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IoT and the end of business as usual

High-growth organizations consider societal impact as well as business impact. Source: Deloitte.

One of the more popular phrases associated with the internet of things is the “Fourth Industrial Revolution.” This is the idea that the combination of cheap sensors, connectivity, and cheap analytics will lead to a holistic view of the world, and to business operations and even people that promote greater productivity and efficiency.

Deloitte took this this concept to 1,600 C-level executives in 19 countries in order to understand how they thought this fourth industrial revolution would change society, their business, and their relationships with workers. What came back was a clear example of magical thinking.

We’ll dive right in, starting with social impacts. Of those surveyed, 87% believe that the coming digital transformation will reduce economic inequality and promote stability, while two-thirds of them believe that businesses will have more influence than governments in determining how the future plays out. It’s a good thing that those in charge of the businesses that will create this equal, stable society believe it’s going to happen.

Yet less than a quarter of those executives surveyed believe they have influence in areas of social good like education, health care, etc. So somehow these business leaders are really bullish on reducing inequality, believe they have a big role to play, and yet feel powerless to influence areas that are highly likely to produce a stable society that is more equal. Sure.

A lot of this blue-sky thinking on social equality comes from executives in the U.S. and Europe. Meanwhile, three countries — India (32%), South Africa (28%), and China (23%) — envision social upheavals and increased income inequality as a result of the fourth industrial revolution, according to Deloitte.

Businesses are confused about their role in society as part of this digital transformation, but the gaps also appear when discussing their own employees. Only a quarter believe they have the workforce needed, but human development resources are a low priority, with just 17% of surveyed executives stating that HR and talent development is a priority. Additionally, a majority of them (61%) expect that their workers will trend toward contractual and temporary employees. Thankfully, 56% believe that we need to rethink our social and labor contracts.

These are just two examples of magical thinking around the fourth industrial revolution. The overwhelming sense from this short report is that we’re entering uncharted territory and that while many executives are aware of it, they are unable to actively adapt to what lies ahead. Instead they are talking about the future while continuing to walk the same strategic walk of today’s business environment.

This will leave established businesses open to new competitors, promote frustration from consumers, and likely lead to regulatory crackdowns. Deloitte seems well aware of these challenges; it’s encouraging executives to promote stronger relationships with customers and evaluate technologies on the basis of the new business opportunities they can offer as opposed to simply ROI.

It’s also encourages executives to concern themselves with the ethics and morality of applying new technologies, not just the “traditional risk concerns of security, privacy, regulatory, compliance, safety and quality.”

That’s a tall order. But if today’s business leaders want to use their influence to promote this society they are so optimistic about, then they need to take the steps necessary to get us there. And that means moving beyond magical thinking and taking a long-term view. In other words, use the advantages enabled by the fourth industrial revolution to make a better world, not just a stronger balance sheet.

Stacey on IoT | Internet of Things news and analysis

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