Business leaders, listen up: Your world is about to significantly change. The convergence of digital, physical and biological spheres will drastically change your business models, and if you cannot adapt, you will be left behind.
That was the message from the CEOs of industry giants Salesforce, Alcoa, Hewlett Packard, Kaiser Permanente and Schneider Electric during a panel discussion on the digital transformation of industries at the World Economic Forum held in January.
The Fourth Industrial Revolution, they note, is “being driven by a staggering range of new technologies that are blurring the boundaries between people, the Internet and the physical world.” What this will do is transform the way we live, work and relate to each other.
That transformation is being brought by the speed with which new technologies are emerging. Until now, the exponential growth of technology had been linear, jumping forward when there was human buy-in, such as with computers and the Internet. But the acceleration of progress that is being brought on by cyber-physical advancements and big data is beyond what most could have imagined. It is not making sporadic jumps but rather continuously huge leaps and bounds—and this revolution will only continue to accelerate in the coming years, transforming business models as well as social and cultural norms.
It is that acceleration that has executives like Salesforce Chairman and CEO Marc Benioff noting that speed will be the new currency of business. “In my 35-plus years in the technology industry, I’ve never experienced so much innovation, and at such an incredibly rapid pace.”
The Future Belongs to the Fast
The speed and power of these emerging technologies cannot help but transform existing business models. What is driving the disruption? Data—and massive amounts of it. Consider this: Aureus Analytics estimates that 90 percent of all data in the world was created in the last two years. Volumes of data are growing at a rate of 40 percent per year and will increase 50 times by 2020. As new technologies interconnect all that data between devices, companies will be forced to change how they work.
“Business leaders everywhere are trying to keep up with this immense wave of digital transformation,” said Benioff. “Now is the time when every business leader needs to consider how the digital technology breakthroughs are going to impact not just their companies, but their communities, the planet and society as a whole.”
Meg Whitman, President and CEO of Hewlett Packard, agrees with Benioff. “The future belongs to the fast,” she said. “If companies can’t develop at a pace that allows them to win, they will find themselves behind very quickly.”
The critical problem she sees is that virtually every existing company has a slow IT infrastructure that needs to adapt to this new environment. Business strategy and IT strategy are now one and the same, she said, and this is driving organizational change.
Trust Is Essential
Part of that organizational change has to do with transparency. All the executives on the panel agreed that surviving and thriving during the digital transformation requires one essential element in an organization: trust. “You are about to define a new level of trust between yourself and your employees, yourself and your customers, yourself and your shareholders, and yourself and your partners,” said Benioff.
For those companies without it, the transformation will be not only a technological revolution for them, but a cultural one as well. “This is an opportunity for all of us to get to the future first,” said Benioff. “But when you get there, make sure you show up with the right values, because the values of the Fourth Industrial Revolution are different from the values of the Third.”
Where to Start
So where do you start to prepare your company for this digital transformation? Like any major change in a business, it starts with the leader. Whitman’s advice to any CEO is to first create accountability for the business. Have a vision. Ask yourself, what are the milestones, and how can they be achieved. Then develop a plan and execute it, changing it as needed along the way to accommodate new technologies.
She also believes that to successfully bring employees and customers along while you keep pace with technological advancements hinges on three key elements:
- The right talent: Not every employee is comfortable with change. You need to find the people with the right constitution to handle a business transformation.
- Communication: In this age of big data, where there is so much information available, success will come not in the facts and figures but in the stories you tell.
- Values: You need a set of shared values and beliefs that permeates throughout the company and to your customers.
Klaus Kleinfeld, CEO of Alcoa, believes a long-term vision always wins. “The tone at the top is still very important,” he said. “Think louder—and act faster.”
If you’re looking for more information on how to prepare for the technological changes to come, Benioff suggests The Fourth Industrial Revolution by Professor Klaus Schwab, the founder and executive chairman of the World Economic Forum.