STANDARDS&DIGITALTRANSFORMATION

GoodGovernanceinaDigitalAge

?UNIDO,14October2021

Thisbrochure,introducesabroaderpublicationdevelopedbytheUnitedNationsIndustrialDevelopmentOrganization(UNIDO),whichdescribesdigitaltransformation,itskeydriversandtheimplicationsforthreeoftheSustainableDevelopmentGoal(SDG)pillars—people,prosperityandplanet.Italsohighlightstheroleofstandardsindigitaltransformationgovernance.Areviewoftheinternationalstandardslandscapewasundertakenforsevenofthemost-trendingdigitaltechnologiesofthe4IR.Whilestandardizationreflectsthedifferentfeaturesandscopeofimpactsof4IRtechnologies,thispublicationidentifiestheessentialcriteriatounderstandhowtodevelopappropriateandeffectivestandardsfordigitaltransformationworldwide.Basedonthereview,furtherconsiderationisgiventowhatgoodgovernanceprinciplesarenecessaryforguidingthedevelopmentofstandardsinthedigitaltechnologylandscapetoensurethatthetechnologiesremainhuman-centeredandalignedtothegoalsofsustainability.

TheworldisinthemidstoftheFourthIndustrialRevolution(4IR)poweredbydigitaltechnologiesthataretransformingsociety,economiesandtheenvironment.Increasinglyconnectingobjects,machines,peopleandtheenvironment,thedisruptivenatureofthesetechnologicalinnovationsmakesitdifficulttoplanforandanticipatethefuture.Whatisclearisthattheseismicshiftthatdigitaltransformationbringshasmajorimplicationsforsustainabledevelopment.

Timelyandharmonizedstandardscanplayapivotalroleinshapingthedigitaltransformationprocess,complementingregulationsandcontributingtodigitaltransformationgovernance.Standardscanfacilitatetheongoingdigitalizationofindustrybyenhancingproductivityandefficiency,promotingcompatibilityandinteroperabilitybetweenproductsandprocessesthroughcommonlanguage,whileguaranteeingminimumlevelsofqualityandsafety.Furthermore,standardscanserveasacceleratorsofchangeastheypromoteinnovationandtheuptakeofnewdigitaltechnologiesandspreadknowledgethroughcodification.

CHANGINGWORLD–

THEFOURTHINDUSTRIALREVOLUTION

Revolutionsandchangehavemarkedhumandevelopment.Whatdistinguishesthe4IRfrompreviousindustrialrevolutionsistheparalleltechnologicalbreakthroughswithinandacrossthedigital,biologicalandphysicalspheres.Thecomplexityandrapidpaceofchangeofthe4IRalsomaketherevolutionuniquecomparedtopreviousindustrialrevolutions.Moreover,theCOVID-19pandemichasactedasanunanticipatedacceleratortothepaceofchangeandstructuralshifttowardsthe4IRandtheadoptionofnewtechnologies.

The4IRisstillbeingshaped.Thedigitaltechnologiesthatsitattheheartofthe4IRwillirrevocablytransformsystemsand,consequently,howpeoplelive,workandplay;therefore,societiesneedtounderstanditsrisksandrewards.Itisessentialtoensurethenewtechnologiesinthedigital,biologicalandphysicalworldsremainhuman-centeredandservesocietyandtheplanetasawhole.

IMPLICATIONSFORSUSTAINABLEDEVELOPMENT

The4IRisinfullsteam.Italreadyhasglobalimplicationsforsustainabledevelopment.Enormousconsequencesarisefromthenewandtransformationaltechnologiesastheyenablenewmodesofproduction,newbusinessesandsocietalmodelsandnewbehavioursthatcandisruptestablishedandfundamentalparadigms.

Thepaceandthecomplexityofthe4IRcanblurinternationalbordersandentangleboundariesbetweenpublicandprivate,presentingnationalregulatorswithuniquegovernancechallenges.Regulationcanstruggletokeepupwithadvancesofthe4IR,hinderinginnovationandleavingsocietywithoutdatedlawsandregulations.Regulatorsneedtoadoptamoreagile,flexibleapproachtoregulationtoseizethepotentialofthe4IRtodeliverbenefitstosocietyandmanageitsrisks.

Tograsptheopportunitiesandmitigatetherisksfrom4IRtechnology,the‘regulateandforget’approachneedstogivewaytoan‘a(chǎn)daptandlearn’approach.

TheSDGssitatthecenterofthe2030AgendaforSustainableDevelopmentandguideglobal,regionalandnationaldevelopmentendeavoursuntil2030.Subsequently,asthe4IRcontinuestoreshapetheworld,alignmentwiththeSDGsisfundamentaltoensurethatbenefitsaccrueforpeople,deliveringthemprosperity,andthattheplanetisprotected.

