Industry 4.0 must be supported by Governance 4.0

Can your organization move at the speed of technology? 

The answer, most likely, is no. Technology far outpaces the speed at which companies can respond, leaving a constant state of catch up.

The push for digital transformation urges organizations to upgrade and overhaul technology; however, moving too fast carries risks. Rapid transitions threaten to leave employees behind, creating tension throughout the business. Or worse, security shortcomings emerge from poor software quality.

But digital transformation goes beyond technology — if companies want to engage in a new era of technology, they must rethink how work is done too. 

Overall, the shift from simple digitization (the Third Industrial Revolution) to innovation based on combinations of technologies (the Fourth Industrial Revolution) is forcing companies to reexamine the way they do business. The bottom line, however, is the same: business leaders and senior executives need to understand their changing environment, challenge the assumptions of their operating teams, and relentlessly and continuously innovate.

The Fourth Industrial Revolution changes not only what we do but also who we are. It affects our identity and all the issues associated with it: our sense of privacy, our notions of ownership, our consumption patterns, the time we devote to work and leisure, and how we develop our careers, cultivate our skills, meet people, and nurture relationships. The list is endless because it is bound only by our imagination.

Food for thought: Can government move at the speed of technology? 

The answer is, very likely, no. Technology far outpaces the speed at which government and governance can respond, leaving a constant state of catch up and contributing to the vast ecosystem of technical debt. 

If our institutions would be well governed, we would pay little attention to them. They would be barely visible infrastructure that supports the economy and virtually every aspect of social order. 

Today, however, many people have lost confidence in institutions and their leaders. 

At the root of our failure to anticipate and manage global risks – including climate change and deepening social divisions, debt crises and inadequate technological regulation – lies in an unresolved problem of local and global governance.

Our institutions and their governance are no longer fit for purpose. We tend to think of history as a series of cataclysmic, seismic events. But the deterioration in global governance is a case of gradual erosion.

The brutal social and economic shock caused by Corona ushered in Governance 3.0. Today operational crisis management dominates the decisions, possible unintended consequences are rather meaningless. This short-term, trial-and-error approach has led to a haphazard approach to the pandemic and its socio-economic fallout.

We need a new model: Governance 4.0to complement Industry 4.0:

According to Klaus Schwab of the World Economic Forum, Governance 4,0would differ from its predecessors in several fundamental ways:

First, today's short-term crisis management must be replaced by long-term strategic thinking. The focus on current issues such as the pandemic, socio-economic crises and people's mental health must be complemented by measures to protect the environment and combat climate change, as well as addressing related social challenges such as involuntary migration.

* Second, a Governance 4.0 must replace the tunnel vision and top-down approach that has prevailed in the past. We live in a highly complex and interconnected world. This also means that the roles and responsibilities of each stakeholder in society must change. Business can no longer ignore its social and environmental impacts; government can no longer pretend that it alone has all the answers!!!

* Third, the current emphasis on a narrow view of economics and short-term financial interests must end. Instead, the primacy of society and nature should be at the heart of any new system of governance—whether for corporations or governments. Finance and economy are vital, but they must serve society and nature, not the other way around!

The world has changed, so public and corporate leadership must change too. Major structural changes such as the fourth industrial revolution and climate change are now disrupting all industries and power centers. Technologies like blockchain are replacing centralized and hierarchical organizations with decentralized, autonomous entities. At the same time, social, economic, and digital inequalities are increasing.

But many executives are already thinking and acting like pioneers of a new governance era. These include business leaders who champion environmental, social and governance metrics , and some politicians who push boundaries. Above all, however, young people are demanding a better future.

We need leaders who are exploring largely uncharted territory, acting as trailblazers and championing concrete action to combat climate change and social injustice.

In the end, it all comes down to people and values, in the private sector and in government. We need to shape a future that works for all of us by putting people first and empowering them.

What are we supposed to be involved in these days? Digitalization and innovation? To get there, we are asking ourselves how we can improve planning, forecasting, budgeting, run simulations, run plans and analytics in a very visual and intuitive manner. What tools are available? Are we making those tools available to the private and government organization? And more importantly: are we training our important asset, our people, adequately?

Luckily, detailed training and tools are available for companies, for industry sectors and subsectors, and, of course, for government offices.

Feedback is welcome; assistance can be made available; contact me at [email protected]