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Twelve Forces That Will Radically Change How Organizations Work

bcg 2017_March_27 Twelve Forces 1

A tidal wave of change is coming that will soon make the way we work almost unrecognizable to today’s business leaders. In an age of rapidly evolving technologies, business models, demographics, and even workplace attitudes—all shifting concurrently—change is not only constant but also exponential in its pace and scope. Companies from startups and online businesses to incumbents in all industries will experience the effects in far-reaching and transformational ways.

During a comprehensive, yearlong analysis of the global work landscape, The Boston Consulting Group identified 60 major trends propelling this tidal wave, which we’ve grouped into 12 primary forces. These forces, or megatrends, fall into four categories. The first two address changes in the demand for talent: technological and digital productivity and shifts in ways of generating business value. The second two address changes in the supply of talent: shifts in resource distribution and changing workforce cultures and values.

Together, these forces will revolutionize the way that work gets done in companies and will compel leaders to rethink even the most basic assumptions about how their organizations function. They will need to discover new ways of organizing, performing, and leading, along with new approaches to recruiting, developing, and engaging employees. All this in organizations with limitless data, open boundaries, employees and machines working side by side, and rapidly evolving employee value propositions.

BCG has assessed the impact of these megatrends on organizations. In this report, the first in the New New Way of Working series, we identify several companies that are leading the way. Yet most organizations still have far to go.

The New Age of Work

What changes will these trends bring? As companies respond to the 12 forces, we expect several key developments in the next few years.

  • Companies will develop a more fluid sense of what is inside and what is outside their boundaries. They will move beyond rigid distinctions between employees, outside suppliers, and customers, developing platforms to promote collaboration among all stakeholders. Eventually, as value chains break up into networks and platforms, the role of the organization will shift from that of a controller of resources to that of a facilitator of ecosystems and a conduit for realizing individual aspirations.
  • Speed and agility will be essential to competitiveness. Many companies will look to break up entrenched departments and reporting lines, opting to organize work in smaller and more agile interdisciplinary teams. These teams will learn to work in short “sprint” cycles to produce minimal viable products and services, solicit feedback on them, and refine them through rapid iterations. Individuals will rotate among projects, training, internal incubators, and even social impact initiatives. These agile and innovative approaches, along with design thinking and other related methodologies, will soon become the norm, not just in IT (where they originated) but across functions and practices.
  • Companies will continually develop (and redevelop) their people, so that they are equipped to deal with the tidal wave of change. They will also inculcate diversity, inclusion, and flexibility in their corporate DNA. They will shift from HR processes, policies, and systems to problem-solving interactions. And as flexible, cloud-based software replaces traditional documentation and controls, HR will customize its interfaces with employees to better support individual needs and desires.
  • The increased prevalence of digital technology and artificial intelligence will lead to new job functions and categories—but also to shortages of people with the skills needed to fill those roles. Many companies will need to focus more on developing digital skills among their current workers or identifying and recruiting potential new hires. In addition, companies will need digital bridge builders: intermediaries between employees with specialized digital talent and those in nontech roles.

Smart leaders will monitor these changes and experiment with new ways of working that align with their company’s context and capabilities. In addition, they will define their businesses not in terms of their competitive advantages but in terms of the purpose that makes them relevant in a rapidly evolving world.

 

These 12 trends are complex and interrelated. To cope with them, companies need a well-thought-out strategy that can translate into concrete interventions. Those that do not develop such a strategy may soon find themselves bumping up against nimbler rivals, unable to adapt to the disruption in time.

In future publications in the New New Way of Working series, we will discuss the implications of these trends in more detail as we explore the following topics:

  • Organizational structures that support more agile and nimble ways of working and allow for open boundaries
  • New ways of developing talent, including leadership talent, that incorporate technology and analytics
  • New models for managing change in an environment of always-on transformation
  • The value and importance of a corporate purpose, not just as a fad but as a differentiator and a source of competitive advantage

Appendix

Our yearlong analysis revealed 60 trends, which we consolidated into 12 megatrends in four areas.

Technological and Digital Productivity

Automation: Industry 4.0; artificial intelligence, machine learning, and wearables; digital channels; augmented reality; and robotics

Big Data and Advanced Analytics: Predictive technology, integrated tools to optmize performance, social media insights, behavioral sensors, and big data

Access to Information and Ideas: Cloud-based technology and the “Internet of everything,” open-source software and processes, open innovation and peer-to-peer technology, decreasing degrees of separation, and new capital and infrastructure platforms

Shifts in Ways of Generating Business Value

Simplicity in Complexity: The value of simplicity, lean methodologies, the evolution from silos to more holistic organizations, specialization, and organizational complicatedness

Agility and Innovation: An accelerating pace of change, increasing uncertainty and black-swan events, exponential organizations, agile development, and digital stakes and subsidiaries

New Customer Strategies: Personalization and premium products and services, the sharing economy, data security, ethics, and the environment

Shifts in Resource Distribution

A New Demographic Mix: The “demographic dividend,” talent scarcity, aging populations, multiple generations in the workforce, and talent imbalances

Skill Imbalances: New skills, waning skill life, formal curricula and development, digital late-comers, and skills education and reach

Shifting Geopolitical and Economic Power: Disparity in wages and economic growth rates, multiple centers of power, urbanization and resource depletion, migration, and the rise of the middle class in developing countries

Changing Workforce Cultures and Values

Diversity and Inclusion: Multiculturalism, racial and ethnic diversity, gender equality, value pluralism, and equitable economic development

Individualism and Entrepreneurship: Freelance work versus employee loyalty, risk taking and entrepreneurism, multidisciplinary pursuits, talent renting and freelancing, and individualized aspirations

