The fourth industrial revolution: it's not all about machinesFollow @PwC
Author: Bob Moritz , Chairman, PwC International Ltd.
Truly dramatic transformation is a rare phenomenon. But that’s exactly what we are in the midst of with the current shockwave of technological transformation. The World Economic Forum has termed it nothing less than the fourth industrial revolution. Advances such as robotics, machine learning, 3D printing, the Internet of Things, and blockchain are changing not just the way industries work but, in many cases, the business models they are based on.
So as CEOs, how do you prepare yourself to navigate, play a role in, and succeed in this time? In a new article on Strategy+Business, we’ve outlined 10 principles that can help you do just that. I want to share a few of those with you in the hopes of spurring how you are reimagining the possible for your company, industry, and stakeholders. In doing so, I want to emphasize that while technology is spurring these big changes, it is human insights and human decisions that will the ultimate determinants of success.
First, let’s look at technological acumen. No matter what industry you’re in, you live in a programmable world, and software will be key to your competitiveness. This is not just a matter of recruiting people with software skills. It has to do with raising the overall technological acumen of people at your company. They need not just the technical training to use digital tools, but insight into the patterns of technology: for example, how to create an operations footprint that can take advantage of the industrial internet, or how to accumulate the type of data that can foster machine learning.
The importance of insight brings me to my second point: designing for customers. Because the next industrial revolution is driven by large-scale digital technology, it’s easy to overlook the way it could affect human relationships. The new infrastructure is a web of connections among people: producers and consumers, in particular, are much more closely connected than they used to be.
Through smartphones and social media, consumers can connect directly to producers and services. Through sensors and data analytics, producers can be thoroughly attuned to the needs, habits, and long-term interests of consumers. As a designer of the new platforms, or a business leader participating in them, you have an unprecedented opportunity to build a customer-centric enterprise, one that connects with what people genuinely want and need from your company, thus generating commitment that will last a lifetime.
Third on my list is rethink your business model. We have all become accustomed to disruption. In industry after industry, we see that those who cling to old business models lose ground. This next industrial revolution will accelerate this sequence, especially in manufacturing, by reducing costs and improving efficiency at a broad scale.
If your company is falling into the trap of thinking that it can be profitable following its traditional business model, it risks losing out to more flexible competitors. You are not in the same industry that you were in before; soon, that industry may not even exist. Your path to profitability is different. Your opportunities for raising capital have changed. Your circumstances are probably different from those of any other company, so you need to look freshly at them, without relying on an industry playbook, and rethink your business model accordingly.
Finally, in a world of robotics and automation, don’t fall into the trap of putting machines before people. If people are shut out — of jobs, creative opportunities, income, and customer satisfaction — then embracing technology will backfire. As the next revolution advances, it is imperative to keep working on the understanding of how people are interacting not just with the technology but also with its consequences, such as the issues of transparency, trust, privacy. Business, in particular, will thrive in this new world only if its leaders understand the place of human values. So, set up your enterprise to foster better connections among people, to encourage humane behavior, and to build the capabilities that overcome technological isolation.
You can read the rest of the 10 principles by checking out the Strategy+Business website.
From 2009, Bob led PwC US as its chairman and senior partner. During his tenure, the US firm focused on increasing quality service and enhancing its brand and reputation by developing and retaining key talent and expanding its capabilities across all areas of the business. Bob speaks widely on, and is a champion for, diversity and inclusion in the workforce as well as being an advocate for workplace flexibility. Read more