Digital disruption and the Fourth Industrial Revolution: Are boards ready?

That is how we are now describing the “digital disruption” and the Fourth Industrial Revolution, which we are currently witnessing firsthand. Regardless of which industrial stage you wish to examine each profoundly changed what it meant to be alive. The use of water and steam power changed agrarian societies into urban, industralised ones. The Second Industrial Revolution saw a rapid expansion of industrialisation thanks to the widespread adoption of electricity and new techniques, such as the assembly line. The Third Revolution has seen us become “computerised” and change from “analog” data collection to “digital” processing. And the Fourth? Is often described as a fusion of technologies. A blurring of lines between the physical, digital and biological spheres. Some people describe it as the “Second Machine Age”, due to the blossoming of Artificial Intelligence, but that would ignore the biological or organic advances also being made. Klaus Schwab, author of “The Fourth Revolution”, says what we are seeing is different from the other industrial revolutions before it because it is being driven by communication and connectivity, and truthfully the term “Industry 4.0” is usually used with direct regard to automation and data exchange in manufacturing and other industries. In a day and age full of buzz words, “digital disruption” sounds like a hornet’s nest. It frightens some, as the word “disruption” has a negative connotation, but really what it is referencing is how digital technologies can impact value of products and services in an industry. This is “disruptive” because it makes us reexamine what we are doing and what our marketplace is. It is also making us examine who we are, what our laws are and how we govern, because digital disruption is changing law and governance. Even as lawyers and legal experts struggle to determine future courts with artificial intelligence, a court in Cleveland, Ohio is already using AI to help judges determine sentencing. Self-driving cars and data privacy are just two of the many issues legal “engineers” are working on now but no doubt fears that how we determine law now and what we consider lawful may be something very, very different tomorrow. Digital disruption is changing our geopolitical landscape. Tech-driven economic and military power equals geopolitical power. Fear of falling behind will drive states to invest more and more in technology with the hope that every innovation will give them the advantage. This innovation will be driven by talent created by public investment in education as well as research. An investment culture that also encourages start-ups will also attract foreign-born tech stars to a country because they will feel they have a better opportunity and given a better chance to succeed. But this type of innovation can also be disruptive to society for it can change the way work is done. What happens to the worker on the assembly line when robots can do the job quicker, more efficiently and at a cost savings? A human investment must be made by society to give workers the opportunity to upgrade their skillset and to stay relevant during the Fourth Industrial Revolution. Thought-leadership platforms, such as the GCC Board of Directors (BDI) Chairman’s Summit, which is held in Riyadh on November 26, help us to explore what company’s board of executives should do in the face of such uncertainty, where the marketplace and landscape can change so rapidly that you are not sure who your competitors may be from one moment to the next? Organisations must be pragmatic. Invest in innovation and education. New business models. Embrace the change and you will eventually change how your organisation does business but in a way that is almost organic in how it occurs. This goes beyond having a “digital strategy” and embracing new ways to look at Return On Investment by discarding certain traditional approaches. Innovation can come from other areas other than the “research and development” department. Give your departments some freedom to all be innovators. Seek partnerships. Obviously, this can lead to acquisitions, but by working with outside partners both groups can offset costs and each bring to the table a unique set of skills. Many companies have collected mountains of data they do nothing with. Use of modern data analytics will make these mountains important referencing and marketing tools now being under utilised. The fact is this: the tipping point for companies to decide how and when to embrace digital disruption is here. Some say it has already past and those not on board may not be able to catch up. Researchers say that by 2020 you can expect 75 per cent of businesses to be digital. Estimates put the “Internet of Things” as a market opportunity representing US$11 trillion. Others put that number at $19 trillion. There is no stopping it. Ignore it at your own risk. About GCC Board Directors Institute: Launched in 2007, the GCC Board Directors Institute (GCC BDI) is a not-for-profit organization that guides board directors of organizations, from family-owned businesses to listed companies, to acquire the know-how and the tools to reach and sustain effective governance. GCC BDI was founded by four leading regional corporations - Investcorp, SABIC, Saudi Aramco and Emirates NBD – and it is supported by four advisory firms: Allen & Overy, Heidrick & Struggles, McKinsey & Company and PricewaterhouseCoopers, as well as regional regulatory authorities: the Emirates Security and Commodities Authority, the Capital Market Authorities of both Saudi Arabia and Oman and the Central Bank of Bahrain. GCC BDI now works with over 1100 Alumni members who benefit from a network of senior business leaders and a variety of workshops designed for board directors and senior executives. Notably, the Institute hosts an annual Chairman Summit that brings together regional leaders and actors to explore the evolving role and value of Boards as well as appropriate corporate governance standards. The next GCC BDI Chairman Summit will take place on 26 November 2018 in Riyadh. Today the Institute is globally recognized and the only Directors Institute from the region to be admitted to the Global Network of Directors Institute. We encourage you to visit the Institute's website at www.gccbdi.org to learn more and get involved with the GCC BDI