Well-Being and Purpose: Desire for personal, social, and communal impact; reflection and purpose; self-expression; appreciation and respect; and physical and mental health and balance

Authors:

Vikram Bhalla
Senior Partner & Managing Director
Mumbai
Susanne Dyrchs
Project Leader
Cologne
Rainer Strack
Senior Partner & Managing Director
Düsseldorf
More about 12 trends in The BCG New New Way of Working Series

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PwC – AI: A new way of thinking

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A revolutionary partnership: How artificial intelligence is pushing man and machine closer together

With more than $5 billion in 605 deals of VC investment over last 2 years, artificial intelligence (AI) is poised to have a transformative effect on consumer, enterprise, and government markets around the world. While there are certainly obstacles to overcome, consumers believe that AI has the potential to assist in medical breakthroughs, democratize costly services, elevate poor customer service, and even free up an overburdened workforce. We dug deeper into those perceptions through an online survey of consumers and business decision makers, and an expert salon with thought leaders in the field. This original research unpacks key ways AI may impact our world, delving into its implications for society, service, and management.

The modern world has been shaped by the technological revolutions  of the past, like the Industrial Revolution and the Information Revolution. The former redefined the way the world values both

human and material resources; the latter redefined value in terms of resources while democratizing information. Today, as technology  progresses even further, value is certain to shift again, with a focus

on sentiments more intrinsic to the human experience: thinking, creativity, and problem-solving. AI, shorthand for artificial intelligence, defines technologies emerging today that can understand, learn, and then act based on that information. Forms of AI in use today include digital assistants, chatbots, and machine learning. Today, AI works in three ways:

Assisted intelligence, widely available today, improves what  people and organizations are already doing. A simple example, prevalent in cars today, is the GPS navigation program that offers directions to drivers and adjusts to road conditions.

Augmented intelligence, emerging today, enables people and organizations to do things they couldn’t otherwise do. For example, the combination of programs that organize cars in ride-sharing services enables businesses that could not otherwise exist.

Autonomous intelligence, being developed for the future, establishes machines that act on their own. An example of this will be self-driving vehicles, when they come into  widespread use.

With a market projected to reach $70 billion by 2020, AI is poised to have a transformative effect on consumer, enterprise, and government markets around the world. While there are certainly  obstacles to overcome, consumers believe that AI has the potential to assist in medical breakthroughs, democratize costly services, elevate poor customer service, and even free up an overburdened workforce. Some tech optimists believe AI could create a world where human abilities are amplified as machines help mankind process, analyze, and evaluate the abundance of data that creates today’s world, allowing humans to spend more time engaged in high-level thinking, creativity, and decision-making. Technological revolutions, like the Industrial Revolution and the Information Revolution, didn’t happen overnight. In fact, people in the midst of those revolutions often didn’t even realize they were happening, until history was recorded later. That is where we find ourselves today, in the very beginning of what some are calling the  “augmented age.” Just like humans in the past, it is up to mankind to find the best ways to leverage these machine revolutions to help the world evolve. As Isaac Asimov, the prolific science fiction writer with many works on AI mused, “No sensible decision can be made  any longer without taking into account not only the world as it is, but the world as it will be.” As a future with AI approaches, it’s important to understand how people think of it today, how it will amplify the world tomorrow, and what guiding principles will be required to navigate this monumental change.

Human intelligence meets artificial intelligence

Beyond boosting productivity, business execs see AI contributing to major strategic shifts in their organizations. Two-thirds believe it will provide more information during decision-making. The same amount believe it will offer employees new types of roles managing and collaborating with machines. Operating as a new type of augmented intelligence, such positions would oversee and coordinate partnerships between man and machine. Sixty-seven percent of business execs believe leveraging AI will help humans and machines work together and combine both digital and human intelligences in the best ways possible. This combined man-machine hybrid is more powerful than either entity on its own. For example, Netflix’s human team created a proprietary manual on how to assess a movie that AI can use to define over 75,000 micro-genres for more nuanced, personalized recommendations.

Business execs also see potential for AI managers to improve life for employees. The majority believe employees wouldn’t mind working with an AI manager if it meant more flexibility and freedom to work from home (71%) and if it meant a more balanced workload (64%). Seventy percent also agree that AI has the potential to enable humans to concentrate on meaningful work, as well as indulge in more leisure. Humans will lean on their ability to navigate complex situations, motivate teams, understand rich social contexts, act with empathy and diplomacy, and influence others to move toward their vision—while machines automate the rest.

More in PwC Report:

http://www.pwc.com/us/en/industry/entertainment-media/publications/consumer-intelligence-series/assets/pwc-botme-booklet.pdf

 

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Competing in the Age of Artificial Intelligence

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Until recently, artificial intelligence (AI) was similar to nuclear fusion in unfulfilled promise. It had been around a long time but had not reached the spectacular heights foreseen in its infancy. Now, however, AI is realizing its potential in achieving human-like capabilities, so it is time to ask: How can business leaders harness AI to take advantage of the specific strengths of man and machine? Read the rest of this entry »

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Intelligent process automation

McKinsey March 2017 Intelligent process automation COVER TITLE

Full intelligent process automation comprises five key technologies. Here’s how to use them to enhance productivity and efficiency, reduce operational risks, and improve customer experiences. Read the rest of this entry »

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The seven decisions that matter in a digital transformation

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A CEO’s guide to reinvention

A successful digital transformation requires making trade-off decisions. Here’s how successful CEOs guide their business’s reinvention. Being the CEO of a large company facing digital disruption can seem like being a gambler at a roulette table. You know you need to place bets to win, but you have no idea where to put your chips. Of course, digital transformations aren’t games of chance. But they do require big and bold commitments in the midst of uncertainty to reinvent the business rather than just improve it. Read the rest of this entry »