Change has Changed in the 4th Industrial Revolution (4IR)

Beyond the focus on the technologies that are fundamental to the 4th Industrial Revolution (4IR) – there is an equally significant shift occurring in how leaders lead and managers manage.

Accessing the benefits that technologies such as Artificial Intelligence (AI), Machine Learning, Internet of Things (IoT), Robotics etc bring is a key dimension of the transition of an organization to thrive in 4IR. However, another equally important dimension is empowering and enabling 4IR talent.

One of the starkest examples of the interplay between these two dimensions is the dramatic change in how leaders lead and managers manage change. Rather than transformation, leaders in 4IR organizations have an expectation of, and hunger for, continuous evolution.

Traditional approaches to transformation were centrally planned; perhaps changing the way the firm participated in the market, the adoption of a new technology or platform (such SAP, or similar), or integrating a newly acquired business.

The hierarchy of actions being first to embrace a vision of the anticipated outcome state, then to design and execute on a process for orchestrating change and once achieved to then embed the new procedures and practices through retraining and aligning performance metrics.

Prior to 4IR: Programmatic Transformation. Step-changes in technology advancement. Transformation programmes to adapt & align talent & processes to leverage technology advances. Resulting in transient superior performance of the organization

In the 4th Industrial Revolution change and adaptation are ongoing; episodic change is supplanted by constant acceleration, adaptation and agility. Our research shows that to achieve such dynamism leaders must nurture belief in the purpose of the organization and create a culture that characterizes how individuals interact and are empowered to act to achieve change.

In the process of evolution they may identify, adopt or adapt new technologies. Of course, such organic growth also needs to be coordinated across the organization and insights, learnings and discoveries of processes, behaviours and technology applications.

4IR: Continuous evolution: In 4IR technology is pervasive and continually evolving, talent that can enable speed & agility through the successful adoption and adaption of technologies is a critical (limited) resource that differentiates performance.

1: Change is not linear

Although the reversal of the sequence of steps in the change management process, as illustrated in the diagram, might be interpreted as being as linear as the original version; in fact change is now far from linear.

Starting with the people, engaging their hearts and minds and empowering them to determine the process, creates the conditions for experimental and iterative process. Where previously change management was perceived to be linear, step-wise ‘unfreeze-move-refreeze’, now it is a constant evolution, adaptation, discovery and learning.

The CEO of a global plastic manufacturer noted:

“There are ‘waves of learning’ in our corporation, a round of discovery and then we try to roll-out and replicate the improvements or adjustments globally. In some ways these roll-outs could be thought of as like the old change-management practice, but because we are looking to learn in each and every step and to reshare that new insight, I think that it is more of an AGILE approach that we are taking. Sometimes the wave may start with technology (e.g. we need to upgrade our manufacturing plants with IOT / wireless sensing), but then we need to learn & discover how to apply it and how to roll it out – and that is iterative and experimental, which need to be people-centred.”

2: Nurture belief don’t just give orders

Continuous evolution requires that the hearts and minds of managers and employees are engaged in the pursuit of the mission. CEOs highlight that the era issuing commands and expecting execution is over.

The CEO of a leading fashion brand stated:

“I’ve been driving growth in this sector, in different ways for over 20 years. How we drive change now is vastly different from how it used to be. Before I would make a plan around the strategy – what was it that we needed to do to drive growth? This would be worked out with the executive team into goals and targets – and eventually split down to the level of the individual store, globally, what were the 4 or 5 things that each specific store needs to achieve in what timeframe – how to support them getting there and how to monitor their progress and adjust resources and intercede to make it happen. Basically one giant xls chart with very clear goals. This doesn’t work any longer. Now you can’t tell people what to do – rather you have to ask them how to move forward; now you can’t state “here’s the objective, let’s go after it” they are likely to ask why is that the objective? – and they certainly want to contribute to thinking about how to go after it.”

