharing economy and the dematerialization of things.
The sharing economy
According to Forbes, the global peer-to-peer rental market is now worth $117 billion a year. Airbnb's growth is a good indicator here. The company provides a platform for people to rent out their own apartment and has received 10 million bookings since 2008 — including 5 million in the last 5 months. Of course, this is having a disruptive effect on the hospitality sector, but you only have to look at how Airbnb is harnessing social media to see that its potential customer base expands with the technology: Airbnb leverages new social media and mobile technology to create trust and enable "micro-entrepreneurship." Even someone with a hectic job can rent out his house through a convenient app and respond to requests within minutes.
Carpooling and car-sharing is another industry with a huge potential to radically reduce the impact of material waste. According to Navigant Research, for every vehicle that is shared, between five and 11 are taken off the road. With cars now able to communicate directly into a digital network, the sector's growth potential is vast. The average car is still parked for around 23 hours a day — which feels a bit like a stranded asset. Essentially, sharing creates value where there was none by monetizing idle capacity of goods already in the market. Demand for new energy and natural resources in manufacturing is thereby reduced dramatically.
The dematerialization of things
Trends in dematerialized goods offer similar attractions to those promoting a zero-waste economy. Spotify, the cloud-based music storehouse, is an obvious example here. E-commerce is a growing industry, accounting for more than $1.2 trillion of sales in 2013. Helped by trends in connectivity and mobile penetration, the number of digital buyers is estimated to grow from around 900 million currently to 1.3 billion by 2016. This is important for sustainable consumption. Studies such as this one [PDF] have estimated that e-commerce uses 30 percent less energy in total than traditional shopping. When you consider that sales of physical CDs have been cut in half over the last 10 years, while download sales continue to increase, you can see why. Similar trends are occurring across print media, with some outlets actually giving away tablets with online subscriptions.
Dematerialized products can be sold and sold again with extremely low production costs and easily can be upgraded for additional revenue.
These are only two ways in which identifiable business benefits and environmental gains are being realized by the power of digital innovations, and especially the "Big 5" trends. The next step will be to scale up the trends to a truly global footing — leading to truly exciting prospects for sustainable business.
Technology photo by ouh_desire via Shutterstock