The next wave of smart technologies—from the Internet of Things and wearables to robotics, and artificial intelligence—will boost worker productivity, reinvent business, and add trillions of dollars to worldwide GDP growth. Research recently conducted by Roubini ThoughtLab and Cognizant’s Center for the Future of Work estimates that these smarter technologies will turbo-boost the digital revolution and rewrite the next chapter in the story of business – how companies generate revenue, control costs, engage customers, and manage work.
Our study, The Work Ahead, reveals that companies are rapidly moving from the initial phase of digital transformation, spurred by SMAC technologies (social, mobile, analytics, cloud), to a second phase of hyper-digitization. In this next phase, which will carry us into the next decade, businesses will harness these smarter, game-changing technologies to become hyper-digitalized organizations that will enjoy leaps in revenue growth, cost savings, productivity and worker engagement.
To gain insight into how advances in digital technology will transform the business world, we surveyed 2,000 top executives at leading companies around the world, as well as their staff, MBA students, and futurists. We uncovered powerful trends and meaningful steps that can be taken right now.
To be clear, digital transformation is not just about using your mobile phone to hail a cab or to book a hotel room. The digital economy is based on technological platforms and algorithms, connected “things” and intelligent “bots.” It will stretch from customer-facing operations all the way into your middle- and back-offices, revolutionizing the division of work between machines and people.
Here are some of the key takeaways from our The Work Ahead study:
1. Digital transformation is already a money-making force. If you haven’t yet prioritized digital transformation in your own organization, it’s time to take stock of what it already means to your peers in economic terms. Study respondents report that by 2018, digital transformation will boost revenue by more than 10% on average, up from 4.6% today. In gross revenue terms, this equates to $2 trillion across all the organizations surveyed.
2. Digital also has the power to boost our global economy. According to our analysis, this next digital wave could unleash the same productivity as occurred during the first Internet revolution, adding trillions of dollars to economies around the world. Our research shows that this next phase of hyper-digitization will particularly boost the economies of large economies, with the US, UK, Canada and Germany seeing some of the biggest gains.
3. Many businesses are overlooking massive amounts of cost savings. Bots, artificial intelligence (AI) and eventually blockchain will unlock huge efficiencies in your call center, supply chain and logistics functions. Denying these savings is like accepting a self-imposed tax on your business future. Leaders who don’t use technology to lower costs — now — will not see their margins fall behind more efficient competitors. They also will not free up the money needed to pay for the digital innovation needed to drive the top line of their business—where the biggest gains will be made by digital leaders.
4. Fear the “Laggard Penalty.” What is the size of your digital investment? If it’s not around 12% of revenue, you’re not keeping up with the average. What’s more, digital investments are growing fast — by about 36% — and will hit 16.5% of revenues by 2020. According to the study, falling behind the curve comes with a high economic price. When you consider the difference in both cost and revenue performance due to digital technology, the Laggard Penalty reached about $262.5 billion across the companies studied, or about $692 million per laggard between 2015 and 2018.
5. Artificial intelligence (AI) is the new “plastics.” So, which technologies should you invest in? Survey respondents regarded AI as the second biggest driver of business change, closely behind big data/analytics. In fact, these technologies are mutually reinforcing, since AI enables companies to drive far greater value from basic automation and robotics. Digital leaders have already developed AI use cases and plans to roll out artificial intelligence across their enterprises
6. Jobs and skills will change significantly. The big fear with AI is that it will diminish the need for human labor. While it’s true that some jobs, particularly rote tasks, will be absorbed by intelligent automation, the need for human skills and capacities will also increase. In fact, human traits – the things we do naturally but computers struggle with — will increase in importance by at least 15%, according to our study: the ability to ask the right questions, craft better decisions, collaborate effectively, engage, lead, reason, interpret, strategize, innovate. Three-quarters of our survey respondents believe that our unquenchable human ingenuity will continue to find plenty of work for human hands and brains to do to satisfy our wants and needs.
Regardless of your industry or even business size, your work ahead will be influenced by digital technology. Digital will change not only how we conduct business but also how we educate, govern and provide healthcare. Amid the massive societal and political issues that will arise from these changes, our work ahead will be to rethink how we conduct work together with the new machines — and harness digital for better jobs, a stronger world economy, and ultimately an improved society.
This article was written by Louis Celi, CEO of Roubini ThoughtLab.