Business Leaders Must Come Down to Earth After Davos

Amid the grand insights and hyperbolical outpourings that typify the World Economic Forum’s annual meetings at Davos, a new report by global consultancy Deloitte, ‘The Fourth Industrial Revolution is here – are you ready?’ draws managers’ attention to some crucial practical challenges that companies are likely to face in coming years.

Perhaps most striking is the report’s global survey of 1600 C-suite executives which suggests a notable lack of preparedness. Managers understand that artificial intelligence, the ‘Internet of Things’, Blockchain and other technologies that underpin ‘industry 4.0’ will herald huge change. But they don’t necessarily know how to deal with it.

There is startling optimism about the possibilities at the same time as profound uncertainty as to whether businesses had the capabilities to cope. Executives were hugely confident (87 per cent) that ‘industry 4.0’ will lead to ‘more social and economic equality and stability.’ But only 14 per cent were confident that their organisations are ready to make the most of the opportunities.

Only one quarter of respondents said they were highly confident they have the right people and skills needed for the future. And yet talent and HR were a priority for only 17 per cent, even though 86 per cent said they were doing ‘everything they can’ to build a better-prepared workforce.

Dazzled by technology

This feels like cognitive dissonance, or at best a bad case of confusion. The dazzle of new technology, it would seem, can obscure business leaders’ vision. As they descend from the mountain top, they must not lose sight of the human-shaped priorities that will underpin business success. These, according to Brian Householder, president and chief operating officer of IT firm Hitachi Vantara, involve ‘essentially enduring human skills such as supervision, creativity and emotional intelligence.’

While 61 per cent of the C-suite executives surveyed by Deloitte anticipate using more contingent labour (contractors, temporary and ad hoc workers), only 22 per cent believe that the uncertain impact of industry 4.0 on the workforce will have a significant effect on their organisation. There is a stark failure to join the dots.

A contrasting view is offered by Simon Roberts, chief operations officer of the Formula One McLaren Racing team: ‘We actually rely a huge amount on the profound knowledge of all our employees,’ he says.

‘New technology does not magically create viable business models on its own.’

Survey respondents talk of using new technology to develop new business models. But have managers genuinely spotted unmet customer needs, or are they just playing with some fancy new kit? New technology does not magically create viable business models on its own.

If business leaders are to make the most of the opportunities, they need to focus on practical human realities.

Five concerns for the Industry 4.0 manager

• Remain focused on the customer. If new tech platforms aren’t making things easier and quicker for your customers, ask yourself why you are developing them?
• Remember the human factor. New technology can support and enhance what people do but cannot replace the need for human contact altogether.
• Create stability in the midst of change. Futuristic visions may excite the leaders who share them, but can disorientate staff.
• Develop ‘navigational skills.’ If the world is changing fast you need  discretion and judgment to remain focused on your core purpose.
• Be curious about and open to new technology. But don’t be gullible. Not all the promises of IT salespeople will be delivered. Use new technology for practical purposes.