The many complex challenges of the Fourth Industrial Revolution are around the corner. Business leaders who are prepared for them will thrive and prosper. Others who are late will be left far behind.
Are you familiar with the tale of Rip Van Winkle? One day, he wandered up the mountains to escape from his wife’s nagging. He met a group of bearded men and they offered him a sip of a strange drink. He fell into a deep sleep.
When he awoke and returned to his village, he found that everything in the village had changed. He recognised none of the villagers but his grown daughter took him in. He had been away for 20 years.
With the development of new and complex skills and the changing climate of industries, one need not wait 20 years to experience the changes. They are around the corner. Are you able to fit into the new environment in the year 2022?
In a report The Future of Work: A Journey to 2022, management consultants PricewaterhouseCoopers (PwC) identified three scenarios for the future of work:
Large corporates turning into mini-states and taking on a prominent role in society,
Specialisation creating the rise of collaborative networks, and
The social and environmental agenda forcing fundamental changes to business strategy.
With rapid globalisation, companies must grow into giants in order to survive. Their leaders continue the relentless drive for profit, growth, and market leadership at all costs. Some multinational corporations such as PepsiCo have revenues that beat the gross domestic product of smaller countries. Free-trade agreements enable companies to trade more openly. As such, your traditional trading partners may change.
In the brave new world, there is no place for generalists as corporations hire or contract specialists to tackle the ever more complex projects. They collaborate with research centres to get the talent that is unavailable in-house.
Social and Economic Environment
As technology continues to improve, it will lead to what some call a “digital disruption”. For example, the peer-to-peer (P2P) economy creates platforms that allow buyers and sellers to interact directly thus lowering transaction costs and cutting out the middlemen.
Platforms such as eBay or Alibaba.com allow users to transact in a virtual marketplace. Such a “sharing economy” will continue to grow very quickly in the next 10 years and it will have great impact on the brick-and-mortar retailers. Trading via the Internet will also affect companies who spend millions of dollars on branding. My friend presented me with a high-end shaver bought over the Internet that is identical to the one sold by Philips. The difference is that it is unbranded but both are manufactured in China.
Customers and employees go for firms that have a social and environmental conscience. This stretches through the organisation and its supply chain. Companies that pollute the environment with slash-and-burn tactics to clear forests, for example, will find it difficult to survive.
New Challenges for Human Resource
As we move towards 2022 and beyond, the emergence of new business models and special skill requirements is going to create fresh challenges for human resource (HR). In the The Future of Work: A Journey to 2022 report, PwC states: “Organisations currently grapple with the realities of skills shortages, managing people through change, and creating an effective workforce. By 2022, the radical change in business models will mean that companies will be facing further issues such as:
The need to create ever more sophisticated people measurement techniques to monitor and control performance and productivity,
Increasing importance of social capital and relationships as the drivers of business success, and
The boundary between work and personal life disappearing as companies assume greater responsibility for the social welfare of their employees.”
HR has been seen by management as a passive, service-oriented function.
But given the demands of tomorrow’s workplace and business environment, PwC believes that HR will go in one of these directions:
With a proactive mindset and focussed business strategy, HR will take on wider responsibility for people incorporating and influencing many other aspects of the business,
The function becomes the driver of corporate social responsibility within the company, and
The function will be transactional and nearly entirely outsourced.
Fourth Industrial Revolution
The First Industrial Revolution used water and steam to power machines. The Second used electricity to create mass production. The Third used electronics and information technology for the automation of manufacturing. Today, a Fourth Industrial Revolution is riding on the Third—it utilises a combination of technologies from the physical, digital, and biological spheres.
The Fourth Industrial Revolution is upon us faster than expected. Leaders in government and industry must do something quickly if the wheels of business are to turn efficiently.
In a report The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution (January 2016) the World Economic Forum (WEF) notes: “Many of the major drivers of transformation currently affecting global industries are expected to have a significant impact on jobs, ranging from significant job creation to job displacement, and from heightened labour productivity to widening skill gaps. In many industries and countries, the most in-demand occupations or specialties did not exist 10 or even five years ago, and the pace of change is set to accelerate. By one popular estimate, 65 per cent of children entering primary school today will ultimately end up working in completely new job types that don’t yet exist.”
