“You cannot wait until a house burns down to buy fire insurance on it. We cannot wait until there are massive dislocations in our society to prepare for the Fourth Industrial Revolution.” – Robert J. Shiller, 2013 Nobel laureate in economics, Professor of Economics, Yale University
The Fourth Industrial Revolution describes the advent of smart technology integrating itself into all aspects of work and life and the economic transformation and disruptions that will follow. Whether you are a small and medium-size business owner, or a manager in a corporation, the Revolution presents both challenges and opportunities, as well as important implications on individual and organizational leadership.
What are the opportunities for business?
The opportunities for businesses can be summarized in two: the productivity gain and potential growth in new products or revenue streams.
Smart technologies that enable machines to interact in the workplace also allow them to make decisions autonomously. The opportunity is found in the immense efficiency gains in the value chain of bringing a product to a customer – the potential for lower costs as well as higher quality.
Since technologies in the workplace also interact with technologies that monitor the marketplace – businesses also gain unprecedented access to huge amounts of data about customers. The opportunity is found in mining that “big data” to unlock new business opportunities and revenue streams – finding new customers and gaining the increased intelligence to create more desirable products and services.
What are the challenges for business?
The challenges for businesses can be summarized in two: staying ahead of the competition and managing the internal disruptions caused by smart technologies.
Pierre Nanterme, CEO of Accenture has stated that digital is the primary reason half of the companies on the Fortune 500 disappeared since the year 2000. And small- and medium-sized companies have been the ones disrupting traditional industries. If companies from small to large are unable to utilize smart technologies to their opportunistic advantage versus their competitors – they risk losing in the marketplace.
But smart technologies will also cause immense disruption. Nearly every activity that is technically feasible to automate has the potential to be automated. McKinsey research suggests that 45 percent of the activities individuals are paid to perform can be automated by adapting existing technologies. The challenge therefore is building the capacity of talent, up the value chain or risk becoming obsolete, and for organizational structures to adapt to disruptive change.
Implications on the Workforce and Organizations
Managers face the task of creating agile learning organizations as well as the challenge of future proofing their talent with effective leadership skills training.
For large organizations, decision makers must undertake the task of designing their organization for the future. McKinsey research states that the onus is on decision makers to balance both agile processes within a stable structure. Using the adaptive leadership framework, an agile workforce is one that creates a holding environment to rapidly respond to the market while still handling the chaos of change within the organization.
Within a fixed infrastructure, projects and teams must be organized around the most dynamic aspects of the market. These smaller teams within large companies act as “intrapraneurial” ventures and undergo continuous change and renewal, much like small and medium-sized businesses. Both the processes and rules of engagement in which these teams operate are flexible and oriented towards creating value.
To future proof their talent organizations must place individuals in positions where they have the capacity to use the technology for their own ends. Since technology can increasingly make autonomous decisions on hard facts and data – there is a premium on the softer qualities that machines do not have when facing uncertainty.
Leadership development programs must help workers attain “softer” skills such as learning agility, adaptability, resilience, design thinking, data influencing, and even imagination. With these skills, they will still have the advantage over machines in setting the parameters in which smart technologies are being used. Along with these skills, there will be a premium on such qualities as character, as well as an artistic sensibility to widen the parameters. Ultimately, agile organizations must invest in leadership training that enables their talent to motivate and mobilize their people while creating value in an unpredictable environment.
By Faustino John Lim