The 4th Industrial Revolution is underway as we speak. Is your board ready to ride the crest? Going into this fall, that’s the essential question that should be on every directors’ agenda.
To recap, the 1st Industrial Revolution began in the 18th century with the use of steam power and the mechanization of production. Instead of spinning wheels to create threads, the mechanicalized version created an 8-fold increase in production.
The 2nd Industrial Revolution utilized electricity to enable great advancements in manufacturing and production. Interchangeable parts were a new event.
The 3rd Industrial Revolution got its start in 1947 with the invention of the transistor by Bell Laboratories, then the R&D arm of AT&T. A few decades of Moore’s Law and we arrive at the present, epitomized by the incredible power of the smartphone in your pocket.
We’re now in the midst of the 4th Industrial Revolution. It was in full force before the pandemic, but 18 months ago, it was accelerated by Covid-19. We couldn’t shut down our companies, so inside of a couple of months we figured out how to keep our firms (and ourselves) alive without many workers commuting to the traditional workplace. Artificial Intelligence was put into high gear. Voice-recognition algorithms now take many of our drive-thru orders. Social-distancing requirements accelerated the use of robotics to pick your burger—and pushed many of today’s executives to enjoy the additional productivity of giving up their commutes.
Now the old normal is dead. RIP.
The key question now, for both boards and management teams: Have you thought through how all this workplace change can create long-term opportunity, rather than just be a short-term response to crisis? Can you ride the crest, and take maximum advantage of this new revolution to grab great talent and keep it? Some thoughts:
• Don’t police. Please don’t think about having some policing tool to check in on how many hours, a work-from-home person is “at work.” It will backfire. Word of such policing will negatively spread through your culture faster than a virus and send the grown-ups fleeing for the exit.
• Get smarter on space. Uber just spent $130 million building their new HQ in San Francisco. Reportedly, they are now trying to lease-out 2/3 of the space. A better option for larger companies than one big headquarters could be a hub and spoke model. Skinny down the New York City footprint to 1/5th its size and add smaller satellite offices in northern New Jersey, White Plains, and Long Island City, for instance, allowing employees to turn the previously-wasted commute time into productive working hours or family time. You can still hold your headquarters meeting when you need to.
• Stay on top of talent. Your HR people need to have a thought-through strategy for stronger talent demand at the low and high ends—as well as dealing with a “hollowing out” of the middle. Ask them about their plans routinely, especially when it comes to in-demand technology personnel—because technology, as you well know, will dictate which companies grow or lose share from here.
For boards, two key to-dos:
1. Encourage your management teams to review Covid-19 related changes and make the useful ones permanent.
2. Perhaps add an agenda item to their next annual offsite/ strategy session: “What might the 5th Industrial Revolution look like? What might cause it? How can the company be ahead of that event?”
Don’t be the person who looks back at the 4th Industrial Revolution. Be one of the leaders who accelerated it.