Enterprise Risk Management Initiative, Poole College of Management, North Carolina State University

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Operating in a Digital World

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To explore the question of “readiness” for Industry 4.0, Deloitte Global conducted surveys of C-level executives worldwide. Based on Deloitte Global’s research, at the broader scale, executives around the world are in the early stages of readying their organizations to harness the full potential of Industry 4.0. There are four focused areas of opportunities to strengthen key connections that will benefit their organizations as well as the society in which we live. It is clear that the rapid changes in every industry are already emerged, that the old way of doing business is not enough anymore, and the only way to successfully making a difference is through embracing new technologies and shifting mind-sets.

Four Areas of Opportunities to Strengthen

As organizations progress towards harnessing the full potential of Industry 4.0, many business executives conceptually understand the changes Industry 4.0 will bring without knowing how they can physically take actions to realize the advantages of the new technological revolution. Deloitte Global’s survey has uncovered four key areas of impact between their hope and ambiguity. The survey result of each area points to a direction in which organizations can improve.

The followings are the four areas of impact for business executives to consider enhancing:

  1.   Social Impact
    Executives are optimistic about the impact of Industry 4.0 which will certainly bring significant changes for almost every aspect of society. Eighty-seven percent of survey participants believe that Industry 4.0 will lead to more social and economic equality and stability. However, another important observation is that the survey also revealed executives do not believe their own organizations have significant sway over societal issues such as education and learning for employees, environmental sustainability or social and geographic mobility. Research also suggests that organizations does not receive enough motivation or support to steer their strategies toward serving broader stakeholders and addressing social issues. Therefore, to achieve societal development goals, business executives need to accept that each and every organization has the power to influence in its own reign.
  2. Strategy
    In viewing the new revolution from the lens of developing business strategy, many executives recognize the changes Industry 4.0 portends. But they are also hesitated to shift their business strategies from the old business operations model to the new dynamic and forward-looking ones. For example, when asked what is their strategic priority, many answered developing business products and increasing productivity. While these are important, business executives need to take a broader and holistic view in exploring how core capabilities can be enhanced by new ones to develop new products and services in an innovative way to create new values for a broader range of stakeholders.
  3. Talent and Workforce
    Despite the clear impact Industry 4.0 will have on workforces in every industry and geography, many executives surveyed do not express urgency to tackle the challenges of the future of the workforce. With the constant evolvement of technology in the area of artificial intelligence and robotics, human skills demand will be impacted and shifted to more complex and process-oriented skills instead of task-oriented such as supervision, creativity and emotional intelligence. Business executives need to make it a priority to equip their employees with navigational skills in the age of Industry 4.0 by creating a culture of learning and collaboration and offering more training opportunities.
  4. Technology
    The shift to Industry 4.0 also means to be prepared and integrate digital and physical technologies to improve operations. This requires business leaders to view technologies as the most powerful differentiator in supporting their new business models. The trend in the digital world now is to use data collected in the physical world and turn that into behavioral-oriented innovative products and services which generates new values. More importantly, executives need to realize technologies should not be limited to just one part of the organization: they should be integrated across to support the business goals and generate values for broader range of stakeholders.

Conclusion

While Industry 4.0 brings us a great degree of positive opportunities, business executives need to keep in mind that there are also a good number of challenges and uncertainties on the way of harnessing its full potential. The two main impacts Industry 4.0 brings are streamlining business operations while creating new values and boosting business growth through the lens of digitizing. It is clear that executives need to be ready and shift their mindsets in managing their businesses to achieve the broader benefits in this new industrial age.

Categorized Under: Enterprise Risk Management Basics / Miscellaneous ERM Topics / Risk Management Fundamentals / 
ERM Enterprise Risk Management Initiative 2019-01-29

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