LDS On: The Three Waves of Transformation

In this episode of “LDS On,” CEO Mimi Brooks discusses the three waves of transformation that accompany the Fourth Industrial Revolution (4IR) and how business leaders must reinvent the organization to adapt to these changes. We are currently in the midst of the second wave, where the fusion of digital innovation and human interaction is driving wholesale changes to traditional business models. Companies are discovering that new work and new ways of working cannot be constrained by organizational siloes, and that collective machine and human collaboration must now be an integral part of organizational design.

Transcript

Welcome to the second video in a series of LDS thought-leadership dedicated to the discussion of transformation management. In each biweekly video, we’ll address a topic of strategic interest to business leaders who are guiding their organizations through transformative change.

In our last video on stakeholder capitalism, I mentioned that we are in the midst of the second wave of the Fourth Industrial Revolution. I got a lot of questions about that. Exactly what did I mean? So in this episode, I want to provide some insights into exactly what that means, and why understanding the impact of these waves are so important for business leaders.

So this is LDS On: The Three Waves of Transformation. Let’s get started.

Even while CEOs are grappling with the ultimate leadership test during the ongoing pandemic, we’re also witnessing game-changing developments on other fronts. These stem from the continual effects of the Fourth Industrial Revolution. At the core of this revolution is the fusion of digital innovation and human interaction.

As Kevin Kelly, author, and founding executive of Wired magazine, once pointed out, “First we digitized. Now we cognify.” As we will see, this sentiment is synonymous with the fact that changes to the basic principles of our business landscape, epitomized by the emergence and rapid spread of digital technology infrastructure, were only the beginning of the latest Industrial Revolution.

Rather, this revolution is resulting in wholesale changes to traditional business models and extraordinary organizational disruption. The speed and magnitude of these changes will continually intensify as advances in areas such as AI, big data, quantum computing, blockchain, and IoT gather momentum.

So what does this understanding actually do for us?

During the first wave of the Fourth Industrial Revolution, we learned that digital transformation is much more than simply buying digital and installing agile methodologies. It taught us that leaders needed better methodologies for managing ongoing, large-scale change as learning and adaptation are constant.

We also discovered, importantly, that long instantiated vertical structures conflict with the horizontal interconnected structures needed in digital-first organizations.

We learned that engagement and culture change without the context of new work and new ways of working have limited sustainable value. Meaning that we need to make culture actionable in some context of work practices that people understand. And more recently, that the design of human and machine work is integral to the new organization.

As companies embark on the 2nd wave of transformation, they’ll need to focus on reconstructing their businesses.

We see this as the wave of organizational and work transformation, where human talent evolves in concert with advances in technology. Extreme value is possible if we can accelerate this model and likewise, extreme delays and missteps will occur if we can’t engage people and align leaders in progressive organizational reconstruction. These new structures are business digital ecosystems and they’re driven by human value and human purpose.

The worker is necessarily central in the organizational ecosystem, and it’s the human factor that brings the needed creativity, insights, and ingenuity that’s necessary for the organization to be adaptive and resilient by design.

Consequentially, a collaborative human-machine approach to problem-solving evolves and iterates during this wave as emerging technologies mature, enabling the Holy Grail of organizational learning on multiple timescales. That’s human and machine time together, which is a competitive necessity in the future state.

This in turn enables knowledge to flow rapidly within and across porous ecosystems, as the edges of digital become the core.

As we peek ahead into the third wave of transformation, non-proprietary, or open-source, knowledge flowing between business ecosystems gains momentum, which is critical to offset growing competitive pressure and shrinking returns.

In summary, as the speed of technological change outpaces traditional strategy scenarios, the size of a company and the efficiency of its processes no longer guarantee long term success. Leaders must constantly reinvent the organization in order to remain relevant, and resilient. A concerted commitment to upskilling workers and getting people ready and comfortable with working side by side with their digital counterparts is critical.

In this new reality momentum, rather than predicting the future, is the play to run. The stakes are high, but the opportunities are as well. Positive outcomes of the Fourth Industrial Revolution will enable us to finally meet the needs of the planet, people, and business, and in so doing, ensure sustainability, relevance, and profitability.

Thanks for watching and you can feel free to interact with us on any of the LDS channels shown below. We hope to see you next time for another edition of LDS On. Stay safe.