Creating a symbiotic relationship between humans and machines will give organisations the best chance of surviving the rising tide of smart technologies, say the authors of The Humachine. A step-by-step leadership approach for the fourth industrial revolution is needed
We are in the fourth industrial revolution – where all major business innovation seems to be characterised by machine learning, robotic process automation, digitisation, and the internet of things (IoT). Technologies associated with AI have shifted the competitive landscape decisively in favour of companies that are undertaking digital transformation, requiring different strategies for organisations to remain competitive. Organisational structures and leadership styles that worked over the last several decades are quickly becoming obsolete.
If you don’t believe this, look at what is happening to brick-and-mortar and big-box retailers. Many of these incumbent (and heretofore household brand name) organisations are sliding into bankruptcy, from Blockbuster Video to Macy’s.
Compare these dinosaur companies to those that are thriving in this new era: Google and Haier have a different type of organisational form – including new styles of leadership and new organisational structures. They are exhibiting traits of an emerging form of enterprise we call the ‘Humachine’ – an enterprise that harnesses the virtues of humans and machines while mitigating the vices of both in a symbiotic relationship. Here, humans and machines are co-workers, working side by side.
Successfully leading an organisation in the fourth industrial revolution means striving to become a Humachine. This requires bold disruption of the status quo and a commitment to re-engineering the company’s DNA. This level of change cannot be attained by following the plug-and-play model of technology adoption from the past. It cannot be attained by just reaching for the newest customer relationship management (CRM) platform. Mutating from a traditional company with a rigid hierarchy and narrow profit-based mission into a Humachine with flat and fluid organisational structures and a purpose-driven mission requires distinct steps.
The pathway to becoming a Humachine requires leaders to develop a long-term vision, accurately assess the status quo, allocate sufficient resources to the change, embrace organisational transparency, start with a pilot, and become more human-centric. The stakes are high and the challenge is, for many, staggering. Many companies will not survive the ‘Silicon Wave’ sweeping through the global economy, submerging outdated business models in the rising tide of smart technologies. Companies that strive to become Humachines, however, will have a fighting chance.
Begin with vision
In the AI age, many executives are feeling the pressure to become ‘digital’ by acquiring technology rapidly. Many believe technology is yet another must-have tool to acquire. However, the idea that implementing technology, adding software, or purchasing better data should simply follow a ‘plug-and-play’ approach is misguided. That is the old paradigm. Research reveals that the most successful companies don’t make these decisions in a reactionary fashion or by merely following competition. Instead, they begin by developing a long-term vision, driven by their unique intentionality and mission. Then, they think carefully about what a company’s structure should look like to support this vision.
Far too often, companies focus on current problems and find quick ways to address them. They merely ‘patch’ the current system. Hasty patches may have worked in the past, but this approach will not work in the age of AI. AI is not Eeyore’s tail; it cannot simply be tacked on – it must be integrated.
Making incremental improvements is often easier than developing an aspirational vision. It is also easy to get caught up in complaints from various division leaders and managers – each with their limited vantage point – and focus on solutions that address those immediate needs. However, a successful organisational redesign needs to be driven by intentionality, mission, and strategy, all tied to a long-term vision of the future and the organisation’s role in it. This intentionality should inform implementation of AI within the organisation.
Assess the current state
Once a long-term vision is in place, leaders must assess an organisation’s current state objectively. This includes comparing its formal hierarchy to its real organisational hierarchy, which is often different from what is on paper. Smart organisations understand that their actual culture – the informal social structures and skewed flow of information through human communication – differs from an organisation’s formal or legal hierarchy, its ‘official’ lines of communication, and other abstract delineations between departments.
Most companies have assumptions as to how things function based solely on their organisational chart. In doing so, they ignore additional lines of communication that support innovation and collaboration. Be objective about these assumptions and fact-check them. Understand talent capabilities, current incentives, weaknesses, and which relationships to build on. Leverage the real human structure of your organisation to bring it closer to the ideal.
Allocate sufficient resources
One significant roadblock to reorganisation is not allocating sufficient resources towards the effort. Re-engineering a company’s DNA must have not only organisational commitment and support in principle, but also in terms of monetary and human resources. Leadership must make a thorough assessment of financial consequences, tax implications, and sequencing of rollouts to make sure there is ample funding at each stage. This will help mitigate risks and alleviate anxiety, particularly from the board of directors.
Research has shown that having ‘slack’ in human resources positively impacts financial performance in the pursuit of strategic change. Though not surprising, studies show that companies that increase financial and human resources during times of change have better economic outcomes. The lesson for leaders? Allocate sufficient resources before undergoing strategic restructuring. It pays off to have slack in the system.
In part two of this series, the authors discuss how to pilot a Humachine strategy as add transparency and a human-centric approach to your organisation.
Nada R Sanders is Distinguished Professor of Supply Chain Management at the D’Amore-McKim School of Business at Northeastern University in Boston, Massachusetts, US.
John D Wood is a member of the New York and Texas Bar Associations, a graduate of NYU School of Law, and the Co-Founder of The Humachine LLC.
Nada R Sanders and John D Wood are the co-authors of Foundations of Sustainable Business (Wiley, second edition 2019) and The Humachine: Humankind, Machines and the Future of Enterprise (Routledge, 2019).