At a conference I attended as a speaker recently, many of the leaders I met told me that they struggle to keep up with digital transformation internally in their organization even if they have great digital products and services to their clients. Their work environments were still, in their opinion, outdated and old fashioned and not ready for the digital transformations happening in their industry.
Although you might think you are keeping up with the latest of technology and your company is up to date with the digital era, we have a question for you. Would your people also say you and the company are on top of all this change? Or would they think they are part of a company stuck in the past, with an old-school mindset businesswoman or man at the helm? Maybe that person that is conservative and cautious and is always resisting change until absolutely necessary?
According to a recent report by Merrill Lynch anticipates US$14-33 trillion in annual creative disruption impact in 10 years, including US$9 trillion cuts in employment costs via automation of knowledge work and US$1.9tn in efficiency gains via digitally enabled transportation autonomy. Adoption of MIoT related technologies could boost global productivity by 30% in many industries, while cutting manufacturing labor costs by 18-33%. They also estimate up to 50% of all jobs could be at risk of replacement in 20 years due to digital disruption coming from robotics and the MIoT.
Furthermore, they cite a recent, major study by researchers from the University of Oxford showing that almost one in two (47%) of jobs in the US are at risk of being computerized in 20 years. Likewise for the UK, one-third (35%) of jobs risk being replaced (source: Frey and Osborne 2013). The trend is worrisome in markets like the US because many of the jobs created in recent years are low paying, manual or services jobs that are generally considered high risk for replacement.
We have found that if you are on the resisting camp regarding transformation, you are not alone. A large number of independent professionals and company executives find it daunting and challenging to “take the plunge” and introduce a digital transformation program to their business.
However resisting the change will only make the very need for it ever more persistent! As we have seen, those who let go of resistance and persist with transformation will keep an edge — even as in some cases change is the only option: there’s analysts that say that due to technological disruption, 40 percent of today’s Fortune 500 companies on the S&P 500 Index will have disappeared by 2025. This was documented by Prof. Mark J. Perry, scholar at the American Enterprise Institute in a famous study, which showed that 87% of the companies that were part of the Fortune 500 had disappeared by 2011. Companies aware of the pressing issue of transformation are taking radical action.
Take the example of Cisco. John Chambers, its current Chairman and ex-CEO for many years, shared at a recent conference in Dubai how seriously he and his board took the threat of “disrupt or be disrupted” at the beginning of this decade. And how he went about reinventing the company in dramatic ways. In our next article we will touch on how they did, because it is an amazing case study. What Mr Chambers also said was that in his experience, a top challenge facing executives wanting to embrace digital transformation is to change a company’s culture, which starts with a big mindset shift at the top. Many other studies support this, pointing fingers at senior executives for the dismal success rate of transformation projects.
To be continued in our next article.