Another executive noted:

“We’ve moved from centrally set clarity and managed execution to providing experiences that enable the management teams to come to their own understanding of what is required and to develop their own belief in the purpose and the changes required to seek to fulfil that purpose. They don’t believe just because you say so. A simple example, is that we have known that remote and flexible working was a good thing to pursue for a long time, but there was very little take-up and indeed prejudices against doing so. Covid has forced many people to work remotely – now they have experienced for themselves that it works – and now they are believers. We need to always be looking for similar ways for individuals to experience for themselves the pursuit of the purpose and the changes required to achieve it - and in that process to be contributing their ideas and insights for how to create a better ‘solve’.”

The regional president of a media conglomerate noted:

“The boss is not automatically believed or followed any longer. Individuals ask themselves ‘Am I motivated to do this change?’. Previously we managed change by focusing on the process. Now change is achieved by nurturing the belief (of the managers and staff).”

3: Shape the culture for the pursuit of Purpose

Culture has a very important part to play, establishing the process by which the organization evolves.

Perhaps surprisingly in 4IR it’s not the systems or the technology that matters most but how people learn and interact with each other as the future unfolds, the ability to adapt quickly yet committing to a course of action in pursuit of the purpose. It is hard to have a long-term strategy for a business when things are constantly moving so much. Purpose is the new version of strategy. Culture defines how the organization moves forward.

A regional partner a leading executive search firm noted:

“I would say that in fact people’s understanding of how culture can effect and then affect change is one of the critical components to any successful transformation today. Also the fact that culture can shift and evolve to allow an organization to meet its purpose is a really important proposition.”

The CEO of a plastics manufacturer stated:

“I changed the culture of the firm to celebrate asking questions (in order to learn and to help each other improve) whereas before it was a culture of giving answers. Now the most important skill is asking the right question and being able to orchestrate resources to go and find potential solutions. The glue that holds us all together and enables us to challenge one another is our purpose. Ensuring that everyone understands and aligns with the purpose is much more important than before; before we just had to get on with key initiatives – now we need to think why is something important – and then explore the change process whilst keeping an eye on the destination, the objective; as a plastics manufacturer our purpose is to reduce the plastics in the oceans.”

4: Sharpen central intelligence whilst empowering local innovation

The adoption of 4IR technologies, particularly AI, is enabling significant changes to the roles executed by people or machines. Creative thinking and innovations lead by people are increasingly perceived as the differentiators of an organization’s performance, as more routine roles and analysis of data is automated. People are the key source of innovation as innovation requires new thinking.

The regional president of a media conglomerate noted:

“We will increasingly be able to be adaptive to local market nuances without losing overall efficiencies. The past few decades have seen a ‘swing’ towards centralization and standardization, this is slowing-down and will reverse in 4IR. We will see technology empowering local operations as the valuation premium of a company’s stock-price is driven by its speed and successful experimentation in market.”

The CEO of a leading fashion brand similarly noted:

“A huge impact of AI is that it provides insight and guidance on what we should stock and how to display or price at the local level. AI is enabling us to be smarter at the customer interface. As a result of this I see that 4IR tech is driving us to grow the expertise and skills that we have at the corporate centre, whilst at the same time to reduce down the number of manager-level roles in stores or outlets. We really don’t need to have regional coordinators any longer, really sophisticated AI-supported insight at the centre enables better decisions and fine-tuning of operations at the store level, globally.”

The global HR head of a leading snack foods company noted:

“Central management (may not be collocated) will be a decreasing number of people - but they will be highly skilled, visionary and able to work effectively across national cultures and regions.”

People drive continuous evolution in 4IR

In 4IR, technology adoption is widespread and development is unrelenting. As such it is the people that are the differentiators of company performance, particularly in creative, knowledge-based and innovation roles.

Change has changed in 4IR as managers are not responding to orders and centrally planning. Rather they are engaged believers, passionate in the pursuit of the purpose of the organization. As such people are the instigators and drivers of change, with the culture of the organization setting the framework and the style for how change is pursued.

To quote the CEO of the fashion brand:

“Now we can have the entire brain-power and creativity and innovation of the company contributing – as the mundane, the roll-out of execution, fulfilment, pricing, stock management etc. is increasingly managed by automation. People are the key to high performance in 4IR.”