(File pix) Leaders must also hone a mindset of readiness among employees for these new technologies and guide them along every step of the way. Reuters Photo
(File pix) Leaders must also hone a mindset of readiness among employees for these new technologies and guide them along every step of the way. Reuters Photo

JOSEPH Schumpeter, an Austrian economist, postulated that by “creative destruction” new technologies will displace existing ones. Kodak went into bankruptcy as it adamantly hung on to its age -old film business even though it had invented digital photography in 1976. Similarly, Nokia lost its supremacy in mobile telephony when Apple introduced its innovative iPhone without a tactile keyboard in 2007.

At the turn of the century over half of the Fortune 500 companies failed to make the digital shift. Today, businesses are on the cusp of another massive technological revolution. Of this fourth industrial revolution, or 4IR, Satya Nadella, the CEO of Microsoft, opines presciently in his 2017 book Hit Refresh: “Artificial intelligence, mixed reality and quantum computing are going to be game changers… (They) will be more profound in (their) impact on the economy than those revolutions that came before.”

The 4IR is a world of interconnectedness and smart factories where machines are digitally connected to a remote centre that controls the entire production chain. Carl Bass, the CEO of Autodesk, an American multinational software corporation, prefigures thus: “The factory of the future will have only two employees: a man and a dog. The man will be there to feed the dog. The dog will be there to keep the man from touching the equipment.”

Going digital will help companies to reduce costs, increase efficiency, improve customer experience and compete better. Better profit margins, customer loyalty, innovative and better quality products, and new businesses are the other benefits from adopting the technologies of the 4IR.

Small and medium enterprises (SMEs) comprise 98 per cent of our business establishments. However, only 20 per cent of our SMEs actively use ICT in their business and nearly 80 per cent of them are in labour-intensive activities. As such, Malaysia is yet to be at the centre of this new revolution. The biggest fallacy is to think that because the company is not in the hi-tech space it can be spared the need of migrating to the 4IR era. Our businesses must embrace digitalisation if they are not to go the way of Kodak or Nokia.

Samuel Kim, the president of the Centre for Asia Leadership, argues that business leaders have a critical role in driving their company’s digital strategy forward. Leaders will have to first determine which businesses will prosper in the 4IR and what technologies can help them succeed.

The best business models will be those that produce connected, data-enhanced and smart products. For example, Ralph Lauren came out in 2015 with its Polo tech-shirts that stream data about distance travelled, calories consumed, heart rate and other such data to the wearer’s phone.

To ready their organisations for this technology migration, leaders need foresight-thinking skills to map how companies can adapt to this ongoing disruption.

It calls for a clear vision of where leaders want to take their business in the future and how to get it there.

Speed is of the essence if the company is not to be left out of the 4IR. It took Takata, the Japanese manufacturer of airbags, that caused 16 deaths and more than 180 injuries,18 years to respond to the first malfunction of its air-bag. It has since gone under.

Contrast Takata’s snail-paced response to that of Samsung. In 2016, Samsung introduced its Galaxy Note7, a mobile phone that was touted to dim Apple’s dominance in mobile telephony.

However, its explosion-prone battery threatened to damage the brand. Samsung quickly swung into action. Within weeks it initiated a global recall and discontinued the phone altogether.

Recent research by Korn Ferry, a consultancy, suggests that

Malaysian companies are more

process-oriented and structured. While such structures have their relevance, leaders will have to make them leaner and flexible if they want to pounce on opportunities generated by the 4IR.

Obviously, cutting-edge technologies do not come cheap. It falls on leaders to convince their board and business partners that these technologies will enhance competitiveness and be cost-effective over the long haul. Steering stakeholders into this AI era demands digital knowledge and skills of a leader.

Leaders must also hone a mindset of readiness among employees for these new technologies and guide them along every step of the way in the adoption of these technologies. That calls for emotional intelligence, including empathy and relationship management.

Chief executives have to create a more empowering climate where employees have the autonomy to surface issues relating to digital adoption. Trust has to be engendered among employees that, should machines take their jobs, alternative arrangements such as reskilling or generous voluntary separation schemes will ensure that they are none the worse off.

Readying talent for managing the new technologies will have to precede the migration to 4IR technologies. And as the digital agenda grows across the organisation, leaders will have to develop the next leadership bench.

These are challenging times for our SMEs. Yet, it is an opportune time for their leaders to reshape their organisations by harnessing the forces of disruption. As Shakespeare says in Julius Caesar: “There is a tide in the affairs of men. Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life is bound in shallows and in miseries. On such a full sea are we now afloat, And we must take the current when it serves, Or lose our ventures.”

A former public servant, Datuk Dr John Antony Xavier is a principal fellow at the Graduate School of Business, Universiti Kebangsaan Malaysia

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