Transformation in a Digital Age

Digital transformation is everywhere. It is used to describe so many things that it risks losing its meaning, and with it, the potential for a common approach to supporting it in pursuit of equitable, sustainable development. We’re sharing this blog, then, as part of defining this important area.

Digital transformation should include both the processes and outcomes of mindful, intentional, and shapeable efforts that lead to intended, prosocial effects. Definitions of digital transformation at the firm level tend to focus on existing or new business models. For McKinsey, it is to “enable existing business models by integrating advanced technologies,” while for Salesforce, it’s “using digital technologies to create new — or modify existing — business processes, culture, and customer experiences.”

Definitions at the national level tend to take a broader perspective. The European Commission characterizes digital transformation as “a fusion of advanced technologies and the integration of physical and digital systems.” The OECD defines it as “the economic and societal effects of digitization and digitalization.” This is important; while the first three definitions focus on process, the last focuses on effects and the consequences of these significant changes.

Development-focused definitions emphasize this outcome-focused perspective but highlight challenges and risk. The Pathways Commission at Oxford University cautions that “The use of digital technologies will not automatically lead to the inclusion of the poor and marginalized.” UNCTAD points to the challenge of measuring the broader national digital economy and emphasizes how digital transformation is “highlighting the significant divides that exist.” The United Nations Foundation Digital Impact Alliance, having reviewed over 30 frameworks, concludes that “more work is required to attempt an overarching articulation of the most important elements” of digital transformation. This blog is a contribution to this continuing effort.

We believe that the emphasis on transformation as both process and effects is particularly important, especially as although digitization and digitalization are well underway, accelerated by the response to COVID-19 (remote working, payments, etc.), these are not inevitable processes. They are the results of human decisions. Similarly, the effects of these are not inevitable, either. We agree that technologies amplify intent, and left unchecked, digital transformation may amplify the most powerful, strengthening autocracy and dystopia. With strategic engagement and clear intention, it is possible to build ethical and inclusive digital economies, societies, and politics that mitigate risk and prioritize protection.

Digital transformation that works for all requires values-based intentional focus on the promises of this new era and mindfulness to mitigate their perils. The following five considerations are insights that help us ensure we are intentional in our support to governments, donors, and other partners in their work to ensure digital transformation prioritizes people, protects fundamental rights, and promotes equality of opportunity.

1. Digital transformation as development in a digital age. Since we made this phrase central to our work in 2016, we’ve only become more convinced that while digital is fundamental to processes of change in politics, economy, and society, the emphasis needs to be not on digital but on the changes and developmental outcomes. It is vital to recognize that this is not simply focusing on technology to drive changes, and that there are particular characteristics and challenges to achieve developmental goals in a digital age. As we wrote for one donor, “Digital transformation introduces new risks as well as opportunities,” so building inclusive, ethical transformation demands engaging “with complex, nuanced concepts around agency, literacy, power, and structure in the digital age.”
2. Digital transformation requires an ecosystem approach. Most digital development projects still exist in sectoral silos and/or are driven by a relentlessly optimistic approach to “connecting the last billion.” This is despite all the evidence pointing to the significant cross-cutting — both negative and positive — impacts of digital technologies on economies and societies as the excellent 2016 World Development Report on “Digital Dividends” laid out. We have found it helpful to firstly define and bind digital ecosystems, at the national or firm level, for example, and to engage at this level — for example, on mapping a digital identity or on entrepreneurial ecosystems. Although the map is not the territory, it is vital to know the terrain before plotting a course to successfully reach your goal.
3. Digital transformation must be inclusive, leave no one behind, and prioritize the protection of vulnerable communities. Otherwise, at best, it will leave them behind, or at worse, it will increase vulnerability and exclusion. The promise of digital transformation in terms of added value to government and the economy are increasingly recognized, but there is a growing realization of the harms these transformations can bring, particularly on the most vulnerable. We have found that for groups such as refugees, women, and informal, gig, and platform workers, there are increased risks to privacy, personal protection, and secure jobs that enable social wellbeing — not forgetting the risks to political process and social polarization. In supporting clients to develop digital transformation strategies, we have emphasized the importance of incorporating “responsible digital” and “digital inclusion” as critical components of strategy to support ethical and inclusive digital transformation.
4. Digital transformation should be integrative, not additive. In our work with partners, we are often asked to develop a digital program — building a new team and developing a program of work. We have found that to effectively influence the arc of digital transformation, development outcomes can be better achieved if programs and organizations incorporate digital into existing teams, programs, and work. We advised on ways that digital information systems might enable humanitarian to social protection transitions while emphasizing protection and security. We worked with Oxfam to help their team conceptualize, develop, and sustain an approach that emphasized digital technologies that “are not an end in themselves; but …integrated into existing programs.”
5. Digital transformation requires leadership and ownership. All change is hard, and without leadership, it is often sidelined and withers. Efforts to direct digital transformation are no different, and require leadership to own and push for the changes that are required. Globally, efforts such as the Digital Public Goods Alliance provide helpful normative framings. With national governments, we’ve found it to be critical to identify champions who take ownership and invest political capital in attaining success. However, champions cannot be isolated figures. One international development donor that we supported in developing a team of digital champions found they were unable to gain traction because they had no ownership over the processes they tried to influence.

There are many different interests advancing the processes and effects of digital transformations, but for these to lead to inclusive development outcomes requires purposeful, intentional, and considered engagement. This will be particularly important as the challenges of equitable progress, social inclusion, and climate change place ever greater demands on the international community and its capacity to respond.