Callaghan Innovation CEO Vic Crone was guest speaker at a recent Business North Harbour luncheon. Her message? Sign your business up to the 4th Industrial Internet Revolution or get left behind.
When Vic Crone, ex-CEO of Xero and current CEO of Callaghan Innovation, New Zealand’s innovation agency, is the guest speaker at a business function – you can guarantee a good turnout. Crone is in the box seat when it comes to predicting the future of business technology, and at the Business North Harbour luncheon on April 11th she delivered a message loud and clear to business owners on technology: don’t just get ready for change, be part of that change, or your business may be left behind.
Her talk was not just explaining new technologies – but how those new technologies will impact on business models, people, as well as the required demands on business leaders.
“We are about to go through [technological] change over the next decade that will dwarf what we’ve been through in the past 20 years,” she told the audience.
Crone is talking about the era we are entering – the 4th Industrial Internet Revolution – the era of artificial intelligence (AI) and automation, and it will impact every single industry sector.
“We’ve moved from a focus on electronics, IT and production automation to a decade where we will connect and automate every single part of our businesses and value chain.”
Crone also delivered a sobering message on the performance of New Zealand businesses compared to APAC (Asia-Pacific) nations. We’re less likely to be introducing new products, services or processes into our organisations – and more likely NOT to be using social media for business purposes. We’re also less likely to NOT be using new payment methods, such as PayPal, and our uptake of new technologies (bitcoin being one of them) lags behind APAC companies.
R&D spend is behind too, adds Crone, particularly compared with Australia, Europe, Israel and South Korea.
She urges business owners to stop thinking about their particular industry in terms used over the past 20 years, and get in the mindset of where the industry is moving in the next ten to 15 years.
It’s the application of the new emerging technologies that will have the biggest impact, she explains.
Crone sums up the next business decade in three words: disruption, de-monetisation (think Sky TV, Toys R Us) and de-materialisation (think the ‘Sharing economy’). Big-scale technologies that will have a major impact on business include AI, IoT (Internet of Things), location detection, drones, 4D printing (think 3D with the added dimension of water or electricity), ‘Big Data’ analytics, and augmented reality (AR).
Crone reminded the audience of a white paper produced by Callaghan that identifies which sectors will be most affected by AI disruption. (www.callaghaninnovation.govt.nz/news-and-events/ai-whitepaper)
“It will help you understand what’s applicable to your business. Is it about how you will use natural language processing in your customer relationships to determine the next course of action for your customer?
“Or the information you need to collect about your plant to help inform your capital decisions around maintenance or improvement programmes?
“Is it about how you interact with your customers in terms of chatbox or new robot-human interfaces?”
Crone wants businesses to waste no time in researching what’s applicable to their business around AI – that’s products, services, processes and operating models.
She says AI is already happening in the digital sector. In the medium term it will target the manufacturing and agricultural sectors; and in the long term it will sweep through energy, health and transport (think autonomous vehicles).
Better broadband connectivity was on the wish list of business owners last year; now that it’s largely built, Crone says the question is – what do you do on top of that network that is now important?
“Business is knowledge around Big Data, 3D printing, automation, machine learning, cloud computing and connectivity.”
Information processing is where AI will shine, says Crone. “A computer’s ability to scan thousands of documents and pieces of information and spit out the answer to the question we want to ask is better than [what we’ve done in the past].”
It’s the role of humans to overlay on that information context, judgment and creativity, she adds.
“The top ten experts in the US predict that in the next three to five years AI directors will be sitting around boardroom tables. They’ll be the ones we look to for that information expertise.”
It was hardly surprising to learn that age is a significant factor when it comes to business growth and technology adoption. A 2017 CPA Australia and Asia-Pacific SME Survey reveals that people aged under 40 are more into higher growth businesses, new products and services, the use of social media for their business, higher online sales, and are more focused on how technology plays a role in their business to drive growth and profitability.
If you’re a business owner over the age of 40, Crone encourages you to consider who in your business can bring this thinking, if it’s not being brought by yourself.
Identify your young, hungry, totally techno-comfortable people; then consider AI, social media, etcetera, in your organisation. Consider how you’re driving this agenda and how you’re empowering those people, suggests Crone.
The CEO is safe
Crone presented evidence that over the next dozen years around 48 percent of all jobs will have more than 40 percent of their activities automated. One comment sparked a reaction from the audience: the one role that cannot be automated is that of the CEO.
“This reflects the judgment and complexity of a CEO’s role.”
She says Callaghan is evaluating the impact of automation technologies within it’s own organisation. Who will be impacted? What roles will be created? How do they upskill people to meet the new roles?
There’s no denying the scale and impact globally of what Crone calls “the automation onslaught”. It’s impacting $14 trillion of wages worldwide, and will substantially change the way New Zealand’s economy operates and the skills the country’s workforce requires.
The dilemma is not the end game, explains Crone, there will be plenty of jobs and a lot of new jobs. The dilemma is the transition. Callaghan believes there will still be a high level of employment but a large unemployment gap while roles change and peoples’ new skills and roles are created.
Crone says there will be a large degree of upskilling required by business leaders too. They will need to be more agile and flexible, as well as acquire eco-system intelligence – “the ability to understand the broader system you’re working with and partner with the right people” – and ethical intelligence. The latter is best demonstrated by the recent #MeToo movement.
“What was acceptable to say in business five years ago is not acceptable to say now,” explains Crone. “Leaders must be savvy on how fast values are shifting.”
Another trend to consider is the emergence of large online platforms – AirBnB for example.
“Leaders need to plot out the eco-system they operate within and [evaluate] how it integrates across the value chain and who the providers are [both present and emerging].”
Health and insurance are two sectors in particular that will be impacted by these eco-systems.
Getting leaders up to speed on the digital future is one thing – upskilling board members is another, says Crone – adding that a “huge percentage” of boards admit to not having the capability and want to know what it looks like.
She says the question is, over the next decade how can businesses create room in the boardroom for young people to add value in regard to digital innovation and technology?
In summing up, Crone reminded the audience of some Productivity Commission research that found that the greatest productivity gains come when a business is internationally connected and product innovation happens at the same time as organisational and operational innovation.
So look at how you apply your technology and innovation processes to your products, processes and business model, she advises.
It’s also a researched fact that firms solely focused on the domestic market are likely to be less innovative and less productive. Which means, suggests Crone, your opportunity to survive through the next decade will be reduced.
The businesses with an advantage are those that are foreign owned and/or have an international focus.
Crone says the six lessons in the CPA report sum up the required focus by SMEs going forward in this latest Industrial Internet Revolution:
- Invest in technology, including digital payment such as Bitcoin.
- Focus on innovation through new products, services and processes.
- Grow your revenue from exports.
- Start using social media, if you’re not already doing so.
- Have an online presence.
- Focus on improving business strategy and management.
Article by Glenn Baker, editor of NZBusiness magazine.