Leadership 4.0: A review of the thinking

RESEARCH REPORT
By Fionnuala Herder-Wynne, Rachel Amato, and Frank Uit de Weerd

This review of the thinking on Leadership for the Fourth Industrial Revolution, or Leadership 4.0, is part of the Oxford Leadership Living Research project.

It is intended as a working document whose purpose is to provide “food for thought” and surface some of the key questions on this exciting topic. It draws on multiple sources – books, articles, Ted Talks, Youtube videos, presentations, interviews, conversations and our own thinking – but does not pretend to be exhaustive. It is the Executive Summary of a much larger review we have carried out and which you can access on the Oxford Leadership online platform. As a member of the learning community we are building around the topic of Leadership 4.0, we hope you will later be enthusiastic to enrich that larger resource document with your own favourite and useful references. As a participant in the Oxford Leadership Global Leadership Conference in October 2017, we invite you to engage with this Executive Summary as preparation for the conversations and debates that will take place during the conference. Building on the conference discussions and the interviews carried out to date, further work will be carried out on the thinking and research as our project moves forward.

“Probably 40% of the world’s leading companies will not exist in a meaningful way ten years from now.”

John Chambers
Former CEO – Cisco

Some of the open questions we suggest you might be thinking about as you read this document are:

1. How can we act to ensure the digital revolution is a force for good? What is the place for human values and ethics?

“Technology is neither good nor bad – it’s what you do with it that makes the difference. As in previous eras, new technologies also carry negative consequences. AI and genetic engineering in the wrong hands could alter our future in undesirable ways. For too long we have done our work in isolation, unaware of the effects our innovations have on societies and environment as a whole. As business leaders, government officials, educators and citizens, we need to create a common set of principles and values that take us to the future that we all want together” (World Economic Forum, 2016).

“Together we all have the power to learn from nature, create things of beauty and live a life of purpose. We all have the power to change our world” (Christian Kromme, 2017)

2. How do inner leadership practices such as embodiment, aikido, mindfulness, coherence, … contribute to resourcing our ‘inner state of being’ as leaders in a 4IR world?

“Mastery of oneself is more about removal than addition. It’s about stripping off the masks and pretences that keep us feeling isolated; about dissolving the inner judge and re-discovering the innate love and wisdom within. As we let go, we become real and authentic. As the parts of us that we want to hide from ourselves and the world are revealed, we are empowered to fully embrace our whole selves” (Michael Bunting, 2016)

“Our research showed that how you develop your inner state antecedes the practices which lead to successful outer change. The quality of all of your action comes from this inner place” (Deborah Rowland, 2017)

3. How can leaders, wherever they are in organizations, instil a sense of purpose and foster true collaboration in teams, networks and other collective endeavours?

“As human beings, we are not problems waiting to be solved, but potential waiting to unfold” (Frédéric Laloux, 2014)

“This whole purpose and the brighter future is why I do this job. It’s why I’m here on Earth. It is my passion. I couldn’t work – I don’t want to work – for shareholders only. I don’t want to work for profit, or have my life personally to myself without purpose. Before I go upstairs – I hope it’s still some time away – I want to do something meaningful here”.

4. Is it one size fits all for the operating models of the future? To what extent can agile principles and self-management apply to large, mature, asset-heavy organizations?

“Our organization is in squads, tribes, guilds.  But there is always a point where the traditional hierarchy comes in. Interesting to explore how far you want/need/can go fully agile”.

“The dilemma for big organisations is how to become agile and fast; nobody seems to have the answer. Being large means being structured and standardised. This agile approach isn’t possible in the big ships. Do you move away from control in leadership: we struggle with it.  I’m not sure whether a non-controlled approach will be able to manage such an operational setup.”

5. What are the consequences of the new modes of organising for recruitment? Are organization charts and permanent jobs things of the past, replaced by temporary missions, and ad-hoc project teams or networks? What then are we actually recruiting people into and how to support them in those fluctuating roles?

“I think the Hollywood model is even more agile than agile: this is organising around a project (making a movie) and dissolving itwhen it’s-over. Everything is specific for the project”.

6. Given different possible scenarios about how the 4IR might play out, what exactly are the necessary competences and qualities of the leaders of the future? How to develop those?

“The complexity of what we have in front of us is so new to the managers. The toolbox they are equipped with doesn’t really fit this”

“Leadership in the 4th Industrial Revolution will be defined by the ability to rapidly align & engage empowered, networked teams with clarity of purpose and fierce resolve to win.”

