The Fourth Industrial Revolution, a concept introduced at the World Economic Forum in Davos by Klaus Schwab in 2016, describes a fundamental shift in the business and social landscape — a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.
As part of Salesforce’s participation in Davos 2018, we interviewed a number of chief executives and thought leaders about the impact of the Fourth Industrial Revolution on the business world and how CEOs need to rethink their technology and business strategy to thrive in a time of considerable disruption.
Tom Puthiyamadam is a principal and Global Digital Services Leader with PwC’s Advisory practice, and is responsible for developing programs that help major organizations increase growth by adopting cutting-edge, digital-first business strategies. We discussed how companies should prepare for disruption, and embed innovation and agility into their business practices.
Thanks for joining us, Tom. I'd like to start with a quote from the CEO of Alfa-Bank, Alexey Marey. He said, “The idea of a corporate 10-year plan is becoming a utopian ideal.” That type of long-term planning is becoming somewhat unattainable in a world that is changing as quickly and as comprehensively as the Fourth Industrial Revolution dictates. How should companies be retooling and refocusing to be able to pivot, change, and learn quickly over a shorter time frame than ever before?
I see too many CEOs who believe that simply “adopting new technology” is the answer to that question.
Yes, new technology will be part of the solution, but thinking just technology is the answer, that’s wrong. The term “digital” is often a crutch. It's a lazy person's way of describing the type of transformation we need to go through, but it isn’t backed up with enough action to create the significant behavioral change in employees and consumers that is required.
Too many executives hurry to adopt new technologies. And when they do, they lose focus on the true business outcomes they want to achieve. There’s one big issue executives give short shrift — reality. How technology will actually impact employees, or customers, is often subjugated to this amorphous hope that technology itself will be the answer to all your woes. It’s not.
I believe that the companies best equipped to thrive in the Fourth Industrial Revolution are those who start by looking closely at and investing in their human capital. Most organizations’ employees simply don’t have the skill sets required to take on the digital change they’re tasked with rolling out. Companies must begin by preparing their workforce appropriately.
Otherwise, no matter how sophisticated the technology the company adopts, their business won’t be able to truly absorb it because they haven’t prepared their people.
The true challenge for CEOs who want to be more nimble isn’t rapidly adopting tech; it’s about ensuring that you have the correct mix of employees that you need, and the right skill sets and capabilities.
To do this, you also need the right executive leadership team in place — who actually appreciate how this type of transformation needs to happen. And — to let you in on a secret — companies don’t have a leadership team like this.
Finally, you need the right culture. A company needs a culture that supports the type of digital transformation you’re looking to create. That means breaking down silos and not letting hierarchies get in the way. It means thinking and deciding more quickly and, in most cases, embracing working in new ways.
Human capital is the most pressing issue we have to face right now. It’s not robotics and AI — even though these are what dominate executive board meetings and news stories. The key question for most CEOs is: How do we change our organizational capabilities so that our people can respond and leverage the new technology that's available to them?
The evolution of the workforce is a key element of the Fourth Industrial Revolution. And it’s evidently a core pillar of your own recommended approach to digital transformation. So what advice do you have for CEOs looking to reskill employees, embed a more agile and innovative culture, and empower employees to be fit for purpose in the Fourth Industrial Revolution?
You need to be complete. You need to put a holistic solution in place. Too many companies think that driving innovation and agility is about creating a discrete “innovation unit” within their business. Set up a group of a dozen or even a hundred employees, on another floor or in a faraway office, and let them come up with the cool ideas and the workways of the future.
Frankly, that’s the easy way out. Starting from scratch in a small, controlled environment just lets CEOs avoid thinking about the vast majority of employees in their organizations. CEOs tend to expect they can take that innovation unit and scale out their learnings across the existing workforce.
Let's think about that for a second.
What is the impact of a little incubator sitting in the corner of your business? Yes, you’ve let a select few people play around because you think that could be important. But frankly, the scale of disruption right now is such that we are long past the time for a rinky-dink experimental unit. It’s imperative that you build this capability to innovate and be agile across the entire enterprise.
Think about it as a sort of “no-man-or-woman-left-behind” policy. Don’t just hire new talent — because if you don’t create an internal environment where they can thrive, they’ll fail. Instead, build a holistic solution.
There are three stages to making that happen.
