The Thought Leader's Voice Podcast

Rachael Kinsella: Hello and welcome to the latest episode of The Thought Leader’s Voice, The Future of Enterprise: Sustainability and Resilience. I’m Rachael Kinsella, Editor-in-Chief at iResearch Services and your host today. Today, we’re delighted to be joined by Sepideh Matinfar, she’s the Senior Researcher at Ericsson IndustryLab. She’s been immersed in the sustainability sphere, performing lifecycle assessments of ICT products and services, holding an MSC in environmental science from Stockholm University. And she’s recently broadened her area of research to industry and enterprise.

She’s here today to share some insights into sustainability from IndustryLabs’ recent market research. Ericsson Consumer and IndustryLab explored the future of technology for consumers, enterprises and a sustainable society. The organization delivers world-class market research, insights and design concepts to drive innovation and sustainable business development. Their knowledge is gained from global consumer enterprise and sustainability research programs, including collaborations with leading customers, industry partners, universities, and research institutions. Their research programs cover in-depth studies and over 100,000 interviews with consumers, working people, and decision-makers each year across 30 countries; so statistically representing the views of 1.1 billion people. We’re really delighted to have you here with us today, Sepideh. Thank you very much for joining us.

Sepideh Matinfar: Thanks, Rachael, for inviting me. It’s so very exciting to be here today. 

Rachael Kinsella: It’s great subject matter that we’ve got to cover, some of the very exciting research that you’ve been doing recently. You’ve been focusing on driving forces for change, which of course, are on everyone’s minds at the moment. And I think if we dive in, looking at some of the research that you’ve been doing around sustainability, what are the driving forces for change in the industry and how are they actually connected to sustainability? 

Sepideh Matinfar: Yes. Today there are several trends affecting enterprises, forcing them to change their business models, strategies, and operations. These include technological innovation, stagnant population growth, the need for upskilling current workforces and more. As the urgency of mitigating climate change is ever-increasing, enterprises will need their future strategies and investment to be based on sustainable technological improvement to ensure there is a future for them at all. 

Rachael Kinsella: Yes, very much so. How do you think enterprises will reach in their levels of sustainability? How sustainable do you think they will actually be in the future? And what will the role of ICT be within this context? 

Sepideh Matinfar: Yeah, within our research, I can say that when it comes to better understanding the future of enterprise from an environmental sustainability point of view, there are different factors that can play a role. In our research, we focused on dematerialization and renewable energy as two of the most important key factors. A short introduction about dematerialization and then I will move on to the role of ICT.

I can say that dematerialization is the shift towards digital resources, products, and services, leading to a decreased consumption of physical resources. As this also leads to increased business value, dematerialization enables enterprises to create more with less. Digitalization is a key step towards higher profitability and improved sustainability. And today, almost 70% of the surveyed enterprises are already halfway or further towards their dematerialization targets. Productivity and profitability are named among the key dematerialization benefits by almost half of white-collar decision makers. And close to 40% say that. The same is for sustainability.

And taking into account the role of ICT within this context for dematerialization, I can say that ICT  solutions have the potential to lessen the need for material by substituting physical products with services and digital products within both the ICT sector itself and also other sectors. And approximately 6 in 10 decision makers agreed that cloud infrastructure, selling software and services, rather than physical products, and using online training courses and documents are key contributors to dematerialization at their respective enterprises. And no less than 8 in 10 decision-makers expect to make significant energy savings till they move towards cloud solutions.

And as I mentioned, nearly half of decision-makers believe about improving productivity and profitability as key benefit of dematerialization and also 40% believe the same for sustainability. And this should be seen as a win-win situation that benefits both the enterprise and environment.

And the other aspect enabled by ICT that could reduce emission can be found in the area of remote working and travel. And here, ICT can further enable remote working as well. This was shown to us during the pandemic and around 60% of decision-makers reporting less business travel and commuting. And by 2030, half of white-collar workers believe that their need to commute and for business travel, in general, will be lower than before the pandemic. Perhaps even more interestingly, I can say that 4 in 10 white-collar employees said their commuting has decreased during the past 10 years.