Brian Bacon
Chairman and founder – Oxford Leadership

Defining Leadership for the 4th Industrial Revolution

“Unprecedented and simultaneous advances in artificial intelligence (AI), robotics, the internet of things, autonomous vehicles, 3D printing, nanotechnology, biotechnology, materials science, energy storage, quantum computing and others are redefining industries, blurring traditional boundaries, and creating new opportunities”
(Klaus Schwab, Chairman of the World Economic Forum).

Schwab goes on to propose four implications for a new leadership paradigm:

“Firstly, we must focus on systems rather than technologies, because the important considerations will be on the wide-reaching changes to business, society and politics rather than technologies for their own sake.

Secondly, we must empower our societies to master technologies and act to counter a fatalistic and deterministic view of progress. Otherwise, there is no room for optimism and positive transformation, and society’s agency is nullified.

Thirdly, we need to prioritize futures by design rather than default. Collaboration between all stakeholders must play a central role in how we integrate these transformative technologies. Otherwise, our future will be delivered by default.

And lastly, we must focus on key values as a feature of new technologies, rather than as a bug. Technologies used in a way that increase disparity, poverty, discrimination and environmental damage work against the future we seek. For the investment in these technologies to be justifiable, they must bring us a better world, not one of increased insecurity and dislocation”.

The objectives of this project are:

Understand how organizations are adapting their leadership and ways of organizing and working in the face of current contextual changes and turbulence, particularly as related to the disruptive influence of digitalization (impact on business models, society, organization, work practices and employment models, consumption, and so forth).

Engage people working with and intervening on leadership in organizations in an immersive, collective learning experience aimed at redefining leadership in this new environment

Build new knowledge and insights on
leadership and ways of organizing, so as to describe the new ‘principles’ of leadership in the 4IR, and also open up the possibility of redefining the notion of ‘leadership’ itself in this environment. 

Create a learning community from a diverse network of professionals to share new knowledge and thinking and grow together in finding solutions and seizing the opportunities that this evolving world opens up to us.

Context

The 4th Industrial Revolution is bringing unprecedented changes to societies and organizations throughout the world. The multiple ramifications of digitalization and the accompanying acceleration and increased complexity of work activity, makes it urgent to revisit the assumptions and practices that have defined our ways of leading and organizing until the present day and to propose possible ways forward.

‘We are living in a time of extraordinary change. In this Fourth Industrial Revolution, every individual, business, industry and government is being impacted by breakthroughs in computing power, connectivity, artificial intelligence (AI), biotechnology and other innovative technologies. This is a revolution without boundaries spreading across the world with incredible velocity’ (Klaus Schwab, Chairman of the World Economic Forum, 2016).

These quotes reflect conversations we have had with people about lived experience of this VUCA world:

“You have far less time than you used to have, to make informed decisions, so speed of decision-making has changed. The second big change is that everything you do as a leader right now is magnified by a thousand because of the speed of communication. Fifty years ago, when you had a fire at a refinery, somebody from the village showed up, made a picture and it had to be developed and might end up in a newspaper the next day. That gave you 24 hours to prepare a response, and then it was a local newspaper before it hit anything outside the area – that could take days. Nowadays, there’s a fire in a refinery, and within two minutes, someone takes a picture and you’re on the front page of a website and you’re asked for a reaction. Whether you like it or not, you have to do that.”

“Five years ago, I would have laughed in your face if you’d have said to me I’d have a team of 25 people whose role was to talk to our customers using social media. But that’s exactly what I’ve got”

In their book “Machine, Platform, Crowd, Harnessing our Digital Future” (2017), MIT professors, McAffee and Brynjolfsson suggest that digitalisation of the workplace means re-thinking the balance between minds and machines, between products and platforms, and between the core and the crowd. Given the increased capabilities of the latter of each of these pairs, “understanding when, where, how and why these machines, platform and crowds can be effective is the key to success in the economy today”. According to the authors it is the successful incumbents that find it hardest to see the possibilities of new technologies that depart greatly from the status quo. The tension between what the human mind can and should be doing and what machines can and should be doing is a key issue. Then there are the platforms that are fundamentally reconfiguring business models.  “Platforms are online environments that take advantage of the economics of free, perfect and instant” i.e. they have virtually no costs of access, reproduction or distribution. Well-known examples are Uber and Airbnb. Running platforms requires certain ethics and one could wonder about the misuse of platforms in a way that is destructive to humanity. Not only in the sense of building monopolies, but also when platforms are used for harming others. As Schwab puts it:

“The fourth industrial revolution will generate great benefits and big challenges in equal measure. A particular concern is exacerbated inequality. … The consequence of the platform effect is a concentration of few but powerful platforms that dominate their markets. … To prevent the concentration of value and power in just a few hands, we have to find ways to balance the benefits and risks of digital platforms (including industry platforms) by ensuring openness and opportunities for collaborative innovation”.

