As the Fourth Industrial Revolution takes hold, developments in technology are advancing at quicker and quicker paces. Trustworthiness is a new currency from consumers and business partners, including reputation and branding. These can create value in talent acquisition, trust in the market and create bargaining power to broker deals.
Companies, as well as countries, are competing to attract the best talent, from cyber security professionals to AI specialists. Companies face challenges from talent shortages, out-dated processes, knowledge gaps, overreliance on traditional procedures, inability to adapt and innovate and even suffering from a fear of interfacing with arising developments.
CEOs and managers have a series of hurdles that they must overcome to promote interests in key areas: cybersecurity, AI, Big Data and the Internet of Things. Founder and Executive Chairman of the World Economic Forum Klaus Schwab said:
“In today’s world, it is no longer the large fish that will eat the small fish, but rather the fast fish that will eat the slow fish.”
This is still true today.
Mounting pressure from investors on CEOs to deliver results faster for lower costs, to demonstrate the effective use of analytics to drive value and cater to new technologies to streamline business models and deplete overheads, is causing headaches, especially in the Golden Age of Technology.
Technology is not merely changing corporations, it is redesigning business models and how business should be run. A CEO now needs to be tech-savvy (or have access to tech experts), this bringing with it the challenge of keeping up with technological development. Fortune.com found that the concerns of Fortune 500 CEOs included the rapid pace of technological change (73%, up from 64% last year) and cybersecurity (61%, up from 59% last year.) This should be taken merely as an insight, as the survey had only 72 respondents, a response rate of 14%.
- Implementing procedures
Actually gearing a company towards using tech requires long preparation and incubation procedures, training of personnel and reworking of work process. Data is the largest example – more and more data is being collected about consumers, for example, from sensors, either via online purchases or through their cars.
The cost of sensors, network hardware, computing power, data storage, and communication bandwidth have all fallen dramatically, allowing for mass deployment and greater levels of data collection. This has required data-analysis systems to keep pace. This data can be used to feed AI or use cloud computing systems and standard interfaces to create powerful applications, rendering them cheaper and faster to implement at scale, across global operations.
Data is one example of the changing business environment, and it is believed that no part of the modern manufacturing organisation will remain untouched by this flood of data, and digitisation redefining the business case for digital solutions everywhere.
- Robots and Automation
Robots and AI have received unrivalled hype in recent years, even causing prominent figures to call for a universal income. Cheaper, more powerful, more reliable and more highly integrated robotics and automation systems allow companies to extract maximum efficiency from a workforce. Such robotics can replace human workers. China, once the empire of low-cost labour, is expected to have one-third of the world’s industrial robots by 2018.
A challenge for CEOs is striking the balance of implementation – understanding where something can be automated and how these processes of manufacturing, for example, can interact. Companies also have more choice in how they can develop and apply robotic techniques, whether opting for a ‘lights out’ full automation approach or a combined workforce, a CEO needs to be aware of the strengths and drawbacks of robotics.
Interestingly, PwC’s 20th CEO Survey found that, of 1,379 respondents, 52% stated a desire to increase their headcount, with only 16% planning to decrease it, even with the onset of automation and increasing usage of robots. CEOs’ willingness to increase headcount shows a desire to rebalance the workforce, incorporate more skills such as problem-solving (76% stating this is very important) and adaptability (62%, very important).
- Disruption to Normal Manufacture Practices
When one also considers the developments in 3D printing technologies, which are also letting manufactures create products through new techniques, before unachievable, more design choices await CEOs for developing business. Pharmaceuticals, for example, will see a large benefit in implementing 3D printing tech, as researchers can experiment with such systems to manufacture pills for idiosyncratic purposes, fine-tuned for individual patients.
Diversifying skillsets shows a desire to strengthen innovation, building on a strong core of human workers, AI and automation can be used to out-manoeuvre competition, capitalising on new opportunities, from support skills to investment. An augmented workforce is the future.
- Skills Gap
Businesses will need to sure up their employee base with the necessary skills to work in the new environment. An employee that cannot adequately use the new technology mitigates any advantage gained from having that technology. Moreover, there will be resistance in encouraging employees to embrace Rev 4.0, particularly if the technology replaces their co-workers.