So it’s hardly surprising that decision-makers and employees alike expect decrease environmental impact as a consequence. They also anticipate that environmental impact of remaining commuting will be lessened, driven by the evolution of more efficient and environmentally friendly modes of transportation. This is important not only from a sustainability perspective, but also for job satisfaction. 

Rachael Kinsella: Yes, absolutely. I mean, there are so many different levels to that, aren’t there? And as we’ve seen through the pandemic, the areas of remote working and travel, people are more conscious about the sustainability aspects of that. And it’s very much a win-win if you’re using technologies in an efficient way, that’s going to be more beneficial for broader environmental issues as well as providing a more flexible and agile workplace. 

Sepideh Matinfar: Yes. And also, maybe I can add about the role of renewable energy as I mentioned, the focus on dematerialization and renewable energy as two main factors that the switch to renewable energy is also a key component in the journey towards a net zero enterprise. And today, more than half of the surveyed enterprises already use renewable energy for most, if not all, of their energy needs.

By 2030, this is expected to increase to almost 3 in 4 and only 2% think they won’t use any renewable energy at all. And also, for the dematerialization frontrunners, this is 8 in 10. And I can just give a brief description about this term of frontrunners, and this is one of the groups we examined in our research where the name is frontrunners, and this is the group that have progressed further in their journey compared to the others. And this group comprises the top third of the enterprises surveyed. And overall, around half of the white-collar employees are at least somehow satisfied with the employer’s support, which is really important here.

So, this transition toward renewable energy, it’s really important to consider that it has its own set of challenges and barriers. And within our survey, we can say that one in four decision-makers are expecting that economic barriers will be too significant. Other barriers mentioned by one in five decision-makers were a lack of necessary technology and a lack of incentives and tax breaks. And no less than 50% of the surveyed enterprises are already investing in renewable energy production of their own. And this is really interesting, I can give an example of installing solar panels. 

Sepideh Matinfar: And when moving in this direction, it is important to have a strategy for handling excess energy, because if connected to the power grid, renewable excess energy can be sold back to the grid during the day and energy can then be purchased at night when the solar panels do not generate any power. However, if the power grid is not 100% renewable, then neither is the enterprise.

And I can give you another example within cloud technology here that if it is used in the right way can be another important enabler of reduction in both energy consumption and environmental impact and many cloud and data center providers today invest in renewable energy sources. And overall, 80% of ICT decision makers expect significant energy saving due to the usage of multi-cloud solutions by 2030, not only for their own enterprise, but for society as a whole. And among dematerialization frontrunner enterprises, the consensus is almost unanimous with 9 out of 10 in agreement. 

Rachael Kinsella: Wow. That’s pretty strong figures! Obviously there’s a real appetite there for using cloud technology, using technologies in the right way as enablers to reduce energy consumption, environmental impact emissions. But also, there seems to be a real appetite for using new technologies and renewable sources, like, as you mentioned, the example for solar panels, but also sort of getting rid of that reliance on fossil fuel. So, it’s really interesting to see the commitment of decision-makers to these different renewable sources to actually using technology to reduce environmental impact. It’s something that we’ve seen in our research as well. So, it’s quite encouraging, I would say, that those kinds of statistics are coming through your research as well.

So, I think that kind of paints hopefully a more positive picture of the future of enterprises. You did mention of course tax conditions, the prohibitive costs of different technologies, or using renewable energy. And I’m sure those are being assessed very carefully in the current geopolitical environment. But what could we see the future of enterprises looking like as they start to develop using more of these sustainable technologies and renewable sources and that evolution of ways of working?

Sepideh Matinfar: Yes. You know, white-collar work has evolved over the years and the trend of today are forcing enterprises to change their business models, as I mentioned. And I can say enterprises without borders, it’s what we expect to see. If you go back to the pandemic, I can say that in all its tragedy, it has led us to ask how can enterprises be better prepared for and resilient towards future disruptive events? It has given us a glimpse into the future of enterprise: one that is highly digital, hopefully more sustainable, and increasingly global.

