Last month’s annual meeting of heads of state and heads of commerce at Davos covered a wide range of issues. As a technologist, however, I was most keenly interested in the buzz around what’s been dubbed the Fourth Industrial Revolution: the massive business and societal changes resulting from the fusion of the digital, physical, and biological worlds.
Robots replacing human workers, 3D-printed organs, AI “directors” steering corporate boards — the Twittersphere was chock full of predictions and warnings from the World Economic Forum’s Technology Tipping Points report. And the pundits aren’t the only ones focused on this: We at PwC have observed ongoing concern about rapidly advancing technology and cyberthreats in our annual survey of CEOs.
Yet for all the sci-fi visions, I’m struck by just how unprepared many businesses are for this coming revolution. In fact, many organizations aren’t yet fully taking advantage of today’s technological disruptions. Although I’m glad to see so many business leaders focused on raising their Digital IQ, that often means that they’re still mastering the fundamentals.
By fundamentals, I mean the hard and unglamorous work of linking all your data and getting disparate systems to talk to one another. This is the basic digital infrastructure of an evolving enterprise: a flexible and secure foundation that enables your company to fully personalize customer interactions, or establish foolproof authentication, or capitalize on the Internet of Things. In our conversations with company leaders, many acknowledge that they’re still struggling with this baseline.
Given these demands, how, then, can businesses ramp up for a wave of even greater transformation and disruption? The key is a strategic approach to emerging technology. Yes, you have to pay attention to those developing and mostly unproven innovations like augmented reality, drones, and deep learning. In fact, PwC’s own Emerging Technology Labs tracks and analyzes more than 300 discrete technologies, some of which are making inroads in the enterprise and others that are incubating in the research lab. The landscape is so vast, it’s a formidable challenge for companies to keep up with what’s new and what’s next.
But it’s simply not enough for your CIO or CTO and their teams to consume analyst reports, attend conferences, or study efforts by industry peers. You must actively, deliberately, and decisively pursue emerging technology to uncover the high potentials that could reposition your business for the Fourth Industrial Age.
Decisively pursue emerging technology to uncover the high potentials that could reposition your business for the Fourth Industrial Age.
Knowing You Don’t Know
CEOs appear to embrace the idea that technology represents a powerful unknown. When asked which technologies have the most potential for engaging stakeholders — customers, employers, partners, shareholders — more than half simply said “innovation” and “R&D.”
You can’t leave emerging technology to chance or luck. Yet, that’s the trap many companies fall into, due to resource constraints, competing priorities, and different lenses on how technology can propel the business. For example, think about the different perspectives on emerging technology on your leadership team. The CEO may wonder whether you’re investing in the right areas to be competitive in 10 years, the head of corporate development is thinking about acquisition targets, while a business unit leader is more interested in technologies that can augment existing products or services.
To balance these different needs and truly exploit emerging technology, business leaders can begin with the following practices.
1. Rethink your approach to experimentation. Given the continual onslaught of new technologies, most companies are engaged in active exploration. But have you stopped to consider what’s driving your choices? I’ve found that organizations typically prioritize one of three factors when it comes to experimentation: vendor input, technology advancement (the guidance of experts in the field), or business considerations. The best way forward is the last: evaluating technology through a business lens. This enables you to experiment first and foremost with technologies that will help you differentiate your company, by expanding your capability to do things that no one else can do.
2. Engage your emerging tech ecosystem. Identify the organizations that are conducting research into — and launching startups around — the technologies most relevant to your customers, products, markets, and geographies. Establish working relationships with some of them; keep your eye on the rest of them. For example, invest in a tech research lab at a university that specializes in problems important to you. Focus that relationship on executive education, co-developing research experiments, and possibly recruiting top talent.
3. Build your own learning lab. Establish your own team to harvest ideas from your ecosystem, then develop prototypes and demos within the context of your own business. A dedicated lab — even a small one with just a few technical staff — provides the right blend of structure and space to create a consequence-free zone for experimentation. It’s where you’ll continually try new things and iterate until you come up with a working prototype that captures the potential of an emerging technology. You can then share these assets internally and with select customers and partners to bring to life that potential and explore new business opportunities.
4. Develop the mind-set of a maker. Makers are innovators who draw connections among disparate technologies, solving real-world problems in new ways. They emerged with the rise of digital fabrication and personal robotics. And enterprises can learn a thing or two from them. They are willing to try, test, and fail — again and again. They get their hands dirty. And, they share and build on one another’s discoveries and knowledge. I believe large businesses have so much to gain from how makers approach the world that I’m developing a series of blog posts called Garage University for Emerging Technologists to explore the links to enterprise innovation.
5. Establish a process to scale emerging tech. Your regular processes — building business cases and planning projects with well-understood financial impacts — won’t work for emerging tech-driven innovation. Design a separate process with smaller and shorter stages, including advancing ideas, developing prototypes, market testing, and scaling.
Cultivating these five practices will help you better take advantage of the technologies being developed today, as well as those that will emerge tomorrow.