“We must develop a comprehensive and globally shared view of how technology is affecting our lives and reshaping our economic, social, cultural and human environments. There has never been a time of greater promise, or greater peril.”

Klaus Schwab
Founder and Executive Chairman – World Economic Forum

There is a lot of uncertainty today about how these different tensions are going to play out. Scenarios for the future vary widely – even working from the same data. Christian Kromme, in “Humanification: Go Digital, Stay Human” (2017), offers an optimistic scenario for healthcare where in 2030 “People are now able to fulfil most of their basic human needs by themselves, by using technology that is becoming exponentially better and cheaper. Able to generate and store their own energy and grow their own food … (Thanks to technological devices) we stay more healthy and reduce the need for health services… our home medical dispensers print 3D pills! You can scan you own DNA and print your own personal medicines. There’s a new kind of robot and he/she/it dispenses your medicine for you and for all the other people in your town or village. … All in all, despite our ageing populations, computing power, artificial intelligence, and robotics are all going to help to reduce the strains on our global medical system.” He sees humanity standing on at the evolutionary equivalent of what nature created when she gave organisms a neocortex, poised at the edge of an explosion of creativity, a wave that heralds a creative revolution.

Whereas Martin Ford in The Rise of the Robots, (2015) predicts a future that (in the absence of societal debate and intervention) is terrifying. He systematically outlines the achievements of artificial intelligence and uses a wealth of economic data to illustrate the societal implications. From health and education to finance and technology. His warning is stark – all jobs that are on some level routine are likely to eventually be automated, resulting in the death of traditional careers and a hollowed-out middle class. The WEF predicts job losses of 5 million jobs in the next 20 years. A 2013 report (University of Oxford’s Martin School) showed that 50% of US jobs are susceptible to full machine automation. A 2015 parliamentary report estimated that 35% of UK jobs will be lost to automation in the next 20 years.

What is not disputed:

• Google purchases YouTube for $1.65 billion. It employs 65 people
• Facebook purchased Instagram for $1 billion in 2012. It employed 13 people. That same year, Kodak went bankrupt. It employed 17,000 people. In its heyday in 1996 it had a market capitalisation of $28 billion and provided jobs for 140,000 people
• Facebook purchased WhatsApp for $19 billion. WhatsApp employed 55 people
• Apple invested billions of dollars in a data centre in the town of Maiden North Carolina. Number of full-time jobs created? – 55!

The argument that genuine artistic creativity is not possible for machines is being eroded:

• In 2012 the London Symphony Orchestra performed Transit – Into the Abyss. The score is composed entirely by a machine:
• In 2016 a robot wrote a short novel (ironically entitled, “The Day a computer writes a novel”) that almost won a literary prize in Japan 
• IBM’s Watson created a movie trailer for the SciFi thriller Morgan
• Indeed, some experts believe that artificial intelligence is only in its infancy.

According to one conversation we had:

“I’m in a lot of conversations with Apple, Google, I go to San Francisco as a sanity check two or three times a year. A sanity check in terms of: are we still hungry enough. They say only the paranoid survive – I’m a bit paranoid. I’m paranoid thinking about who’s in an old garage somewhere coming up with an idea to transport people in cities 10 times smarter than we do it right now.”

According to some experts, we are at a fork in the road:

“The Fourth Industrial Revolution can compromise humanity’s traditional sources of meaning – work, community, family, and identity – or it can lift humanity into a new collective and moral consciousness based on a sense of shared destiny. The choice is ours “ (Marc Benioff, Chairman & CEO, Salesforce).

“The world lacks a consistent, positive and common narrative that outlines the opportunities and challenges of the fourth industrial revolution, a narrative that is essential if we are to empower a diverse set of individuals and communities and avoid a popular backlash against the fundamental changes underway” (Klaus Schwab, Chairman of the World Economic Forum).

One person we talked to stated:

“We will not use as much labour as we have been doing. So how do we create some sort of social contract with everything from communities to countries to unions globally……. This social contract, seeing that as part of a sustainability process, because it’s sustainable for the whole society. We can bring the people along with us on this journey”.

Martin Nowak, a professor of mathematics and biology at Harvard University states that if humanity has “the courage to take collective responsibility for the changes underway, and the ability to work together to raise awareness and shape new narratives, we can embark on restructuring our economic, social and political systems to take full advantage of emerging technologies”. (Source: Nicholas Davis, Head of Society and Innovation, Member of the Executive Committee, World Economic Forum Geneva, 2016)