The Fourth Industrial Revolution is here—but are Australian executives ready? has been added to Bookmarks.
The Fourth Industrial Revolution is here—but are Australian executives ready?
- Global research explores C-suite views on readiness for the impact of the Fourth Industrial Revolution on society, strategy, the workforce and technology investments
- Finds Australian executives least confident in the world about their organisations’ readiness for technological and societal change
23 January 2018: As senior business executives and government agency leaders from around the world meet for the World Economic Forum in Davos, Switzerland, a new research report by Deloitte - entitled The Fourth Industrial Revolution is Here—Are You Ready? - finds that many lack confidence in their organisations’ readiness to influence and harness the opportunities offered by the Fourth Industrial Revolution (Industry 4.0).
Industry 4.0 is characterised by the marriage of physical and digital technologies, such as analytics, artificial intelligence, cognitive computing and the internet of things (IoT). Deloitte surveyed 1,600 C-level executives across 19 countries and conducted select in-person interviews to explore their readiness to leverage Industry 4.0 to benefit customers, employees, communities and other key stakeholders.
The research found that only 2% of Australian business leaders feel highly confident they can fully harness the changes associated with Industry 4.0, compared with 14% of executives globally.
Conversely, Australians are the most confident in the ability of their current workforce to adapt to Industry 4.0: 71% of Australian executives (compared with 40% globally) say they have people in place with the right skills to maximise their potential—the highest percentage of any country surveyed.
Also of concern is that technology was not seen as a competitive advantage by Australian executives. Only 4% of respondents from Australia consider technology a key competitive differentiator, compared with 20% globally. This is a key variance because executives’ approach to technology appears to be a leading predictor of how well prepared they believe they are for Industry 4.0 and for making the business case for new technologies.
“The rapidly advancing technologies driving Industry 4.0 are bringing about social and economic change rapidly in an environment of unparalleled global connectivity and demographic change,” said Punit Renjen, Deloitte Global CEO. “It’s a time of great opportunity, but also risk. We developed this research to better understand how executives are navigating the pervasive shift and to uncover areas where they can more effectively influence how the Fourth Industrial Revolution impacts their organisations and society.”
The research focused on four major topics: social impact, strategy, talent/workforce, and technology. The survey results indicate that while executives conceptually understand the changes Industry 4.0 will bring, they are less certain how they should act to benefit from those changes. In each of the four areas of impact, the survey uncovered some degree of contradiction:
Social Impact: optimism versus ownership – While executives see a more stable future with less inequality, they are less confident about the roles they or their organisations can play in influencing society in an Industry 4.0 era.
- An overwhelming proportion (82% in Australia, 87% globally) believe the Fourth Industrial Revolution will lead to more social and economic equality and stability, and two out of three globally say business will have much more influence than governments and other entities in shaping this future.
- However, less than a quarter globally believe their own organisations can influence key societal factors such as education, sustainability and social mobility.
Strategy: static versus dynamic – Executives acknowledge they may not be ready to harness the changes associated with Industry 4.0, but these reservations have not compelled them to alter their strategies.
- Only one-third (33%) globally and just 8% in Australia are highly confident they steward for their organisations during this time of change. Just 14% are highly confident that their organisations are ready to fully harness the changes associated with Industry 4.0. This drops to just 2% in Australia.
- Many executives are sticking with a focus on traditional domains (i.e. developing products and increasing productivity) instead of shifting their focus toward developing talent and driving competitive disruption that could spur innovation and create value.
- More than any other country, 50% of Australian executives believe the changing regulatory environment will have a major impact on business in the next five years
Talent/Workforce: evolution versus revolution – Executives are not confident they have the right talent to be successful in Industry 4.0. However, they feel they are doing all they can to build the right workforce, despite talent ranking low on their list of priorities.
- Seventy-one percent of Australian executives (compared with 40% globally) say they have people in place with the right skills to maximise their potential—the highest percentage of any country surveyed.
- Interestingly, 86% globally say they are doing everything they can to create a workforce for Industry 4.0. Yet, responses indicate that HR topics remain a low priority, other than aiming to increase worker efficiency.
- Australian executives are among the highest of all countries surveyed in believing the workforce is trending toward contractual, temporary and/or ad hoc employees rather than toward full-time employees
- For companies that have placed Industry 4.0 talent implications high on their priority list, they are exploring the potential for new roles that allow people to play to their strengths while leveraging technology for greater innovation, alternative work environments, and new approaches to learning and development.
Technology: challenged versus prepared – Executives understand they need to invest in technology to drive new business models. However, they have a hard time making the business case to fully address Industry 4.0 opportunities because of a lack of internal strategic alignment and short-term focus.
- Executives acknowledge that their current investments in technology are strongly influenced by the desire to create new business models which they believe will have one of the biggest impacts on their organisations.
- However, very few executives say they are able to make a strong business case for investing in the technologies that define the Fourth Industrial Revolution. They cite a lack of internal alignment, a lack of collaboration with external partners, and a focus on the short term.
- Australian executives do not express as much confidence as global counterparts in their organisations’ preparedness to address a number of Industry 4.0 elements, including dealing with more powerful and tech-savvy customers (Australia 5%, Global 20%) and the uncertain impact on the workforce (Australia 8%, Global 25%). Yet they are more confident they are ready to address the blurred lines between physical and digital worlds (Australia 66%, Global 49%).
The research revealed that, overall, executives around the world are in the early stages of readying their organisations to harness the full potential of Industry 4.0. They will need to seize opportunities to strengthen key connections that will benefit their clients, their people, their organisations, their communities and society more broadly:
- Social impact. Accept that each and every organisation has the power to influence, in multiple ways, the promise of the Fourth Industrial Revolution to create a more equitable and stable world.
- Strategy. Take a holistic approach to strategic planning, exploring how core capabilities can be enhanced by new ones to develop new products and services, and create new value for a broader range of stakeholders.
- Talent and workforce. Make it a priority to prepare workers to navigate the age of Industry 4.0 by creating a culture of learning and collaboration, and creating training opportunities—both within the organisation and in underserved communities.
- Technology. View technology as the most powerful differentiator in an Industry 4.0 world and invest in integrating new applications that can support new business models. And—most importantly—understand that Industry 4.0 technologies shouldn’t be limited to just one part of the organisation, but integrated across the organisation to better support a broad spectrum of responsibilities and stakeholders necessary to thrive in a 4IR world.
“I believe those who take a broad view will be the ones to succeed in this new era,” noted Renjen. “They will see connections between business and social needs; between financial outcomes and innovative strategies; between workforce productivity and people’s sense of stability and well-being; between integrating existing technologies and creating completely new solutions.”
For more information and to view the full international research results, read the report here.
Forbes Insights, in conjunction with Deloitte Global, conducted a global survey of 1,603 CXOs (including 100 from Australia), to better understand their perspectives on Industry 4.0. All respondents were from organisations with annual revenue greater than US$1 billion, with average revenue of US$7.4 billion. The CXOs lead organisations in Australia, Brazil, Canada, China, Denmark, Finland, France, Germany, Iceland, India, Japan, Mexico, Netherlands, Norway, South Africa, Spain, Sweden, United Kingdom and the United States. Respondents represent 10 industries, with no industry constituting more than 12 percent of the total sample. The survey was conducted in August 2017.