Hesitating before you answer this question is perfectly normal. According to a survey by Deloitte conducted in partnership with Forbes, which interviewed over 1,500 executives around the world, only 14% stated that their companies are prepared for the changes being brought on by the New Economy 4.0. So, you would be in good company if your answer is “no.”
Industrial Revolutions Shaping the New Economy
Steam powered the first industrial revolution, which took place in the late eighteenth century. One hundred years later, electricity and assembly lines made mass production possible. In the 1970s, the third revolution was made possible by automation, computers, and connected networks.
We are currently in the throes of the fourth industrial revolution. This latest paradigm shift is the result of exponential advances in an array of different technologies, which, when combined, further enhance their transformative power.
We’ve talked before about disruptive technologies here, and how they mesh together to change businesses, the job market and society itself. This is precisely the characteristic that defines the Economy 4.0. The digital and the real are irretrievably melded. Artificial intelligence, IoT (the Internet of Things) and digital analysis are directing actions in the real world. In the new order, where small companies can grow rapidly into major players, new technology-based companies are constantly created, and giants occasionally stumble, every executive ends up wondering if their company is on the right track.
You can see clear evidence of this paradigm shift in the ranking of the world’s most valuable brands. Iconic brands like Coca-Cola, Nike and the like are no longer at the very top. Technology companies like Google and Amazon now hold all the cards. It can even be difficult to define these brands areas of operation since they are so diverse and involve so many new fields of activity.
Four impacts of Economy 4.0 and why so few are prepared for the change
Deloitte’s research has raised four major points of impact, all of which are pillars of competitiveness in today’s market. They are Society, Strategy, Talent and Technology. Like everything in this era, these pillars are interconnected and mutually reinforcing.
Let’s start with the potential impact on society. In the survey, executives stated that they believe that companies will shape society in the future, not governments. Advances in the economy now permit the delivery of services that in earlier times were unable to reach a large part of the population.
It is based on a synergy between technological innovation and high scalability, generating cost savings and facilitating access to new consumers. The mass micro-credits that financial institutions can currently extend, thanks to technology, are an excellent example.
In the field of strategy, short-term vision is losing ever more relevance. Broad, long-term, sustainable approaches are driving the market. A business may be profitable at the moment, while at the same time clearly not geared for the future. The most obvious case is the dichotomy between the hybrid car and industries. Tesla hasn’t yet assumed a market leading position, but its gaze is firmly aimed at the future when the time of fossil fuels will be closer to an end.
On the other hand, according to the survey, one of the current challenges is a lack of focus. 56% of the respondents emphasised the importance of increasing productivity – a traditional goal which fails to embrace the idea of broad and disruptive concepts. Thinking in the same way, without attempting to do something different, such as connecting supply chains, streamlining processes, making systems agiler, and reaching new markets, will cause the company’s performance and results to stagnate.
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The more process automation and the integration of artificial intelligence figure into decision making, the more talent becomes an increasingly valued capability. We have tools for operational work and no longer need to know everything, but it is important to understand where and how to find the correct information quickly. Many executives still fail to comprehend the urgency of bringing together a talented team to stand out in the new economy, version 4.0.
>> Recommended reading: Trends defining the composition a high-performance team
Historically, technology has created more jobs than it has eliminated. However, change creates uncertainty and relying on today’s systems and teaching structures is not enough to guarantee that the relevant talent to fill newly created job needs will be properly trained. Taking this into account, it is no wonder that only 14% of executives believe that their companies are prepared for the new economy.
The driving force behind the fourth industrial revolution is the fusion of the digital with the real. The application of new technologies is causing profound changes to business models. That is why technology giants like Amazon, Google, Apple and Netflix are expanding their areas of operation, creating a cascade effect in the economy and leading to a number of ramifications.
The result has been a sequence of turning points in our method of thinking, developing, and delivering solutions. The companies that are able to use disruptive technologies to engage suppliers, employees and customers are the ultimate beneficiaries. However, the point is that the vast majority of existing companies are not prepared for the new economy. The lack of preparation is compounded by the fear that competition is responsible for real change. It is another of the biggest challenges associated with the new economy.
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What are you doing to prepare?
The combination of these four points of impact is generating the paradigm shifts that are causing dramatic changes in our day-to-day lives. How long will people still get together to watch TV? When will the new urban mobility structure become a reality?
If we move our considerations from theory to reality, the anxiety about not being prepared for Economy 4.0 can also go hand in hand with excitement regarding the immense array of possible new fields of business.
According to a study by Brazil’s National Confederation of Industry, 77.8% of Brazilian companies are still in the first and second technological generations. A profound transformation will occur here in the next ten years, when more than half of the local industries will migrate to the third and fourth generations which include the use of robotics, new materials, energy storage, big data, cognitive technology, among others.
>> Recommended reading: How data can to help you make more accurate assessments
A valuable tool to help you migrate to the Economy 4.0
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