Considering how decision-makers and white-collar employees alike expect the future to include both remote working and increased international ambitions, we are led down to a paradoxical path where enterprises will simultaneously act both locally and globally. And this is really interesting. They will be more local in the sense that their workforce will spend less time traveling and commuting and instead spend most of their work and life in their own residential areas. At the same time, enterprises will act globally from the perspective that an employee’s residential area could actually be anywhere in the world.

Another perhaps more obvious global aspect is the expansion of e-commerce and cloud-based tools to reach a global customer base. And this transition will certainly put new requirements on digital and physical infrastructure. Non-office-related remote work such as remote control and surveillance of machines and vehicles will add further complexity and requirements to this infrastructure. Increased remote working will also make city planners rethink the way our cities are built and more local life may very well fulfil the vision of 15 minutes city, creating a renaissance for our residential area with a rich set of services catering to a remote working lifestyle. And this could even help to close the gap between rural and urban areas while further decreasing the need for transportation services.

And our industry lab research has outlined several approaches that enterprises can take to reduce emissions and move toward Net-Zero emissions while becoming smarter, more agile, and internationalized. ICT has the potential to continue its key role in this journey, and perhaps now it’s the time to reflect on what kind of society we want to be part of in the future. There’s a collective insight that we need to build an enterprise that is both sustainable and better prepared for tomorrow’s challenges and disruptive changes; and decarbonization and dematerialization are key components in this evolution. 

Rachael Kinsella: Wow. That’s a lot to digest there. But as I mentioned earlier, it does actually seem like a more positive vision of the future for enterprises. And in taking into consideration all these different aspects like city planning, different ways of building residential areas so they’re geared up for remote working and a whole new approach on that delineation between working and home life, but also opening up globally and having that hyper-local support and sense of community. So, there’s a real need for agility across all of these areas. But it sounds very exciting in terms of the direction that things are going. 

Sepideh Matinfar: Yeah, exactly. 

Rachael Kinsella: So, I think obviously, we’ve talked quite a lot about environmental sustainability, we’ve talked about dematerialization, decarbonization, renewable sources of energy, and how they interact with different technologies and different ways of working. Apart from environmental sustainability, the importance of enterprise resilience has also received a lot of attention recently, I mean, not least throughout the pandemic and with the continued battle against COVID-19. Could you tell us a little bit more about your research insights in this area as well? 

Sepideh Matinfar: Yeah, we have done recent research within Resilience Enterprise. And as you know, resilience is a term used both within the business community and academia, often with various meanings; it commonly refers to the ability to bounce back and return to a previous state after a disturbance. In the context of enterprise, the term describes not just the ability to maintain its core capabilities, identity, and structure, but also its capacity for transformation. And for an enterprise to be resilient, it needs to be capable of handling systemic disruptions that can be random, accidental or even intentional. Due to different disruptive events and their impact on enterprises, we wanted to get a better picture of how resilient today’s enterprises are and how they are preparing for the future. 

Rachael Kinsella: This is really interesting. I’m very keen to hear about the research that you found into resilience, because the need for resilience has been increased dramatically in recent years. And  really measuring how resilient today’s enterprises are, it’s absolutely up to the minute. Can you tell us a little bit more about what your study shows in that regard? 

Sepideh Matinfar: Yeah. Our survey shows that enterprises can expect more frequent and severe disruptive changes in the future. We see a substantial concern regarding the growing impact of natural disasters such as fires and hurricanes. And more than 40% of decision-makers say natural disasters caused by climate change, such as flooding and storms, are currently key challenges for the companies. And even more decision-makers expect these challenges to grow in the future.

Employees mentioned natural disaster challenges such as difficulty in access to work supplies and increased risk of getting heard more frequently than for the average event. So, these are important factors that need to be considered for future enterprise. 

Rachael Kinsella: Yes. And it’s something that perhaps even five years ago wouldn’t have been considered as business critical where it’s now obviously coming up in terms of leadership and employees’ concerns about the impact of natural disasters and continued severe disruption that we might not even be able to predict and the implications for enterprises and for the people who work for them. So, it’s something that’s very much on the radar, but only in quite recent times. So that’s surely something that needs to be monitored and taken into consideration in terms of wider business strategies.

And obviously, there’s that very close link between resilience and sustainability. And I think your research also covers off some of the elements of the connection between resilience and sustainability and how we can define those. Could you tell us a little bit more about what you found there? 

Sepideh Matinfar: Yes, for sure. Sustainability and resilience can be seen as overlapping terms, especially from an enterprise perspective, and it will establish a way to describe a company. Sustainability work builds on the concept of a triple bottom line: environmental sustainability, social and economic. A truly sustainable company can handle all three bottom lines.

And looking at the environmental aspect of sustainability means protecting the needs of future by reducing energy consumption and greenhouse gas emission, and also avoiding depletion of natural resources while catering to the needs of today’s generation. This implies a need to focus on efficiency. Yet an obvious way to achieve resilience is to create redundancy, such as by duplicating systems in case of one system going down. So, resilience for many enterprises sometimes plays out in the short to the medium-term scenario. While sustainability, on the other hand, particularly its environmental aspect tends to be associated with a long-term perspective.

So, what is the ideal set up? An ideal setup would be one that is both environmentally sustainable and resilience. So how is it possible? One of the factors that system and its impact on enterprise in general is their preference for redundancy or their efficiency during disruptive events. As our data shows, companies with more experience of disruptive events tend to prefer redundancy. In this context, redundancy may, for example, intentional duplication of fiber connections, energy sources, supply of spare parts, or other input material.

And an enterprise that has experienced more disruptive events, their reliance on redundancy increases. So, this could become a vicious circle leading to increased resource usage and higher environmental impact. To counter this, dematerialization through digitalization could enable enterprises to become more resource-efficient. And nearly half of the enterprise servers today say they already consider both efficiency and redundancy in order to find a best trade-off. An increased exposure to disruptive events makes companies prefer redundancy.

So, our results highlight that if decision-makers are correct in their assumption that disruptive events will increase as we said, it is also likely that more enterprises will opt for redundant solutions in the future. So, what should we do? There will be increased resource consumption contrary to the needs of long-term environmental sustainability. So, when asking decision-makers to what extent natural disasters caused by climate change are key challenges for a company, fewer efficiency oriented-enterprises consider it problematic compared to those that are redundancy-oriented. And this could be linked to efficiency-oriented enterprises, that have strategies that consider environmental sustainability issues more extensively, which in turn makes them less vulnerable.

Rachael Kinsella: So, do you think that having those plans in place and those contingency plans at an earlier stage potentially, or where they have planned it in because they’re already used to more disruptive events, that they’ve got particular ways of tackling them, but how do you balance that with the sustainability issues? And so, one impacts the other. So, energy issues affect the resilience of an enterprise, but also the resilience of the enterprise affects how sustainable they are. So, what are you finding in terms of that balance and where decision-makers are having to focus their attention? 

Sepideh Matinfar: Yeah. When it comes to energy following the energy crises and its disruptive impact, more than 70% of decision-makers believe it is important to have resilient power and electricity supply. And since many enterprises depend heavily on their energy supply, it’s really important as a society become more electrified, the demand for a reliable and cost-efficient electricity supply will increase, and rising energy costs and perceived risk of electrical disturbances. Therefore, making enterprises invest in sources of local renewable electricity production, such as solar or wind energy. And in fact, more than half of decision-makers say shifting to renewable energy will make their company more resilient, both against price shocks and energy disruptions. Just as many say their companies are fully committed to increasing their share of renewable energy usage.

Investments in renewable energy are examples that could contribute to more systematic resilience, as well as lead to further job creation and economic growth. And it is therefore not so surprising that roughly three out of four decision-makers, agree it is very important for power and electricity supplies to be built and run in such a way that they can withstand the effect of disruptive events. The need for a resilient energy system is something that is further discussed in another Industry Lab report by the name of ‘Bringing 5G to Power’, that I highly recommend for those who are interested to take a look at that report. 

Rachael Kinsella: Brilliant. Thank you. I mean, it’s really interesting, isn’t it, that society is turning more to electricity. But then we’ve got the continued concerns and issues around rising energy costs and then perceived risks of electrical disturbances. So, it’s making sure that the supply meets demand. But also, I like that you’ve highlighted the shift to renewable energy and how that can actually improve resilience of enterprises and help to protect them against shocks such as price increases or energy disruptions, particularly on the electrical side, for example.

And I think it comes back to those decision-maker commitments that you were talking about earlier around committing to using more renewable energy sources; to committing to becoming a more sustainable business; and in line with that, that actually becoming more resilient and gearing up to be a more agile enterprise. Have you got any more final reflections on that relationship or around the future of enterprises when you’re considering both resilience and sustainability together? 

Sepideh Matinfar: Yeah. You know, the pandemic has shown us the importance of thinking outside the box and being prepared for the unforeseen. You know, at the same time, the definition of resilience has widened for enterprises from a focus on individual disruptive events to a broader perspective, where resilience is seen in the light of globalization, digitalization, and sustainability.

Additionally, resilience preparedness is migrating from an internal focus on actions within each company to wider collaborative societal preparedness. And sustainability sits at the corner of long-term resilience. Neither enterprise nor societal resilience can be achieved unless alignment and coordination between stakeholders are strengthened and this is true also for sustainable development. Society needs to adhere to improved coherence of actions at all levels: global, regional, and national, to implement the United Nations Development Goals for a more resilient and sustainable world in the future.

Enterprises need to integrate sustainability and resilience into one long-term agenda and assess the strategy required to reach those goals. From a holistic point of view, enterprises and societies need to build up more structural resilience to make it possible for companies to recover and come out stronger after disruptive events. Future disruptive events may even accentuate ongoing societal changes, something that further emphasizes the need for a proactive and long-term approach. I said, again, proactive, being proactive and having long-term approach to resilience and it is time to break the vicious circle of increased resource usage and instead create a virtuous circle of sustainable resilience. Or we can say it is time to rethink resilience. 

Rachael Kinsella: I love that, time to rethink resilience. It says a lot in just a few words and rethinking resilience from all these factors, particularly with a sustainability lens, but also highlighting that need for long-term approaches, long-term resilience. But bringing that into the now, in terms of being proactive, planning, mitigating risk, and planning for the unforeseen, as you mentioned.

I also really like how you pointed out that a truly sustainable organization can handle all three bottom lines, which I think also really speaks volumes and is a very good lens to look at resilience and sustainability at the enterprise level and also from a strategic business perspective. So, I think all of this research has gone into a lot of depth about sustainability, about resilience, about the relationship between the two.

Thank you for mentioning the research that you’ve done on 5G. And I’m sure quite a lot of our listeners will be interested in delving into that in more depth, it’s something that we spoke about at length in recent discussions around sustainability in the technology sector and beyond, looking at the 5G revolution and how that’s going to help support enterprises from not only being more sustainable but also breaking down those global barriers and making those connections. And I think that feeds into your point about increased globalization and digitalization, but also collaborative effort, global alignment, and coordination around the UN development goals, around becoming more resilient, but in a sustainable world.

And I think enterprises can’t act alone to make the world more, more sustainable and to protect our natural world. But working together in a coordinated approach that is both resilient, forward-looking, and bringing in the long-term planning, so that the potential risks can be mitigated, I think that sort of brings it all together nicely in terms of collaboration and how communities and different types of enterprises can work together internationally, globally, and also on a local level to create a more sustainable world.

Have you got any more final thoughts on that before we finish chatting? I think it’s a lot to digest and a lot of very useful insights that you’ve brought out from your research. So, thank you very much for sharing that with us and we’re very privileged to be able to have access to that thinking. 

Sepideh Matinfar: Thanks a lot for having me. And I’m really glad that you found it interesting and you summarized the discussion really nicely. Thank you. 

Rachael Kinsella: Brilliant. Thank you. Well, thanks again for joining us today. It’s really useful information for us. And hopefully, we can keep the conversation going about how enterprises are becoming more resilient and working together towards greater sustainability and see how things are panning out over the coming months. 

Sepideh Matinfar: Thanks a lot. Looking forward to future collaborations. Thank you.

Rachael Kinsella: Thank you.