Digital Transformation - A Short History of Industrial Revolutions
Digital Transformation is an organizational imperative today and almost all corporate entities are investing time, effort and dollars to become a “Digital Enterprise”. The advent of the Fourth Industrial Revolution (4IR) has almost sealed it for the organizations to reinvent and realign their business priorities to maximize the advantages of digital transformation. As per a report by Deloitte, the 4th Industrial Revolution is indicated by the integration and symbiosis of physical assets with digital technologies resulting in the transformation of world ecosystems such as the society, economy, lives and society blurring the lines between the all the worlds.
To understand the evolution of the “Digital Enterprise” or/and digital transformation, we need to look into the journey that has been covered over the last 200 years to appreciate where we are right now.
Around the end of the 18th Century, the world witnessed the First Industrial Revolution characterized by mechanization, steam power and urbanization propelled by iron, coal and textiles. The second industrial revolution up until 1914 was characterized by developments in book-keeping to aid the businessman in decision-making, the rise of the engineer, application of mechanical engineering in construction projects, the birth of the “Assembly Line” and consequently, mass production. The revolution also saw the birth of the Principles of Scientific Management (Burn, 1931). The third industrial revolution (1970’s) to the saw the shift towards collaborative behaviour, advent of technology, the rise of the knowledge worker and the power of the Internet. Antiquated forms of energy supply gave way to renewal energy and green electricity and the world became more closely knit.
The below diagram as per Deloittee’s study summarizes the four revolutions and their milestones.
Digital Transformation -The Fourth Industrial Revolution and Covid 19
The present day and age is the era of the 4th Industrial Revolution (4IR) characterized by the world of big data, analytics, artificial intelligence, robotics, internet of things, connected devices, augmented reality & virtual reality, blockchain, 3D printing etc. As mentioned before, the technologies and advancement deployed have blurred the lines between many worlds. For organizations to be be profitable and more importantly sustainable, digital transformation needs to be all pervasive and deployed across the organization to leverage the true power of technology and advancements while also ensuring there is an alignment of leadership, people and investments.
Reports from leading management consulting firms suggest that while CEOs understand the value of digital transformation, the organizations they represent may not be ideally set-up to embark on this journey. According to McKinsey, organizations that adopt a digital transformation set-up are able to quadruple their five year revenue CAGR and increase their five year Total Return to Shareholders CAGR. While financial and operational metrics have seen a positive change, the success rate is still quite elusive with a majority of organizations (70%) landing short of their digital goals and consequently seeing a gap between the actual and the intended results. Success of digital transformation initiatives are heavily moderated by size, complexity and scale of an organization. McKinsey reports that organizations with less than 100 employees are 2.7 times likely to see the success of digital transformation initiatives than organizations with more than 50,000 employees. The question, hence, in the mind of the CEO, or the Chief Digital Officer today is how should one initiate the digital transformation journey to achieve the intended outcomes. The answer to this question is not easy however organizations need to follow a structured framework to address this question. The 5 important components of a typical digital transformation framework are as follows:-
- An integrated and holistic digital strategy for the organization
- Aligning leadership, people and investments
- Digital transformation of the core business
- Evaluating and implementing new business opportunities
- Augment business processes and enablers
The Corona Virus seems far from getting eradicated or contained with the second wave of infections rising steadily across the globe. While the number of organizations who have converted the crises to opportunities continue to rise, its also important to know that the the global economy is still reeling under the weight of GDP contraction, productivity loss, stress on resources and human lives being lost. The promise of vaccines has in many ways ameliorated the fears and the same can be seen in revised economic outlook along with the recovery in China and US election results. This however should not divert our attention from the losses that the world has seen. As per a report by S&P Global, there has been a decline in the global GDP forecasts. While China seems to be the only major economy to have a positive GDP outlook, the United States is seen to contract by 5%. In emerging markers such as India, the actual GDP contraction is now at almost 9% as per Moody’s. See the below table for reference
This video by the World Economic Forum summarizes the implications and the consequences of the 4th Industrial Revolution where the lines between the artificial and the natural world become blurred to create a new realm of possibilities
The Digital Transformation video by equalman, lays down the power of social media and the speed with with people are engaging with it.
The Digital Transformation video by Gerd Leonhard talks about the how humans will still be at the forefront of digital transformation in an integrated and holistic ecosystem
Digital Transformation- The Workforce of the Future
While advances in technology across segments and domains have played a pivotal role in accelerating the pace of digital transformation, its important to note that the nodal point of such a transformation is talent. The propensity of an institution, a corporation or a country to embrace digital transformation lies on one important parameter, the talent readiness. The Covid -19 upheaval has exposed some of the inherent gaps in the workforce from a readiness, capability and behavior perspective. The fact that a lot of organizations started to re-evaluate their investments in L&D to improve employee engagement as a reactive response is an indication that learning was not always a priority for organizations. On the supply side of talent, the Covid 19 showed the lack of will on the part of the work-force to invest time and effort in continuous learning in pre-Covid times. Having a workforce of the future demands that both the organization and the individual take co-ownership to bridge the knowledge gap, embrace change, learn new tools and technologies and be future ready.
One of the most talked about subjects today are “Future of Work ” and the “Future Workforce” and to be future ready, reskilling and upskilling are seen today not as a competitive advantage but business as usual. For the world to succeed in its endeavor to be future ready, there is a need for an ecosystem of learning that is inclusive, experiential, personalized, relevant, on-the-go, mobile-based and analytically driven.
According to the LinkedIn Learning Workplace Report 2020, there have been a shift of investments from Instructor Led Training (ILT) to Online Learning. ILT investments are down according to 38% of the L&D professional surveyed and 57% of the respondents indicated an increase in online learning. While this is good news, a second factor needs to be addressed which is the archaic system of learning currently deployed in organizations across the world. The Learning Management System (LMS), has not changed much from its early years putting storage, delivery, administration and management of content at the forefront with little emphasis on learners involvements, focus, experience and outcomes. The traditional LMS’s hence become outmoded especially at the face of monumental improvements in the world of digital technologies.
One of the main focus of the new age learning platforms have been their ability to align the goals of the organizations with the goals of the individual. Learning is continuously been seen as an experience than tasks and relevant content is being curated to produce a more personalized experience. As per Docebo, 2020 learning trends, the learning platforms will see the gamification, simulations, augmented reality, virtual reality, analytics etc. govern the architecture of the learning platforms. These intelligent systems are also seeing the deployment and leveraging of user-generated content to drive L&D ambitions of an organization while consumption driven primarily through mobile. Data in the same study indicate that 70% of organizations are now offering mobile learning in one form or the other primarily attributed to the ownership of such devices by 90% of young corporates and preference towards “learning-in-the-flow” of work. These trends are also converging towards the smooth assimilation of gen-z to the workforce that prefers self-directed learning,
The diagram below shows the evolution of the L&D universe.
References:-
- American Engineering Competition, 1850-70,” by D. L. Burn; in Economic History Supplement to Economic Journal, Vol. II, No. 6 (1931), pp. 297-300.
- A strategic framework for successful Digital Transformations by Nima Torabi, in The Startup, 2020.
- Deloitte Study, Preparing tomorrow’s workforce for the Fourth Industrial Revolution, September, 2018
- Getting your organization ready for a digital transformation, McKinsey & Company, June 2020
- 7 Examples Of How Digital Transformation Impacted Business Performance by Blake Morgan, July, 2019, Forbes
- The Global Economy Begins A Slow Mend As COVID-19 Eases Unevenly, Paul Gruenwald, S&P Global, July, 2020
- Deloitte Insights, Technology Trends 2020