Look at the fourth industrial revolution through the lens of an organization and actions that should be considered.
- In 1958, on the Fortune 500 list, an annual list of the most profitable US industrial corporations, companies remain there for an average of 61 years. Today, the average is just 18 years. In the UK, at the top 100 organizations listed in 1984 on the FTSE 100 Index, a listing of the largest UK organizations by market capitalization, only 28 remain today.
Relevancy is increasingly fleeting. Competition is rigorous. Innovation is swift. The Fourth Industrial Revolution accelerates all of this. So what actions should an organization take. Let's acknowledge there are hundreds of models for anticipating and responding to changes of all kinds. But I'd like to explore the topic through the lens of risk. Simply put, a risk is the possibility of an adverse outcome happening that deviates from what is expected.
Risk doesn't mean something will happen, particularly if you take mitigating actions. In my view, the biggest risk to an organization in the Fourth Industrial Revolution is that becomes irrelevant. And when it becomes irrelevant, it can no longer exist. We have to look at lowering that risk. To do this, I suggest the four step process. One, gather intelligence. Two, assess the situation.
Three, evolve the strategy. And four, on a regular basis, repeat steps one through three. First, gathering intelligence. This can take several forms. But at its most basic, it's about education. Ask, do the leaders and other stakeholders of an industry understand the dynamics of the Fourth Industrial Revolution? And when they do, do they understand the broad risk factors? Reading articles and books, listening to podcasts, watching videos, consulting with peers, participating in conferences, these are all appropriate mechanisms to elevate intelligence on this complex topic.
Next, assess the situation. In other words, what are the specific risks to the organization and industry and what are the risks of not acting? There are many approaches to this, and I suggest taking a leadership-convened SWAT analysis to get the ball rolling. SWAT stands for strengths, weaknesses, opportunities, and threats. Say the organization is in vehicle insurance.
We know now that autonomous vehicles are likely coming in a big way. We have to assess the risk to the insurance business. Will automobile insurance be viable when there are less accidents? How do you provide insurance for the behavior of AI? Using a SWAT analysis, we can begin to understand the extent of the risk through four dimensions. What used to be strength may no longer be relevant. Thus, a high risk is identified.
A weakness may require greater urgency to address. Our opportunities may be expensive and speculative. And finally, the threat may be obvious. An initial pass at a SWAT analysis, really only serves to elevate the conversation. Then, evolve the strategy. Based on the risk assessment, it's likely that an organization's strategy will need to change. The idea that a strategy is good for several years, typically three to five, well, that's out the window.
My hunch is that most organizations will be iterating on their strategy frequently. Constant change and lack of predictability will become a common characteristic of the Fourth Industrial Revolution. Disruption will happen suddenly and will often be disorientating. Evolving the strategy may be enough as conditions change, but sometimes a complete refresh of the strategy may be required. Lastly, repeat steps one through three often.
Remember, this new era is defined by greater impact, scope and velocity. It means that leaders and stakeholders need to constantly gather intelligence. Without insight, our possible future cannot be understood. Without continual assessment of a risk, it automatically goes up. And if organizations don't evolve their strategy, the world will change too quickly around them, leaving them in the dust. Existing organizations will need to change, that's a fact.
But for new entrants, the future may be rosier. As industries and organizations become irrelevant, new ones will emerge. The Fourth Industrial Revolution will create incredible new opportunities to innovate. At a minimum, we have to agree that current organizations can't just ride this out. The risks are too high. Have a plan, and take action, otherwise irrelevancy awaits.
- History of the four industrial revolutions
- What has changed in science and culture
- Core technologies: AI, Internet of Things, and more
- Impact of the fourth industrial revolution
- Taking action