This could also present a challenge to the culture at a firm, reducing employee count, spreading less employees over more departments could create a culture shift, especially if there is a Rev 4.0 expert, for example specialist staff, worker divide. Companies would be well placed to offset such feelings by raising spirits through catalysing employee growth, encouraging company social events and offering more opportunities to develop.
As touched upon, the issue with intelligent machines replacing humans is that no human can compete with the machine for the job. Whilst this currently does not include emotional intelligence and is limited to routine and low-level jobs, machines in these positions need no holidays, suffer no sickness with no personal or family issues warranting time away from employment. The rise of the automated workers is strengthened by the efficiency they bring, ultimately trickling value to shareholders.
Combatting the skills gap should be a priority for companies looking to implement new technologies that have no forerunner in the company; for example, if a company is already using AI, using a new iteration will not require as much training as using automation for the first time. Workshops and skills courses that update workers can be used for re-training on the job. Ultimately, CEOs should look to re-train rather than higher fresh talent if the skills can be learned on the job as better company experience with new knowledge would outweigh new skills without company or work knowledge.
- Cross-Pollination of Departments
CEOs also need to support new collaborative and cross-functional teams to work together in order to make the best use of their time and investments. Having teams isolated from one another in a system that requires constant connectivity is a sure-fire way to destroy value.
A major impediment to generating business value is companies treating business and IT departments as entirely different organs of the company. For years, firms have hired IT specialists to maintain their networks but there is more potential that simply a cyber janitor. Not communicating efficiently leads to a lack of shared understanding. Ensuring that IT specialists regularly communicate with their business compatriots to ensure cross-pollination of ideas is key. The worst case scenario is having a model of analysis, for example, being developed by IT specialists to use Big Data, but business leaders in the other department being unable to fully utilise such a system. As such, CEOs much use a single, integrated ecosystem platform, allowing business and IT ideas to permeate all stages of creation, from development to production. Only then can analytics be truly optimal.
- Cybersecurity requirements
Having everything attached to everything else in the Internet of things (IoT) is going to monumentally increase the vulnerabilities present in any given network. With more nodes, connections and burden of connectivity, systems are going to have to be more secure. Rev 4.0 will usher in more calls for greater cybersecurity.
Cybersecurity has suffered from a lack of prioritisation – either resulting from other interests garnering more attention or CEOs not understanding their role in promoting security, this could be caused by the unclear responsibility that has been put on companies to hold cyber standards. CEOs need to consult experts and facilitate better tech adoption by securing their internal infrastructure.
Companies will need to map their networks, assessing the risk and critical factors relating to security. Such an assessment should examine accessibility to systems, for example, possible threats from internal sources, from disgruntled employees to internal human error, and external sources including hackers. Further, it is necessary to examine the value of processes and assets, from machinery to intellectual property, ensuring that there is insurance, security measures and that any vulnerability is sufficiently identified.
Once such an activity is conducted, designing an action plan for responding to cybersecurity threats, including backing up data, locking off operations so attackers cannot reach them and using strong shielding software, is necessary to provide additional protection. Furthermore, routinely maintaining systems, briefing experts with updates and making sure the workforce is diligent in using the systems will go a long way to reducing vulnerability.
CEOs would do well to understand how the IoT and cybersecurity will impact their business model, from incorporating routine maintenance and updating to regularly consulting experts for ways to secure networks. As the IoT comes into fruition, there will be better technologies available, cutting down expenditure and effort. Staying afloat of these developments will catapult CEOs to the forefront. However, simply treating this as another ‘factor’ in business would be to create a grave injustice; security now underpins all of the business. Setting up clear policies for data handling and security will help keep things running smoothly.
A big challenge for CEOs is maintaining trust – in a time where people can be replaced by machines, using the strengths of humanity with the combined brute force efficiency of machines, CEOs need to find the delicate balance between the connectivity of the digital world without sacrificing the trust of consumers and business partners. Cross-pollinating departments, using IoT systems and re-training employees is key in building a strong foundation. The role of CEOs is changing, those who do not adapt risk relinquishing the company to certain failure.