Today, our world stands at a historical turning point. As we continue to navigate the ongoing repercussions of the COVID-19 pandemic, we are also in the grip of major forces of change that are so powerful, no organization or country could possibly expect to manage them, or the risks associated with them, entirely on their own.
The existential threat of climate change, popular pressure to reduce social inequalities and accelerated digital transformation are just a few among these forces we must reckon with. A collective and collaborative strategy and response, drawing on knowledge within our broader ecosystems, is the only way forward. We must work together to solve and survive.
Organizations already recognize the immense business value of ecosystems. The EY Reimagining Industry Futures Study 2022 (pdf), a survey of more than 1,000 enterprises globally, found that three-quarters (75%) of enterprises believe that integrated, ecosystem strategies will become a significant driver of their organization’s growth over the next five years. Furthermore, over two-thirds (69%) are already collaborating with other organizations as part of a business ecosystem.
Ecosystems will be crucial in the imminent fight against widespread economic, environmental and social disruption. To mitigate threats to their operational agility, organizations need to reimagine their risk strategies by forming new alliances and better leveraging and strengthening existing ecosystem partners. Here’s how:
1. Unite to combat climate change
The World Economic Forum’s Global Risks Report 2022 (pdf) identified failure to take action on climate change as the most severe risk facing the world over the next 10 years, followed by extreme weather events and biodiversity loss. Yet, despite ambitious pledges made by governments and organizations, the transition to a net-zero world is not happening rapidly enough. The world is currently on a trajectory to hit warming of around 2.4°C above pre-industrial levels by 2100, with likely devastating consequences.
If we’re to succeed in combatting climate change and mitigating associated risks, action must be robust and swift. Alliances between enterprises, industries, investors and governments are our best option for mobilizing a global economic transformation, with climate at its core.
For example, there is a huge opportunity for investors to fund the transition to renewable energy. EY analysis suggests that an additional US$5.2t more investment is needed by 2050, in addition to the US$7.7t currently committed. There are also compelling opportunities for large corporates to partner with innovative startups in the Greentech space in developing new products and services and bringing them to market. Significantly, more than a third (34%) of board directors and executive leaders who responded to the latest EY Long-Term Value and Corporate Governance Survey saw creating new sustainable products and services as the greatest advantage of incorporating environmental, social and governance (ESG) factors into corporate strategy.
A powerful example of existing collaboration in the green space is the Green Hydrogen Catapult project, a global initiative that aims to scale up the production of green hydrogen. Its target is a fiftyfold increase in green hydrogen production capacity by 2026.
2. Respond to the pressure to reduce social inequalities
The COVID-19 pandemic exacerbated existing social inequalities. At the same time, it highlighted the important societal role of businesses. Companies in a wide range of sectors – including health care and life sciences, transport, logistics, retail and utilities – were instrumental in enabling countries and communities to withstand the impact of the pandemic.
As a result, the public believes that businesses can – and must – do more to address social issues. Nearly half (49%) of respondents to the Edelman Trust Barometer 2022 (pdf) think that business is not doing enough to address economic inequality. Furthermore, 60% of employee respondents who are considering a job want their CEO to speak out on controversial issues they care about. Businesses that are not actively trying to address inequality and other social issues expose themselves to significant market and reputational risks.
At the EY organization, we believe in the transformational power of ecosystems, and nowhere is that more apparent than in the opportunity for organizations to work in partnership to bring about societal changes. For example, the EY organization is a member of the Global EQUALS partnership, a public-private-sector effort to eliminate gender bias in technology. It also collaborates with Girls Who Code, a non-profit organization that equips girls with computing skills.
By prioritizing diversity, equity and inclusion (DE&I), organizations can proactively address social inequalities while enhancing their own innovation capacities by working together and best leveraging skills from the broadest possible talent pool.
3. Partner to accelerate digital transformation
Digital transformation was happening at pace before COVID-19. It has been further accelerated by the pandemic, which kick-started a new era of hybrid working and forced businesses – and even entire industries – to digitalize at speed.
Organizations that embed digital strategy and infrastructure into all aspects of their business are not only more resilient and agile in a crisis, but they also perform better financially. Furthermore, with many workforces now geographically dispersed, the pandemic has particularly emphasized the usefulness of cloud-based services, as well as online collaboration and communication tools. It has also driven widespread changes in purchasing habits. The EY Future Consumer Index found that 36% of consumer respondents will do more of their shopping online in future.
Under pressure to digitalize fast, organizations should tap their ecosystems for the skills they need to embrace technology at speed and innovate at scale. Tapping into the power of ecosystems and the diverse range of experiences and perspectives they offer allows for more dynamic problem solving, flexible application of technology, creation of disruptive business models, ability to share risk and reward, and effective new means of meeting customer expectations and combating cybersecurity threats.
Alliances and ecosystems are key to EY business transformation and the way we deliver services to our clients. Through our alliance with Microsoft, for example, we create transformative cloud solutions that help to accelerate our clients’ digital journeys. Through our alliance with Dell Technologies, we combine business strategy, industry knowledge and Dell’s leading technology portfolio to help our clients transform into the digital enterprises of the future.