DIGITALIZATIONANDTHE

DIGITALTRANSFORMATION

The4IRischaracterizedbythewidespreadandever-increasingphenomenaofdigitization,i.e.theconversionofanalogueinformationintothedigitalform.Atthesametime,theever-greaterdigitalization—thedevelopmentandapplicationofdigitalanddigitalizedtechnologiesthataugmentanddovetailwithallothertechnologiesandmethods—isservingtoreinforceandexpandthedigitaleconomy.

Inalargercontext,digitaltransformationisabroadertermthandigitalization.Itistheintegrationofdigitaltechnologyintoallorganizationalareas,fundamentallychanginghowtheorganizationoperatesanddeliversvaluetocustomersorstakeholders.Itisalsoaboutprioritizingorganizationalculturechange,whichrequiresorganizationstocontinuallychallengethestatusquo,experiment,andlearnfromfailure.Digitaltransformationisawidelyusedtermthat,inpractice,willlookverydifferentineachorganization.Inessence,itreferstothecustomer-drivenstrategicbusinesstransformationrequiringorganizationalchangeandtheimplementationofdigitaltechnologies.

Thethreefactorsthataredrivingthedigitaltransformationinclude:necessity,thetechnologyitself,andtheheightenedsetofexpectationsthathavebeenraisedby

digitalization.

DIGITALTRANSFORMATIONIMPACTSONPEOPLE,PROSPERITYANDPLANET

Theacceleratedpaceofchangebroughtaboutbydigitaltransformationtoproduction,theeconomy,theenvironmentandsocietywillsignificantlyimpacttheachievementofthe2030AgendaforSustainableDevelopmentandSDGs.Asadevelopmentdrivenbyhumans,despitestillbeinginitsinfancywithlittlementionmadetoitintheSDGs,digitaltransformationhasthepotentialtobeshapedtopromotesustainabilityforthebenefitofallpartsofsociety.

》ImplicationsforPeople-Digitalizationisunevenlydistributedbutoffersthepotentialforovercomingspatialandsocialbarrierstobenefitpeople.

》ImplicationsforProsperity-Digitaltransformationisfundamentallychangingthecommercialworld,impactingcompetitionwhilstdisruptingmarketsandaffectingprosperity.Digitaltechnologiesaretransformingproductionbyenablingnewproductionmethodsandbusinessmodels.

》ImplicationsforPlanet-Uncheckeddigitaltransformationunalignedwiththeenvironmentalconstraintsoftheearthwillnegativelyimpacttheplanet,increasingresourceandenergyconsumption,exacerbatingdamagetoterrestrialandwaterecosystemsandacceleratingclimatechange.Digitaltechnologiesofferthepotentialtocontributetotheprotectionoftheplanet.

?UNIDO

THEROLEOFSTANDARDS

Theroleofstandardsineconomicgovernancederivesfromthewiderangeoffunctionsthattheyfulfil.Amongstothers,standardshavethepotentialtoreinforceopportunities,enhanceproductivity,andpromotetechnologyadoption,whileminimizingrisk,improvingsafety,andsupportingpolicyandlegislation.Thesefunctions,inturn,affecttheeconomyinavarietyofways,includingthroughtheimprovementofcompetitionandefficiency,theexploitationofnetworkeffects,thediffusionofinnovationandthereductionofproductioncosts.

Thereisalsoacircularrelationshipbetweenstandards,regulationsandpolicies,whichfeedintoanoverallconcept/publicgoodofgoodgovernance.Standardsareavoluntarycomplementtoregulation,whichhavetheeffectofenhancingefficiencyandproductivity.Thesestandardsinformeffectiveregulations,whichcancreateanenablingenvironmentforinnovationandminimizeriskfordisruptorsandinvestors.Standardsdevelopedbyinternationalorganizationscanprovideaneffectiveresponsetomarketbarriers.

Inthecontextofdigitaltransformation,thetimelyandharmonizedadoptionofstandardsislikelytoplayakeyroletothisend,bothasameansofpromotinginteroperability,productivityandinnovation,andalsoofensuringthesuccessfulscale-upofsolutionstobeimplementedglobally.Standardizationcanofferanumberofbenefitsandopportunitiesfordigitaltechnologies.Theseoutcomesmaybeespeciallybeneficialinrestoringinternationalmanufacturingandtradetotheirpreviousvitality,asbothsectorsslumpedsignificantlyduetotheCOVID-19pandemic,theassociatedlockdownsandvaluechainbreakdownsinmanyregions.

Digitaltechnologiesandthenewbusinessmodelsofdigitaltransformationdonotfiteasilyintothetraditionalregulatoryframeworkregulatorsusetointerveneinmarkets.Itisclearthatpreviousmodesofgovernance,whicharelargelyreactiveinnature,cannothopetobeeffectiveintheeraofadvanceddigitaltransformation.Governancerulesandregulatoryapproachesfornewtechnologyandprocessesofinnovationneedtobemoreagile,flexibleandresilientthroughthedevelopmentofexperimentalregulationsuchasregulatorysandboxes,anticipatoryapproaches,multi-stakeholderuseofguidelinesandstandards,andthepromotionofinternationalinitiatives.