It says that in such a fast evolving employment landscape, how to anticipate and prepare for future skills requirements, job content, and the total effect on employment is increasingly critical for businesses, governments, and individuals if they want to fully seize the opportunities presented by these trends and to reduce undesirable outcomes.
In the past, waves of technological advancement and demographic change have led to increased prosperity, productivity, and job creation. This does not mean, however, that these transitions were without challenges. Anticipating and preparing for the current transition is therefore critical if companies want to still be around to see the next industrial revolution.
Technological Drivers of Change
According to the WEF report (1960), management must be prepared to hire or train workers in the areas described below.
Crowdsourcing, the sharing economy, and peer-to-peer platforms. The impact of this is already felt. With peer-to-peer platforms, companies and individuals can do things that previously required large-scale organisations. In some cases, the talent and resources that companies can connect to, through activities such as crowdsourcing, may become more important than the in-house resources they possess.
Advanced Robotics and Autonomous Transport. These changes are expected in the 2018 to 2020 timeframe. Advanced robots with enhanced senses, dexterity, and intelligence can be more practical than human labour in manufacturing, as well as in a growing number of service jobs, such as cleaning and maintenance. Moreover, it is now possible to create cars, aircraft, and boats that are completely or partly autonomous, which could change the face of transportation, if regulations allow, as early as 2020.
The companies investing large sums of money in driver-less cars include Tesla, Google, Grab with nuTonomy. In the new age, we will see more intelligent Androids doing the work of human beings. Japanese hotels are using Androids to take care of the reception desk. Androids will be seen doing the jobs of salespeople at retail stores and restaurants because of the rising cost of labour. But at such places we pay more and expect good service, we don’t want to pay to be served by R2-D2.
Artificial Intelligence and Machine Learning. The timeframe for this technology to be popularly practised is from 2018 to 2020. Advances in artificial intelligence, machine learning, and natural user interfaces such as voice recognition, are making it possible to automate knowledge-worker tasks that have long been regarded as impossible or impractical for machines to perform.
Advanced Manufacturing and 3D Printing. This will be in the 2015 to 2017 timeframe. A range of technological advances in manufacturing technology will increase productivity. For example, 3D printing allows on-demand production, which has many benefits for global supply chains and production networks.
The creation of a 3D printed object is achieved using additive processes. In an additive process, an object is created by laying down successive layers of material until the object is created according to design. Each of these layers can be seen as a thinly-sliced horizontal cross-section of the final object.
It begins with making a virtual design of the required object. This virtual design is created by a Computer-aided Design (CAD) file. The file is created using a 3D modelling application or with a 3D scanner.
Advanced Materials, Biotechnology, and Genomics. These changes should come from 2018 to 2020. Technological advances in material and life sciences have many creative industry applications. Recent breakthroughs in genetics could have profound impacts on medicine and agriculture. Similarly, the manufacture of synthetic molecules via bio-process engineering will improve the pharmaceuticals, plastics and polymers, and biofuels industrial processes.
According to Scientific American, computer scientists and engineers have long dreamed of harnessing DNA’s tininess and resilience for storing digital data. The idea is to encode all those zeros and ones into the molecules A, C, G, and T that form the twisted, ladder-shaped DNA polymer. This decade’s advances in DNA synthesis and sequencing have bought the technology forward. The hard disks and flash drives we know today could become obsolete.
Be Prepared by Starting Planning Now
We have sketched the complex challenges of future work. Structural changes in the economy, new technology, and increasing labour costs are re-shaping the way we do business. Business leaders and the government must accept the changes in the workplace and labour force.
Old jobs will be lost forever while new ones are created. Training and education should be given priority in preparing for the future. Management must have new strategies in order to survive the Fourth Industrial Revolution.
Copyright © 2017 Singapore Institute of Management