Responding Effectively to the Fourth Industrial Revolution
The following is adapted from CLEVER by Alessandro Lanteri.
We’re at the beginning of a massive change that we don’t yet entirely understand. This age of the Fourth Industrial Revolution — or 4IR — is one of ultra-rapid change, and it has consequences — both positive and negative.
As a leader, this pace requires you to make many more strategic decisions that are short-lived. According to the Boston Consulting Group, the average life of a business model was once fifteen years. By their estimation, that number has drastically reduced to five years. Likewise, research by the bank Credit Suisse revealed that the average amount of time a company spends in the Fortune 500 has diminished from sixty years to less than twenty. Such data suggests that even if you can rise to being one of the most successful companies in the world, it may not last.
The methods companies used to succeed in the past are no longer enough. In 2017, a number of business periodicals began warning of a “retail apocalypse.” To some extent, they were correct. Companies that once netted immense profits have gone or are going out of business, or are being forced to pull back substantially. This includes enormous companies whose brands were household names, including Blockbuster, Kodak, Toys “R” Us and RadioShack.
These companies imploded because the world changed faster than they did. They couldn’t evolve to keep pace with technological change and its effect on consumer habits. It’s not just about poor management or bad decision making — those have always existed. The sheer number of companies closing their doors is indicative of the change brought about by the 4IR.
New Challenges Open New Opportunities
Revolutions also create entirely new opportunities. The 4IR is already witness to new start-up companies that are growing incredibly fast — on some occasions, going from zero to $1 billion valuations in only a few months. Facebook accumulated $1 billion in revenue in six years; Google, in only five. Instagram went from zero to a $1 billion valuation in fifteen months. From the moment I began working on this book until the time you held it in your hands, there were surely a few companies that were created and are now worth several billion dollars.
This level of growth is not limited to the world of start-ups. Established companies are able to achieve this level of financial success as well — if they are able to learn and adapt.
But how? How do you become a success story and not a cautionary tale in this new landscape?
You must keep up with the speed of change. If you don’t, you’ll go the way of the dinosaurs of retail mentioned above. You have to make more strategic decisions, and you have to make them faster than ever before. The problem is that within this 4IR, the rules that you know for making strategic decisions are no longer enough. This is because the structure of the economy has changed. Managers need to look in new places for threats and find new sources for opportunities. In an age of rapid change, there is a price to pay for failure to notice how things are changing. Because this revolution is in its infancy, most people don’t know where to look.
So, how do organizations succeed during the 4IR?
The CLEVER Framework
As a professor of entrepreneurship, executive educator, and advisor, I hear this question all the time. In the last year alone, I’ve worked with multinational companies, investors, consulting firms, international organizations, ministries, and other governmental organizations, start-up programs and, of course, educational institutions in a dozen countries on five continents. All want to know what they need to do for their organizations to remain successful in the face of this unprecedented change.
So, I set out to answer that question.
Of course, the question of what makes organizations successful is not new and has been persuasively answered before. But we are now entering a new era. So, I needed to find new answers.
In my search for new answers, I examined the state of the art of academic research, which tends to lag behind the times, but has great theoretical rigor. I’ve analyzed reports by consulting companies, which tend to lack theory, but are rich in noteworthy cutting-edge case studies. Finally, I’ve engaged with people “in the field,” to understand what stands in their way of making sense of the coming change, to make sure I addressed the genuine concerns of my readers.
In putting together my answer, I combined methodologies from business research and from the emerging discipline of future studies. I’ve examined over seventy case studies of multinationals, startups, and family businesses in multiple industries around the world. But case studies are mere signals of change. So, I dug deeper to uncover dozens of emerging trends. These are the aggregated patterns of change that describe many technologies, business models, and other similar signals. Yet, even these trends may be transient or declining. Therefore, I looked yet further to identify the deep drivers of these trends. Figure 1 clearly shows what these progressive levels of investigation mean.
The result is CLEVER, a research-based framework of strategic drivers, the handful of underlying forces that cut across companies, industries, geographies, and trends.
To learn more about how to succeed in the Fourth Industrial Revolution, you can find CLEVER on Amazon.
ALESSANDRO LANTERI, PhD is a professor of entrepreneurship at Hult International Business School in Dubai and London, and teaches executive education programs at ESCP Europe and Saïd Business School, University of Oxford. Alessandro has advised multinational corporations, the UN, and the World Economic Forum, and worked with startups and family businesses across Europe, the US, the Middle East, Asia, and Africa. His research has been published in Harvard Business Review and MIT Technology Review outlets, LSE Business Review, the World Economic Forum Agenda, and Forbes. A popular keynote speaker, Alessandro’s TEDx talk has been viewed more than 200,000 times. To learn more, visit alelanteri.com.
