The one thing we can’t do without in the Fourth Industrial Revolution
This article is part of the World Economic Forum Annual Meeting 2017
In 2012, 80% of Apple’s revenues came from products that were less than five years old. What does this tell us? The world is changing fast and the best companies are able to adapt. In business terms, their ROI (Return on Investment) is also related with their adaptability rate. The ability to adapt is something we should be measuring in the near future in our companies and as a personal metric. What are the foundations that need to be in place so we can adapt to this transition that is taking place?
While everyone talks about the Fourth Industrial Revolution, most companies and individuals are struggling to adapt to new technological changes and learn the skills required to meet those changes. But we know change is inevitable. As we transition through economic periods, investing in what always worked won’t increase the output, as history has proven to us, and that’s why adaptability is so important.
Let’s go back in time to analyse earlier transitions. In the agricultural era, the Pope and kings held the power because land, the scarce resource at the time, was distributed by them. After the First Industrial Revolution there was a shift from land to capital in terms of scarcity, and banks became the dominant player. At this time, banks had access to this rare resource and dictated terms to the kings. After that, knowledge became the limiting factor and corporations became powerful, because they controlled it.
In this Fourth Industrial Revolution complex skills in chaotic domains are in demand – what’s the scarce resource right now and who has the power? The answer is entrepreneurs and individuals who are able to solve complex problems and create and invent systems and processes.
While this answer is probably not surprising, unfortunately our minds are a limiting factor. Did we ever stop to think about how the world has changed in the past 10 years or how those changes have been so different from what happened in the previous decade? Everyone (and everything) is connected and everything possible has been digitized or is in the process of becoming digital. As a result, both good and bad knowledge spreads instantaneously, resulting in a shift in power from seller to buyer. We have knowledge about the products, the underlying tech, access to other customers and an always available megaphone called social media. We’ve heard about self-driving cars, artificial intelligence, robots and automation, and we still struggle to visualize what things will be like. We think in linear terms.
Let’s take a common example used to explain how we are programmed to think linearly. From the day a Thanksgiving turkey is born everything about its life indicates that things will only get better: it’s hatched in a safe environment, cared for and fed daily. The same pattern repeats itself every single day and the moment the turkey has the most historical data to show that its life is likely to keep improving, things change. Thanksgiving comes and suddenly it’s not so good to be a turkey.
Companies, political systems, education — these are just some examples of systems that are tremendously outdated. We are all failing to pass the right message to those struggling to keep their jobs and reduce volatility in their lives. By preventing technology and innovation changes to be slowly integrated in our societies, we are just delaying the impact they will have. Fighting against them might save some jobs today, but it will cause more harm in the future. Moderate amounts of volatility are good; large amounts of volatility will kill us. If we keep acting as if today’s world is the same as that of a decade ago, the result will not be promising.
Although responsive leadership is all about being aware of the transition we are facing, decision-makers are still failing to incorporate volatility and implement changes in today’s organizations and society in general.
While the half-life of a career is about five years, we are still discussing how to save our jobs instead of retraining people. We cannot sustain models where people are organized in divisions and functional silos, each acting in their self-interest, protecting their ideas or solving their own problems. In some cases, it takes a big company more time to put decision-makers in a room than it takes a start-up to ship a product. Ideas can and will come from everywhere and management happens through communication, with empowerment and enablement being key when managing others. Also be aware of experts: they are the ones that can tell you what cannot be done, not the ones that are going to bring the most innovative ideas. Leaders need to remove the obstacles to entrepreneurship and remove the stigma associated with failure. Collaboration, collective learning and experimentation should be incentivized at all levels.
The longer we spend in our careers or businesses without variation or randomness, the larger the amount of underlying risk we accumulate. Unfortunately, this is more or less the way we are approaching this transition between economic periods — trying to reduce volatility and change in our lives as much as possible.
Entrepreneurs are the ones taking the lead on this quickening of change fostered by technology and one of their main characteristics is adaptability. Again, what has worked in the past is not what’s going to work after this transition period. As a society, we need to be able to teach and learn how to be adaptable. This should be one of the most important metrics for businesses and individuals as the Fourth Industrial Revolution unfolds.