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Strategic transformation and the Fourth Industrial Revolution


Discover how focusing on Strategy Execution can help your business to harness disruptive technologies and seize competitive advantage during the Fourth Industrial Revolution.

Written by: James Davies, Executive Vice President of Product

Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, is one of few thought leaders who has the breadth of insight to fully comprehend socioeconomic trends facing humanity.

In his 2016 book, The Fourth Industrial Revolution, Schwab provides a sweeping analysis of new technologies—from artificial intelligence and robotics to the Internet of Things, biotechnology and quantum computing.

He argues that these technologies will do more than extend existing trends towards digital transformation.

Instead, Schwab argues that technological changes are heralding the dawn of a new age, characterised by profound societal change and economic disruption. But what does that mean for business leaders and their ability to deliver on their strategic efforts?


What makes the Fourth Industrial Revolution different?

The first three industrial revolutions were driven by large, one-off jumps in technological development:

  1. The first by mechanisation with water and steam powered machines
  2. The second by electrification, which made mass production possible, and
  3. The third by computerization.

The Fourth Industrial Revolution is different. It is driven by breakthroughs in multiple fields—a “fusion of technologies that is blurring the lines between the physical, digital, and biological spheres”, as Schwab puts it in a World Economic Forum article.

The interactions between these technologies create a force multiplier effect which accelerates the rate of change.


Why is change a core theme of the Fourth Industrial Revolution?

In many ways, speed of change might be considered the key defining feature of the Fourth Industrial Revolution.

During previous revolutions, the introduction of a new technology led to a step-change in industrial practices: companies were quickly divided into those that adopted the new ways and prospered, and those that ignored the future and failed.

However, once that winnowing process had occurred, most industries returned to a steady state until the next revolution occurred.

By contrast, in the era of the Fourth Industrial Revolution, innovation is a constant concern.

Technology relentlessly marches onward, and a steady state can only be achieved by embracing stagnation and obsolescence—a strategy that is doomed to fail as more agile, tech-savvy competitors devour your market share.


Forecasting the Revolution's impact on society

To succeed in this new age, businesses must understand the impact of the Fourth Industrial Revolution on society in general, and industry in particular.

According to most experts, the economic implications are enormous: for example, a 2013 report from McKinsey identified 12 disruptive technologies that it estimated could have a potential economic impact of $5 to $7 trillion by 2025.

Since that report was authored, some of those 12 technologies have become so deeply embedded into society that it’s easy to overlook how disruptive they have been: for example, cloud computing and mobile internet access are now taken entirely for granted in most developed economies.


Yet, as Professor Schwab points out:

 “The possibilities of billions of people connected by mobile devices, with unprecedented processing power, storage capacity, and access to knowledge, are unlimited.”

As other technologies—such as the Internet of Things, Artificial Intelligence, advanced robotics, energy storage, nanotechnology and genomics—start to gain similar traction, it’s difficult to predict how society will change.

The only thing we can say with confidence is that change will happen, and that the businesses that are best prepared to adapt will be the likeliest to survive, grow and prosper.


What impact will Industry 4.0 have your business?

Looking at the effects of the Fourth Industrial Revolution on business specifically, Schwab identifies four major themes, which we can analyse in more detail.


1. Customer expectations are the number one priority

First, customer expectations are becoming the most important priority for many businesses. Companies are moving towards subscription-based pricing models for both digital services and “smart”, IoT-enhanced physical products, which means that revenues now depend more on securing renewals than on winning new customers.

As a result, customer experience becomes far more important than ever before.

This has wide-reaching implications for the way that businesses view the world: for example, they may need to recognise that the customer service team now plays a more important role than the sales team in the company’s long-term success.



2. Product enhancements are business as usual

Second, product enhancement needs to be a central part of business as usual.

When customers subscribe to a service, they expect it to improve over time; if it doesn’t, they will cancel their subscription and move to a competitor who can offer better functionality.

