Climate Change and Digital Transformation
Good afternoon,
I was about to continue the series on the Digital Transformation methodology for change in organisations, but developments in the France-Antilles situation and the hurricane season led me on a different path. I’ll come back to the methodology in a new email.
On to the update.
Follow-up: France-Antilles
A third proposition has surfaced in the last couple of days to take over the failing old-media organisation, as reported by RCI. The proposal is apparently unpopular as it appears to implement radical reductions in labour costs by reducing staff numbers from around 270 to just 40. The Unions are, understandably, unhappy, and there is a strong chance nothing will come from this offer that is trying to stem 400K€ per month in extra debt. The other option is complete failure with a loss of 270 jobs and, more importantly, the loss of the only daily newspaper in the French West Indies.
I’ve written about what went wrong and how previous strategic decisions inevitably lead to this situation and how others should see this as writing on the wall for their similar organisations. My opinion is based on the elements before my eyes.
It has emerged that the expensive investment of a new printing press made to diversify into other print markets. The absurdity and short-sightedness of this astounds me. Whether or not the machine purchased was productive is irrelevant — it reportedly failed regularly and forced the Newspaper to reduce the number of printed pages per run — as the hard reality of printing is that it is a dying practice.
The European Union, the French Government and many other authorities have mandated that printing non-essential documents be phased out immediately. So what would they print? Birthday Cards?
RCI's article (French), unsurprisingly given that it too is an old-media company, was off by a long way with its suggestions to save FA. It suggested entering the already saturated shop catalogue market where the only result can be a zero-sum game where everyone loses. If they enter the market to gain clients, they'll need to reduce prices; the competition responds with the same cuts under pressure as the customer's cost expectations are adjusted downwards, which in turn leads to lower prices and the ultimate failure of printing companies. Whoever holds their breath longest wins, but nothing is left in the market to monetise meaningfully at the end of the day.
RCI went on to suggest that the new market might generate funds but then in the next paragraph admitted that it is costly and challenging to deliver the printed articles to Guadeloupe and presumably Guyane (they didn't mention). At no point is anyone acknowledging the fact that the entire business model has to be re-thought out, starting from the position of the end-users. Start with the fundamental question:
What is the Job to be Done?
Until they understand this fundamental question and design a value proposition that directly responds to it, then designs a business model that supports the value proposition, they are going to have a very rough ride, leading to inevitable failure.
As I said before, I believe the business is ultimately going to get bought; although for me, it is nothing more than re-arranging the deck chairs on the Titanic.
Climate Change and Digital Transformation
I'm currently writing while a tropical wave develops in the ITCZ, with a trajectory passing over the Windward Islands according to the NHC. Digital Transformation, it seems, is both a blessing and a burden on the climate. According to the World Economic Forum:
.. a number of challenges will need to be addressed if the full potential of digital transformation is to be realized; some relating to the environmental impact of digital technology itself. For example, e-waste is growing, resulting in lost potential value from reusing or recycling devices, ever-growing mountains of landfill and increasing volumes of toxic chemicals being released into the environment. According to a United Nations study, 40 million metric tons of e-waste was discarded in 2014, of which 7 million metric tons alone were from the United States and 6 million from China.
Data centers also contribute significantly to emissions due to their high power consumption and often inefficient cooling systems. Data centers currently consume 1.5 to 2% of global electricity, a rate that is growing at 12% a year. Consumption is projected to increase to 140 billion kilowatt-hours annually by 2020. That would be equivalent to the annual output of 50 power plants and create carbon emissions of nearly 150 million metric tons of carbon annually.
The largest culprit of all is the cryptocurrency industry. However, let's look at the positive side for a moment to have some balance.
Digital Transformation can substantially help in the event of a climate disaster like the one we've seen in the Bahamas. At every stage, before, during and after, digital tools can help prepare, deal with and recover quicker, better and with more accuracy.
Preparation
Hurricanes are unique risks, in the sense that they are somewhat predictable given that we can discern their formation early and that new prediction models are more accurate thanks to computational advances like ML and a better understanding of the climate environment surrounding the storms; there are more sensors, better satellite imagery and many more advances.
For those of us in hurricane-prone regions, preparation often starts when the local authorities announce the coming of a storm, but much more is possible with digitisation. How many of you, for example, have a complete digital record of all essential documents, like your most-treasured photos, your insurance documents, your identity documents, to name a few? Do you store them out of the region in a safe — from natural disasters — and secure — sufficiently protected by 2FA and encryption — environment? I know I could do better!
What about personal belongings? Have you extensively audited your hi-fi, television, kitchen appliances, computers, phones, paintings, the list is endless? If the worst doesn't happen, how can you justify to your insurance company the real value? Currently, insurance companies tend to allocate an envelope in the event of a disaster, but as more and more issues are going to arise as a result of climate change, insurers are going to become ever more strict in the allocation of indemnities.
An opportunity exists for new business models, whereby insurers take in to account the accurate inventory list to adjust premiums and payouts accordingly. In the US, health insurance companies are already making Apple Watch and other activity tracking devices available to their customers with the promise of reducing their premiums. In Europe and further afield, devices in cars track driving behaviour with benefits not only to the driver in terms of cost reduction for insurance but for all drivers on the road with reduced accident potential. As someone who suffered a significant head-on collision and is lucky to be here, I would like to see that in more extensive use.
There are other natural risks that we cannot predict with much accuracy currently, earthquakes, tornadoes, flash floods as examples. A digitalised inventory tool using your smartphone's camera, machine learning and access to an extensive product database like Amazon's would simplify and speed up the process. Imagine pointing your phone at an article, pressing the shutter, the image treated by AI to add its make and model to your "In case of disaster" list that you share with your insurer. Incidentally, I'm not advocating the actual use of Amazon's database!
When disaster strikes
Better documentation and data collection during a disaster is another area where digitisation could help our collective understanding of what is happening. I'd read about a background app that uses the accelerometers in smartphones to measure the shaking earth and send that data to scientists studying tectonic and volcanic activities. I've no idea if it became a reality, but you get the picture.
Other digital sensors deployed at small cost would provide highly localised data to further our understanding of these phenomena. I am seriously toying with the idea of setting up a weather station in my garden and sharing that data with weather experts.
Recovery
Like for the inventory process before-disaster, the same application could be used to file claims with images showing the before and after the situation with Geo-tagging confirming the claims' sincerity. I say this as fraud is a common occurrence after disaster strikes leading to a lengthening of claims treatment for all victims, not just those attempting to gain something from the situation. Specialist DR offers like those from KPMG have embraced Digital Transformation to streamline claims through the use of analytics and automation.
The use of AI to cross-asses claims for inconsistencies with a regions' or cities damage claims is currently common practice. KPMG can even deploy drones to compare the before and after images coming up with estimates (that go through further validation) of the damage and the potential value of the insurance bill. These are, highly specialised applications, but they give you a taste of what is to come further down the line when the democratisation of the technology results.
Digital is additionally helping with relief efforts after disasters; we've seen digital mapping used to identify those in need in Haiti after the earthquake, online donation systems (beware of frauds) for victims of hurricanes and sites like stormCARIB digitally democratising meteorological information on impending storms.
One last word, I place no judgement on the information I've presented here, whether I think it is good, bad, justified or not, that's not the purpose of this article. I'll leave you to make up your minds. For now, let's hope this hurricane season passes without more trouble, we've had more than enough with Dorian.
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