Industry 4.0: The People Skills to Prioritize
| By Terence Brake
The Borderless Challenge
Change has been driven by two powerful and interdependent forces in the business environment:
- Digital technologies
- Multi-polar globalization
New information can impact the rest of the globe at the speed of the Internet, and information is being created 24/7. As Eric Schmidt of Google said, “There is more content being created in 48 hours today than was created from the beginning of time ‘til 2003!”
The digital age is not simply about the transfer of information in its many forms. As Don Tapscott, author of Wikinomics says, “This is not an information age. It’s an age of networked intelligence.” This is an age in which we have access to the intelligence of not just a few, but multitudes; an age that makes mass collaboration possible. Such collaboration radically alters our capabilities to innovate, influence, and get things done.
Gone are the days when globalization was simply multinationals from advanced economies spreading their power and influence across borders. Companies from emerging markets are wielding much more power. Think of:
- Lenovo (China) – now the world’s largest maker of PCs
- Tata (India) – a conglomerate with a market capitalization of $90 billion that earns 58 percent of its revenues outside of India. The Reputation Institute ranked Tata as the 11th most reputable company in the world.
While Lenovo and Tata are becoming well-known names, there are many other emerging market companies becoming ‘global challengers’. The Boston Consulting Group issued a study on 100 fast growing and fast globalizing companies from emerging markets . The companies included Alibaba (the largest e-commerce company in China), Trina Solar (the world’s 4th largest solar panel manufacturer), Naspers (a South African media giant). While China and India dominated the list, there were also companies from Egypt, Colombia, Qatar, Saudi Arabia, and Chile. While the digital revolution and globalization have been with us for some time, how are businesses doing in their response? According to research conducted by Accenture and the Economist Intelligence Unit: Strikingly, only 11 percent of business leaders surveyed believe that their companies are significantly advanced in their strategic response to the disruptive business environment brought about by the intersection of the multi-polar world and developments in IT. “
The Borderless Challenge: Realities
These are some of the specific business realities triggered by the powerful environmental forces.
- Competition: Multi-polar globalization means competition is coming from here, there, and everywhere. This means there is a continuous need to be proactive, responsive, and agile. We experience rapid changes in the marketplace requiring continuous adaptation in strategy, decision-making, and action. It is increasingly more difficult to plan for change often leaving us feeling disoriented, overwhelmed and unprepared.
- Complexity: Diverse – yet often interconnected and conflicting - business models, management systems, legal and regulatory systems, customers, suppliers, stakeholders, geographies, employees, and socio-political systems make up a complex business environment. Often, complex problems cannot be managed with existing knowledge and know-how; they require collaborative solutions and innovation.
- Connectivity: Information technologies have long been used to create efficiencies and productivity. Advanced virtual communication and collaboration technologies are going further by enabling business transformations. The ‘connected’, ‘networked’, ‘matrixed’, ‘latticed’, and ‘borderless’ enterprise are names for organizational forms enabled by the digital revolution.
- Cultures: Being more digitally connected doesn’t mean we are more culturally or psychologically connected. In a world of virtual and face-to-face interactions across borders we often experience difficulty in understanding what is happening or in identifying what is significant. There is an increased chance for misreading situations because the reality might be interpreted in more than one way.
The Borderless Challenge: Developing Capabilities
To suceed in the Borderless Workplace there are specific capabilities required, on an organizational and personnel level:
Organizational capabilities stand out as being of highest priority at this time:
- Agile: The ability of an organization to change rapidly in response to changes in the environment, e.g. the emergence of new competitors, disruptive technologies, and sudden changes in market conditions. Based on research by both McKinsey and The Economist Intelligence Unit, 90 percent of executives rank organizational agility as critical to business success . Research at MIT shows that agile firms grow revenue 37 percent faster and generate 30 percent higher profits than non-agile companies. 
- Innovative: The willingness and ability of networks of people and teams to innovate their way through complex problems, by working together across internal and external boundaries. The story of Procter & Gamble (P&G) is telling . In early 2000, the company’s share price had fallen nearly 50 percent, resulting in the loss of $85 billion in market capitalization. Despite huge spending on R&D, only 35 percent of new products reached their financial objectives. The new CEO, A.G. Lafley, was confident that collaboration was the key to the company’s future value. He wanted to make P&G the company that “collaborates inside and out, better than any company in the world.” A study showed that P&G’s most profitable innovations came from internal collaborations across business units or from external collaboration with researchers on the outside. Twenty cross-functional ‘communities of practice’ were established within P&G, and Lafley determined that 50 percent of P&G’s products, ideas and technologies would be developed externally. By 2008, P&G had improved its R&D productivity by 60 percent, and more than doubled its innovation success rate. Technologies facilitate collaborative innovation, but they are by no means sufficient. As Jim Whitehurst, CEO of Red Hat said, “. . . collaboration is a culture, not a set of tools.”
- Tech Smart: The traditional view has always associated information technology with efficiency and productivity. That is certainly a valid perspective. Work networks (based on social media technologies) will become a common feature in organizations seeking greater agility, and according to McKinsey, “…by fully implementing social technologies, companies have an opportunity to raise the productivity of interaction workers – high-skill knowledge workers, including managers and professionals – by 20 to 25 percent.” That includes: 25-30% productivity improvement in reading and answering e-mail 30-35% productivity improvement in search and gathering information 25-35% productivity improvement in communicating and collaborating internally  Productivity is only part of the story. According to IBM: “The view that technology is primarily a driver of efficiency is outdated; CEOs now see technology as an enabler of collaboration and relationships – those essential connections that fuel creativity and innovation.” 
- Adaptable: The ability of people in an organization to handle the uncertainties and ambiguities that are inevitable when vertical, horizontal, regional, national, professional, functional, and linguistic boundaries are crossed. Research by the Economist Intelligence Unit points to cultural and language differences as being particularly challenging: “The single most common challenge, selected by 56% of executives polled, relates to the misunderstandings that emerge as a result of cultural and language differences from teams operating globally.”
The Borderless Challenge: People Capabilities
Based on these critical organizational capabilities, four specific capabilities emerge for people development – The Critical4
- Borderless Collaboration: People with the mindsets and skills to work together across borders to innovate and create value.
- Matrix Working: People with the thinking and behavioral agility to produce high levels of performance in complex environments.
- Cultural Intelligence: People with the adaptability to bridge and leverage differences between individuals and groups.
- Digital Fluency: People with the ability to make the most effective use of new communications and collaboration technologies.
The Borderless Challenge: Summary
Organizations that can acquire these capabilities stand to benefit in a number of ways:
- Faster responsiveness in pursuing growth opportunities and managing risks
- Increased organizational cohesion and integration
- Deeper and more value-added collaborations with customers and other stakeholders
- Faster and better quality decision making through increased sharing of knowledge, skills, and experience
- Faster workplace learning and application of best practices
- More efficient and effective face-to-face and virtual project collaborations across the organization
- Increased innovation through the cross-pollination of diverse perspectives and styles
- Increased productivity through more seamless cross-border communication