Reacting quickly to new product and service development opportunities and rolling out new offerings continuously have become the key to delivering the best experience and maintaining customer loyalty.



3. Collaboration for innovation

Third, the diversity of technologies that are fuelling the Fourth Industrial Revolution require companies to take a more collaborative approach to innovation.

No single organization—except perhaps the very largest of the tech giants—can expect to possess domain expertise across all areas, so the focus shifts towards composing services from many different partners into a coherent set of integrated offerings.


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4. Organizational structures and operational models must change

Finally, each of these three points contributes to the fourth theme: that organizational structures and operational models will need to change—and potentially keep changing—to enable businesses to take advantage of ongoing technology developments, instead of being disrupted by them.

As Schwab puts it:

 “business leaders and senior executives need to understand their changing environment, challenge the assumptions of their operating teams, and relentlessly and continuously innovate.”



Finding new ways to drive strategic change amidst the Fourth Revolution

This last point poses one of the biggest challenges for businesses.

In Schwab’s view, today’s decision-makers:

 “are too often trapped in traditional, linear thinking, or too absorbed by the multiple crises demanding their attention, to think strategically about the forces of disruption and innovation shaping our future.”

In fact, at i-nexus, we’d argue that the problem isn’t so much a lack of strategic thinking by decision-makers, but their inability to put their strategies into action.


In many cases, despite the effort and insight that senior level executives put into defining the vision, no practical value is achieved because the business has no clear way to cascade strategic goals down to an operational level, manage the execution of strategic initiatives, or monitor their progress and measure their success.



Technology as the solution

In a Forbes article that engages with Schwab’s views on the Fourth Industrial Revolution, futurist and strategy expert Bernard Marr points to technology as a solution.


“Companies should invest in their technical infrastructure and data analysing capabilities,” he writes. “All businesses must be making a move to be smart, connected organizations or they will soon fall behind the competition.”

From a strategy management perspective, this advice is spot on. We contend that many businesses still rely on the wrong systems and processes to define, communicate and execute their strategies.


Naturally, employees tend to act according to the information they have, and will move towards the goals they believe they have been set. If the information flow is faulty or one directional, employee actions and directions will not match the strategic goals.



Why is it imperative for businesses to build a common strategic understanding in the age of technology?

The challenge here is that data on strategic initiatives is siloed in spreadsheets or department-level tools, which stakeholders need to update manually.

There’s no easy way to analyse the information or gain real-time insight at project management level, which makes the connection between planning, execution, monitoring and improvement too tenuous to maintain.


To meet the demands of the Fourth Industrial Revolution, instead of relying on ad-hoc tools, i-nexus recommends adopting a platform that manages strategy deployment, Continuous Improvement and Operational Excellence, and acts as a single source of truth for analytics.

Such Strategy Execution platforms empower senior management to define clearly structured strategic goals and cascade them down through all levels of the organization.

Employees can then use an intuitive mobile app to log updates of the work they do towards each goal, and the information flows back up to a powerful analytics engine that provides real-time visualisation of performance and progress



What next steps should you take in the Fourth Industrial Revolution?


i-nexus can help you establish an enterprise-class Strategy Execution platform that will help drive a culture of continuous innovation and improvement.

By empowering you to convert strategic visions into far-reaching operational change, our platform will help your business harness disruptive technologies, seize competitive advantage and thrive in the brave new world of the Fourth Industrial Revolution.


To learn more about how to thrive in the Fourth Industrial Revolution, explore our content below:

About the author

James Davies is i-nexus’ Executive Vice President of Product. As an experienced software executive with 20 years of experience working in Silicon Valley, USA, James has held senior leadership roles in three venture capital backed software start-ups (including CEO, CPO and Chairman) and has delivered management consulting services to some of the world’s largest technology companies.

If you’d like to talk more about the future of Strategy Execution, reach out to him on james.davies@i-nexus.com or connect with James on LinkedIn for the latest Strategy Execution insights.