First, you've got to be able to build skills in your current workforce. That doesn’t mean giving everyone a lunchtime coding class. It means making decisions on what skills they need, and how you’re going to deliver them. Start with yourself and your immediate leadership team. The tone is set at the top — the more skilled and versed your senior leadership team is, the more employees will respond. Every employee needs to see their senior-most leaders make the transition, model the new behavior, and adapt to a digital mindset.
The corporate training and development space is changing rapidly. And it’s incredibly clear that the world of the future will require an entirely different set of skills than those in demand now. What are the skills and attributes your employees will need if you look at the world through the lens of AI, for instance? How can you empower your employees so that they will welcome this upcoming disruption?
Second, reskilling your existing workforce is not enough. You have to be able to inject your organization with some new talent. But don’t just go out and hire people who tout themselves as digitally savvy. Figure out what kind of new talent — and the skills they’ll have — you truly need. That’s actually relatively easy, if you’re clear what you want to achieve in the future. Take a look at the future and ask yourself: What are my gaps? The easy answer is that you need more computer science hires, but you should begin with a broader starting point. Are you missing creative, design, and ethnography skills — which will be valuable to making AI human-friendly? How about analytics or machine learning? Do you have employees who are skilled in blockchain? What about solution architects who can balance the wild creative thinking with the practical technology with business goals?
Third, it’s essential you ensure that your current workforce and those new hires operate within a corporate environment and corporate culture that is designed to foster and boost innovation.
At PwC, we’ve developed what we call the BXT philosophy to help do just that. The focus is on bringing diverse talent and diverse perspectives together. BXT stands for business, experience, and technology.
Bringing super-diverse teams together to solve problems is already important — and it will be even more crucial in the future. But if you’re going to do it, it’s crucial you have a singular language to get it done: It’s how you talk about everything, how you approach problems and solutions. That’s what BXT is, and we now apply that way of working to almost every digital transformation.
You mentioned that the skill sets and capabilities that the modern workforce requires are changing significantly. You’ve also written elsewhere about the concept of a skill’s half life — and how that half life is shrinking as the world changes more quickly. What are the sorts of skills that humans will need in an AI-driven world, and how can companies go about creating a process to upskill their employees on a continuous basis moving forward?
Digital transformation, and preparing for the Fourth Industrial Revolution, are not simply about understanding technologies like blockchain, the Internet of Things, or AI. That's only about 10 percent of the challenge.
The bulk of the challenge is dealing with the pace of change we’ll all be subjected to — the reduction in a skill’s half life. Your competence will become out of date faster and faster as technology advances. The challenge isn’t upskilling to fit today’s business environment but building a competence to be constantly upskilling, ever more quickly.
The question to focus on is simple: How can you transition your employees to an environment where they are continuously learning and developing new skills? There’s little certainty about the future — but one thing that is certain is that a year or two from now, the technologies we’ll be adapting to are going to be different than the ones we are scrambling to adopt today.
At PwC, we're assessing all 250,000 of our employees for what we’re calling “digital fitness.” As a result of that assessment, we’re giving each of them personalized, bite-sized pieces of information and insight to consume, information that complements and expands their skill set.
That idea of digital fitness dictates how ready an employee is to transition to a world of continuous change and continuous learning. And there are two key elements to digital fitness.
One: Is an employee a collaborator? Does he or she know how to use various social capabilities to solve problems? How open is this person to be doing just that?
Second, what's the employee’s level of curiosity? Are you a person who wants to continue to learn new things? If you don't have that mindset, it doesn't matter what assessment you take today or what training you are given tomorrow. In 12 months’ time, you will again be somewhat irrelevant.
Ultimately, we think it's not just the technology. A company’s ability to thrive in the Fourth Industrial Revolution is about the mindset its executives foster in employees. It’s far more broad than building technical skills. Instead, think hard about how you begin to instill a high level of curiosity in your people. How can you encourage them to collaborate and work as part of a team? That’s the real core of retooling your workforce.
For us, with a focus on digital fitness, the curiosity to learn, and BXT, we create a new environment and for new types of talent, and a workplace that fosters the type of thinking that cultivates making what's next.
This article is part of a Trailblazer spotlight series on the Fourth Industrial Revolution — a concept introduced by Klaus Schwab at the World Economic Forum to describe the fundamental shift in the business and social landscape as a result of a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres. For this series, we’ve interviewed a number of chief executives and thought leaders about the impact of the Fourth Industrial Revolution on the business world. Check out the the other posts in the series: