Are You Prepared for the 4th Industrial Revolution?
A little while ago I was having drinks and laughs with a bunch of friends. At some point, the conversation turned to work. I was sharing what I was up to lately and so did they. One of my friends was telling about his new challenge. I realized his line of work, just like that of most other friends around me, had seen little change in the past decades. Being in a more turbulent industry myself, I’m aware of a lot of cool innovations. And I saw quite a few opportunities for those to disrupt their line of work. So, I asked them what they are doing now to prepare for those innovations. Their responses surprised me. I assumed most of them would, at least, be talking about it. But I hoped they would share some interesting stories about ongoing tests and brave new ideas. Nothing could be further from the truth. In the end, their answers are best summarized as: “don’t worry, no groundbreaking innovation will disrupt our line of work in the next decades”.
In January 2016, the chairman of the World Economic Forum, Klaus Schwab wrote: “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. […] The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.” Quite the opposite of what my friends think.
The perspective of my friends isn’t unique though. Many are busy doing their jobs and running their businesses. There is no need to prepare for some fuzzy future; they are doing fine as they are. And looking at their revenues they might seem right. It might look as if their future is bright. As if everything is going as it should be and there is nothing to worry about. Yet, this is the moment to get scared. It’s not a matter of if, but when their businesses will be shaken up.
How do you think record store holders felt at the end of the 90s? I’m pretty sure most of them were quite comfortable. Business was good. Then Napster came along, turning this digital music thingy into something mainstream. Sure, that was a tiny blow, but nothing they couldn’t handle. Napster was fostering illegal activities, so lawyers could deal with that. No-one was prepared for what was coming next. Only a few years later iTunes opened its virtual doors. From there on things went fast. Before Spotify launched, almost 10 years later, most record stores had already closed their doors.
Over the past two centuries, there have been many examples like these. Rental videos anyone? Camera rolls? Paper books maybe? If Klaus Schwab is right, this is just the beginning. If he is right, then we are on the eve of an era characterized by innovation at an exponential pace of, and I quote: “a fusion of technologies that is blurring the lines between the physical, digital, and biological spheres.”
Sounds scary. How do you prepare your business for something like this? Well, for starters, by acknowledging that change is inevitable. That something will happen. Sticking your head in the sand and pretending nothing will happen won’t help you. Just by accepting your current venture will probably look very different in ten years from now, already gives you an advantage over countless others.
Second, make sure you organize yourself to deal with it. Do you have the structures, culture, and resources in place to face disruption? Do you have a shape-shifting strategy? Is your organization set up to respond to breakthrough innovation, unexpected competitors and the changing market demands that come with it? And, equally important, will it actually do so?
Third, shape the future yourself. As Abraham Lincoln said: “The best way to predict the future is to create it.” He probably wasn’t trying to prepare us for something we already call the fourth industrial revolution, but it is as true today as it was then. If you want to stay ahead, then don’t wait for someone else to make a move, innovate! And I don’t mean the improve-what-you-are-already-doing kind of innovation. I’m talking about the reinvent-yourself kind of innovation.
To illustrate what the difference is between these two types of innovations, let me share an example. We all know gasoline engines are on their way out. Petrol heads might find it hard to accept, but it is happening. Yet, big car manufacturers are still investing heavily in research and development to improve combustion engines. They aren’t ignorant; they know someday they won’t be making these engines anymore. But until that day has come, they still need to compete with other car makers offering these kinds of engines. All of them are also researching electrical motors, battery packs, hydrogen cells and what not. They balance their innovation between relevant now (incremental innovation), and relevant tomorrow (breakthrough innovation). Both types are important. But to be a disruptor, it’s the second type you need to master and act upon.
The hard part is spotting opportunities for possible disruption. Throughout the day, most of us are occupied by day-to-day operations. Taking a break to zoom out, oversee the landscape and identify opportunities can be hard. It is of vital importance, though, that you do so occasionally. This is not a luxury just for disruptors, it’s for all organizations. Even if you don’t plan on taking the lead in innovation, you should at least be aware of what is going on around you. You need to know where threats and opportunities lay. So when some other company, new or incumbent, makes a move, you know how to react.
In a later blog post, I will describe a tool that will help you spot opportunities. Don’t want to miss it? Sign up for our weekly digest below.
Update December 1st 2018:
You can find the promised tool here.