Leading the 4th Industrial Revolution
I have been reading Fortune Magazine since I graduated with my first MBA. But the latest editor really gets technology’s impact upon business. In his column within the latest issue, Alan Murray shares on what he calls “the new industrial revolution” and the discussion that was held on this topic at Davos. The focal point for this discussion is Klaus Schwab’s “Mastering the 4th Industrial Revolution” (I just purchased it on Amazon). Alan says that Schwab claims that the early 21st century is “witnessing a set of economic changes of historical importance. These include a much more ubiquitous and mobile Internet, smaller and more powerful sensors, and artificial intelligence and machine learning”. One of the more fascinating aspects of this revolution is the emergence of businesses that have the ability to scale with unprecedented speed. Schwab believes that speed of innovation is changing the pace of business. The pace of innovation and diffusion of innovation is claimed to be faster than any other period. Future Shock is finally here?
Operating at internet time
This means that if you can’t operate on “Internet time” then by the time you respond your response may in fact be irrelevant. And here is the rub. While innovation is accelerating for disruptors, traditional organizations are actually slowing down. Yes, I said slowing down. According to Tom Monahan of CEB, most business activities at existing organizations have been slowing down, not accelerating in the last five years. In benchmarking the speed of key business processes, Monahan has found in his research that decision making even at the most basic level has slowed down materially between 2010 and 2015.
- The time to hire a new employee has increased by 50%
- The average time to deliver an IT project has increased by 10%
- The average sales cycle has increased by 22%
The problem with this is the disruptive threats are real from nimble companies with hyper quick corporate clocks like Facebook, Amazon, Uber and Google. These firms are just beginning feverish disruption across sectors and industries. And more importantly, there are tangible costs for not having the ability to respond at the pace of today’s business. A vacant role costs $400 a day and month of delay and a month of delay for a typical IT project costs $43,000.
The role for IT Leaders
So what can IT leaders do to fix this? Tom suggestions that there are four actions for CIOs to take:
1) Improve communications with nontechnical colleagues
2) Make sure their teams use everyday language rather than technical jargon
3) Map project handoffs between working teams
4) Design organizations and processes to take into account—and offset—the choke points that technology and organizational evolution have created
Beyond this I believe that CIOs need to get their arms around digital transformation and how they can act as a catalyst for transforming their enterprises. A successful CIO’s can take on this valuable function by either being: 1) the driver of innovation or 2) the strong partner with peers. Regardless of tact, CIOs have stressed to me that CIOs need to get their management team and CEO on board. This is because CEOs and management teams have critical roles in Digital Transformation. One CIO said successful digital transformation in fact needs the “iron triangle” of CEO, CFO, and CIO working together. To be truly innovative and bring digital transformation, CIOs say that CIOs and their business partners must be willing to take risks, fail, and learn quickly what works.
I think that CIOs that want to help their organizations retain their right to win often need to start with a strong understanding of the impacts of not only of conducting a transformation and of what transformation means within their industry. Here CIOs need to four a strong understanding of the four types of transformation:
- Connected enterprise—the ability to act as one company with customers, suppliers, and employees
- Customer experience—the ability to drive superior experience across customer channels and sales and service processes
- Digital ecosystem—the ability to drive connection and understand across the supply chain to demand chain
- New business models—the ability to be a disruptor by reinventing the rules of business and how a business wins or even makes money
At the center pieces of this is one thing—trustworthy, timely, relevant data. It is the fuel of transformation. CIOs have a pivotal role in delivering this and enabling transformation
Digital Transformation and new business models will happen with or without you. Like Deming and Drucker said you do not need to change, because survival is not mandatory. Clearly, speed matters and the CIOs need to drive this as well facilitate the sources of innovation, change agents. And to enable them, they need to provide the trustworthy, timely, relevant data which is the fuel of real transformation.