One year ago, 86% of C-level executives in Deloitte’s first report exploring businesses’ readiness for the Fourth Industrial Revolution said their organizations were doing “all they could” to create a workforce for Industry 4.0. This year, fewer than half - 47% - said the same.
That represents not only a stunning shift in attitudes, but also a welcome one. Because it tells me executives are gaining a much deeper understanding of Industry 4.0, are increasingly aware of the challenges before them, and are viewing the actions needed to succeed in Industry 4.0 more realistically.
Deloitte’s second report on Industry 4.0 readiness, Leadership in the Fourth Industrial Revolution: Faces of progress, again asked executives how they are enabling their organizations to succeed in four areas: society, strategy, technology and talent. In addition to our search for year-to-year trends, though, we also aimed to uncover how leaders are moving forward, where they are making the most progress, and what sets the most effective leaders apart.
While many executives continue to struggle with navigating the complexity of Industry 4.0, certain leaders appeared to be “getting it right”. We found four distinct leadership personas that, we believe, can provide guideposts for executives and serve as models for leaders around the world as they tackle the challenges associated with digital transformation. Before I explore those personas, though, it’s helpful to understand the survey’s key findings.
Executives expressed a genuine commitment to improving the world. Leaders rated societal impact as the most important factor when evaluating their organizations’ annual performance, ahead of financial performance and customer or employee satisfaction. In the past year, nearly three-quarters of respondents said their organizations had taken steps to make or change products or services with societal impact in mind. Many are motivated by the promise of new revenue and growth.
Executives are struggling to develop effective strategies in today’s rapidly changing markets. Faced with an ever-increasing array of new technologies, leaders said they had difficulty understanding all the new technology-driven opportunities, and in some cases they lack the strategic vision to guide their efforts. Many leaders reported that their companies don’t follow clearly defined decision-making processes, and that organizational silos limit their abilities to develop and share knowledge to implement effective strategies.
Leaders continue to focus more on using advanced technologies to protect their positions than on making bold investments to drive disruption. Many C-level executives are seeing payoffs from their investments in technology, but others are finding it difficult to move forward. Challenges include being too focused on short-term results, not fully understanding Industry 4.0 technologies, and too many technology choices. Leaders acknowledged the ethical implications inherent in new technology, but few companies are putting policies in place to manage those threats.
The skills challenge has become clearer. The breadth of the skills gap is more evident to leaders, as is a sobering awareness that current education systems will be inadequate to meet the challenge. Nearly twice as many leaders said their organizations will strive to train existing employees rather than look to hire new ones. But research from Deloitte’s annual Millennial Survey suggests that leaders and young employees differ on which skills are most needed and who is responsible for developing them.
With those findings as context, we found some leaders are making better progress than others in dealing with challenges within the areas of society, strategy, technology and talent. We grouped the leaders who seem to be getting it right into four personas:
1) Social Supers. Certain leaders stand out for their ability to do well by doing good. These Social Supers consider social initiatives fundamental to their businesses, and their optimism about creating societal impact influences their outlook in several ways. They were more likely to say their workforce composition is prepared for digital transformation, and far more willing to train their workers. Companies with leaders who identify as Social Supers are also growing more than those who haven’t successfully found the balance between doing good and making a profit.
2) Data-Driven Decisives. Some C-level executives are overcoming challenges by taking methodical, data-focused approaches to strategic decision-making. These Data-Driven Decisives are almost twice as likely to say they’re prepared to capitalise on Industry 4.0 opportunities, and their organizations are already reaping the economic benefits of embracing Industry 4.0. In the past year, almost half of such organizations generated annual revenue growth of 5% or more while only a quarter of other organizations saw such results.
3) Disruption Drivers. These leaders understand that investments in disruptive innovations set their organizations apart from competitors. They are confident, which gives them an advantage when coping with the unknowns of Industry 4.0 because more-assured organizations will be better prepared to implement disruptive technologies. Disruption Drivers’ organizations typically have more defined decision-making processes, and they are more likely to make data-driven decisions with input from diverse sets of stakeholders.
4) Talent Champions. These executives are preparing employees for digital transformation. They are more likely than others to invest in employee retraining for the future of work. And while doing so, the Talent Champions are also committed to societal impact and are seeing early returns from their progressive efforts - and 64% have already generated new revenue streams for their organizations through socially driven initiatives.
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The report contains a much more-detailed look at what defines the four leadership personas, but in general, we can see that “doing good” is good for business; that using defined strategic processes and data to make decisions can create competitive advantages; that companies benefit from a long-term view toward investing in Industry 4.0 technologies; and that leaders who place a premium on training will be more successful.
As we look ahead, the qualities of leaders will define the future stability of organizations. Leaders who embody the characteristics of the successful leaders above are not only improving their own bottom lines and growing faster than their counterparts, but also are visionary in the ways they lead their companies into the future. How will you lead in the Fourth Industrial Revolution?