THE convergence of man and machine is transforming how organisations operate at an increasingly rapid pace. The technology with which we power our businesses is changing, and so are the needs and expectations of our workforce and customers. Digital capabilities will unlock a new future where human workers are empowered through technology to deliver products and services that meet evolving customer needs.
Boston Consulting Group believes the organisations of the future will be “bionic”, with human and organisational performance enhanced by machines.
Transformations like the Fourth Industrial Revolution are not without precedent. Taking a short detour into history, the transition from the First to Second Industrial Revolutions saw massive organisational changes. Steam power factories, which were organised around the logic of a mechanical shaft, transformed into manufacturing lines powered by electric motors.
Electricity allowed factories to be organised along production lines that were more efficient, cleaner and safer. You could not achieve this result by replacing a steam engine with an electric motor. You had to change everything to capitalise on electric power. This included changing processes, how people worked, the skills needed and how people were recruited and compensated, to name but a few.
Electricity represented an amazing opportunity for early 20th century industry, but it was not one that organisations were positioned to adopt. It took half a century for manufacturing to widely adapt to a production line process that was equipped to fit this new, flexible power.
BCG research and analysis points to the world facing a similar inflexion point in the Fourth Industrial Revolution. The technology exists but most organisations are not ready to fully realise its potential.
We think of it as the transition to the “bionic company”.
Data and artificial intelligence learning are so often the headline-grabbers in this conversation. It is easy to see why. Data is the lifeblood of a true bionic organisation, informing customer journeys, tracking business outcomes and improving human decision-making. It represents a self-fulfilling prophecy, where the more data we feed the machine, the more the machine can tell us about our business.
A bionic business might sound like science fiction but we are starting to see the benefits in organisations taking a lead in this area. BCG’s experience shows that technology can free up to 75% of workers’ time, enabling them to undertake more value-generating work. Smart maintenance can reduce service costs by up to 70%. Speed to market in an agile business can be improved up to fourfold. Operating margins in manufacturing can be improved by 25% through digitisation.
Digitally native companies such as Amazon, Facebook, Cisco, Alibaba and Tencent should be an inspiration for your future. Amazon has transformed from an online book retailer into a constantly expanding billion-dollar digital giant. Alibaba has seen two decades of evolution, which includes successes such as the Taobao online marketplace, Tmall and Alibaba Cloud.
We believe leaders need to reflect on fundamental questions in four areas to navigate this transition:
• Outcomes: What outcomes do you intend to drive for customers, core operations and development of new products and services? How far have you leveraged technology to augment humans in the core of your business, including fundamentally rethinking business processes, personalised customer experiences, automation to free up human cognitive ability and technology to complement human decision-making?
• Data and digital platforms: How do you unleash data to enable technology? How much have you thought through the future of your data and technology infrastructure? How much of this can you upgrade in modular and flexible ways?
• Human enablers: How will you inject new ways of working? How will the role of leadership change in your organisation? How will your organisational structure evolve? Have you thought about the extent to which you need new types of talent?
• Purpose: As companies and organisations transform in this evolving world, the power of purpose becomes all the more important. What is the guiding purpose of your organisation, your business? What purpose will your brand bring to the world? What competitive advantage can you build? What value can you create?
All organisations in both the private and public sectors must craft a visionary view of what the bionic organisation means for them. The implications of doing nothing are stark, so understanding the implications of how to transform is the only sensible step.
The industrial revolutions of the past provide insight into transformations of the future. That said, they cannot reflect how the next transformation will evolve.
The future is not fully known. There are some key elements of which we can be certain — technology-enabled transformation will continue at pace and industry analysts will continue to tell you of its importance. Luckily for us, repetition does not undermine the truth.
Dave Sivaprasad is managing director and partner at Boston Consulting Group