Eventhoughtheworldhaswitnessedariseofstandards-settingactivitiesrelatedtodigitaltechnologiesinrecentyears,itstillfallsshorttomeettheneedofproducers,consumersandregulatorsandremainsfragmentallyconcentratedatthenationallevel,leavingplentyofworkforinternationalexploitationandharmonization.

GOODGOVERNANCE

TECHNICAL

REGULATION

POLICY

STANDARDS

ENVIRONMENTALPROTECTION

DIGITAL

TRADE

TRANSFORMATION

?UNIDO

SEVENBIGTECHNOLOGIES

Thedigitaltransformationispoweredbydigitaltechnologiesofthe4IR.TherapidadoptionofthesedisruptivetechnologiesisacceleratingandhasbeenfurtherboostedbytheCOVID-19pandemic.Globalspendingondigitaltransformationtechnologiesandservicesgrewby10.4%in2020grewbymorethan10%in2020.

Technologicaladoptionisnotageographicallyevenprocess;agreaterquantityandrapidityoftechnology

adoptionishappeningindevelopedcountries.Leastdevelopedcountriesarehamperedby,amongotherthings,lackofinformationandcommunicationstechnology(ICT)andaccesstoproperarchitectureandbasicassetssuchascomputersandsmartdevicesbutmostimportantly,thecapacitytoensurepeoplehavetherightsetofbasicskills.Illustratingthisunevenness:in2019,92%ofSwisshouseholdscomparedto38%ofBangladeshi,36%ofPeruvianand34%ofPakistanihouseholdshadaccesstoICT.

Detaileddescriptionsareincludedinthefullpublicationofthefollowingsevendigitaltechnologiesimportanttothedigitaltransformation:artificialintelligence,bigdata,blockchain/distributedledgertechnology,InternetofThings,robotics,3Dprintingandautonomousvehicles.Thescopeandimpactofthesetechnologiesvaryandstandardizationhasaroletoplayineachonetohelpdelivertrust,privacy,protection,interoperabilityandsustainability.

PRINCIPLESFORGOOD

GOVERNANCEINADIGITALAGE

Therapidandextensiveadoptionofdigitaltechnologiesandtheirfar-reachingpervasiveimpactonpeople,theirprosperityandtheplanetsuggestacoresetofdistinctprinciplesisneededtoguidestandardsdevelopedfordigitaltransformationgovernance.

Thereviewofcurrentdevelopeddigital-relatedstandardsandtheactivitiesofstandardsdevelopingbodies’

committeesinthedigitalspace,andforthesevenbigdigitaltechnologiesinparticular,evidencedthatthe

followingsevenprinciplesshouldbeplacedatthecenterofstandardsmaking:

》Trustworthiness》Inclusiveness

》Sustainability》Interoperability

》Safetyandsecurity》Dataprivacy

》Internationalcollaboration

TRUSTWORTHINESSINCLUSIVENESS

INTEROPERABILITYDATAPRIVACY

SAFETYANDSECURITYSUSTAINABILITY

INTERNATIONALCOLLABORATION

?UNIDO

Thesevenprinciplesrelatetotheimpactsofnewtechnologiesinthedigitaleraandarebasedonthenatureandinternalmechanismofstandardizationinthecontextofdigitaltransformationgovernance.Theycovernotableconcernsaboutthecompleximpactsofnewtechnologiesonpeopleandtheplanet,intermsofwell-beingandethics,aswellasthekeyfactorsemergingfromtheevolvingdiscussionsaboutwhatshouldbeconsideredinstandardsmakinginthecontextofdigitaltransformationgovernance.

LOOKINGINTOTHEFUTURE

Progressintheinnovationanddevelopmentofdigitaltechnologiesanddigitaltransformationiscreatingafast-movingenvironmentandisunstoppable.Theevolvingregulatoryandpolicyframeworksdevelopappropriategovernancerulesfortechnology,however,thisevolvingframeworkhaslimitationssuchasbeingprimarilynationboundandtime-consuming.Standardshaveanimportantroleinthisframework,beingtransnational,multi-stakeholderdriven,speedytodevelopandresponsivetouserneeds.

Standardshavethepotentialtocontributetodigitaltransformationgovernance.Inordertounlockthispotential,thefollowingaspectsshouldbeconsidered:

》Thescopeofimpactsofthedigitaltechnologiesshapingthe4IRvary.Arobuststrategyisrequiredtounderstandtheimplicationsofcurrentandfuturetechnologiesandtoshapethedigitaltransformationtowardspeople,