DAVOS, SWITZERLAND – 21 January 2019—With the Fourth Industrial Revolution (Industry 4.0) re-shaping how the world lives and works, global leaders are facing the pressures of preparing their businesses and their workforces for this new era. Arising from this shift to Industry 4.0 are defined leadership traits that have been uncovered in Deloitte’s second annual Readiness Report, Success Personified in the Fourth Industrial Revolution, which offers insight into the characteristics that set apart the most effective leaders and successful organisations.
This year’s survey of more than 2,000 C-suite executives across 19 countries, found that executives genuinely want to improve the world and they have a clearer grasp of the skills challenge ahead. However, organisational roadblocks appear to be limiting the development of effective Industry 4.0 strategies and they continue to shy away from bold technology investments that will drive innovation and disruption. In two critical areas – societal impact and talent development – CXO attitudes changed dramatically from 2017, indicating leaders are becoming more realistic about what it takes to succeed in Industry 4.0.
“Last year, even though leaders were just beginning to understand how Industry 4.0 would transform business and society, they expressed confidence in their preparedness,” said Punit Renjen, Deloitte Global CEO Emeritus. “Yet their actions demonstrated a significant mismatch between their confidence to address these changes and their actual readiness to address them. Today, leaders are more realistic about what it will take to succeed and they appear particularly focussed on societal impact and workforce development as two critical components of their future success.”
While there is no one recipe for success in how to deal with rapid industrial transformation, it can be helpful to understand how certain leaders are approaching this ever-changing environment. Organisations with leaders who embody the characteristics of the Industry 4.0 personas commitment to do good; defined, data-driven decision-making; bold, longer-term vision of technology; and aggressive about workforce development are poised to survive and thrive.
Deloitte research explores the types of leaders that are taking effective action, where they are making the most progress and what sets the most successful leaders apart. These leadership personas the “Social Supers,” the “Data-driven Decisives,” the “Disruption Drivers,” and the “Talent Champions” can serve as models for leaders globally as they tackle the challenges associated with 4IR transformation.
This year’s survey revealed that societal impact (34 per cent) is the most important factor business leaders use to gauge success totaling that of financial performance (17 per cent) and employee satisfaction (17 per cent) combined. Additionally, more than half of global executives surveyed (53 per cent) noted their societal impact efforts resulted in new revenue streams proving purpose and profit can coexist in Industry 4.0.
The “Social Supers”
“Social Supers” are leaders who consider societal initiatives fundamental to their businesses. They have demonstrated success in “doing well by doing good” by generating new revenue streams through socially or environmentally conscious products or services; and believe that these initiatives, more often than not, contribute to profitability. “Social Supers” are more confident in their ability to handle the workforce challenges of Industry 4.0 they are 12 per cent more likely to cite that their workforce composition is prepared for digital transformation and show far greater willingness to train workers (54 per cent vs. 37 per cent).
A third of global leaders cited lack of leadership vision as the top challenge their organisations face in adapting business strategies to meet the needs of tomorrow. Strategy also falters when it comes to implementing new technologies, as leaders reported concerns over too many technology choices and difficulty keeping pace with the rate of change. Only 29 per cent of executives believe their organisations have clearly defined decision-making processes, so it’s no surprise executives are struggling to keep up.
The “Data-Driven Decisives”
Strategic obstacles, such as organisational silos, can complicate decision-making processes and hamper innovation. “Data-Driven Decisives,” however, are overcoming these challenges through a methodical, data-focussed approach and are bolder in their decisions. These leaders are confident in comparison to other leaders, with sixty-two per cent strongly agreeing that they are prepared to lead their organisations in capitalising on the opportunities associated with Industry 4.0 almost twice as many as other leaders (32 per cent) surveyed.
Despite the unquestionable economic and societal potential of Industry 4.0, many organisations opt to maintain the status quo with respect to their technology investments, leaving themselves at risk. Twice as many leaders said they’re more likely to invest in Industry 4.0 technologies to protect themselves from disruption as are looking to disrupt other industries or the marketplace (67 per cent versus 33 per cent). So, what is responsible for this defensive approach? Issues such as being too focussed on short-term results, having too many technology choices and a lack of understanding of the technologies rose to the top as barriers to investment.
The “Disruption Drivers”
Leaders known as the “Disruption Drivers” understand that investment in new innovations is required for growth; they invest in technologies with a concerted focus on upending their markets. These bold decisions have paid off their technology investments have achieved or exceeded their intended business outcomes. “Disruption Drivers” are more likely to say they feel ready to lead in the Industry 4.0 era (45 per cent versus 32 per cent) and are more assured that their organisations are prepared to capitalise on the opportunities associated with Industry 4.0.
Global leaders appear to understand the new skills required by Industry 4.0 jobs, however, the fear of technology and automation isn’t necessarily causing executives to increase efforts to train their workforce. While 55 per cent of leaders highlighted a significant mismatch between current skill sets and those needed in the future, 25 per cent still prefer hiring new employees over retraining their current workforces. Furthermore, 57 per cent believe the education system is inadequately preparing incoming workers up from 35 per cent in 2017. If the education system isn’t providing business with able professionals, it will fall to business leaders to either hire for the skills they need or retrain their existing workers.
The “Talent Champions”
The “Talent Champions” know what skill sets their companies need and they believe they currently have the correct workforce composition. These executives are aggressively preparing their companies for digital transformation and embrace their responsibilities to train their employees for the future of work (51 per cent versus 41 per cent for all other respondents). Talent Champions also are more likely to invest in technologies to disrupt competitors (42 per cent versus 32 per cent).
“Our research has uncovered four distinct types of leaders succeeding in Industry 4.0. These leaders are achieving greater revenue growth than their counterparts, in part, because they have conquered at least one and sometimes more, of the dimensions required for success. For other leaders seeking to prepare for the challenges of this new era, these personas offer insights that can be used to shape their own strategies for success,” added Renjen.
For more information and to view the full research results, read the report here.
This research is based on a survey of 2,042 global executives conducted by Forbes Insights in June-August 2018. Survey respondents represented 19 countries from the Americas, Asia and Europe and came from all major industry sectors. All survey respondents were C-level executives, including CEOs/presidents, COOs, CFOs, CMOs, CIOs and CTOs. All executives represented organisations with revenue of $1 billion or more, with half (50.1 per cent) coming from organisations with more than $5 billion in revenue. Additionally, Forbes Insights and Deloitte Global conducted one-on-one interviews with global industry leaders and academics.
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