Ashan Kulatunga

S4615652
Managing Organisational Change
Assessment 1: Literature Essay 
August 23, 2019

Leadership 4.0

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Discussion of 4.0 Industrial Revolution and changes faced by organizations

The fourth Industrial Revolution also referred to as Industry 4.0 is the new buzzword flying
around coined by The World Economic Forum. In the past, industrial revolutions have been
transformative technologies that have changed industries. The first industrial Revolution started
off when Thomas Newcomen invented the first steam engine that enabled the large scale
manufacturing of products such as textiles. Subsequently, in the the late 1800’s the second
industrial revolution resulted in the invention of electricity. With this revolution came about the
invention of the the internal combustion engine, production lines and the automobile. The third
industrial revolution revolved around computers. Dating from the 1950’s, computers and digital
systems paved the way for the internet, mass communication and globalization (Khan and
Isreb, 2018).

The fourth industrial revolution pertains to “cyber-physical systems” which can be explained as
the merging of the abilities of both humans and machines (Khan and Isreb, 2018). It is
distinguished by the integration of technologies that is erasing the lines between the physical,
digital, and biological realms (Schwab, 2016). As Industry 4.0 gains momentum, computers are
connected and communicate with one another enabling them to make more informed and
efficient decisions without little or any human involvement. As a result, these computers will
become increasingly intelligent as they keep collating data, which will lead to increased
efficiency, productivity and reduction in waste (Marr, 2018).

Industry 4.0 cannot be mistaken for a continuation of the third industrial revolution due to 3
reasons: (1) Velocity or the speed at which these technological breakthroughs are occurring
relative to previous revolutions. (2) Scope which identifies the fact that almost every industry is
being affected relative to one or few in the past. (3) The systems impact which defines the the
blanket effect it has had on the entire systems of production, leadership, and governance
(Schwab, 2016).

Similar to its predecessors, Industry 4.0 is a dichotomy of opportunities and threats. Just as
the invention of the steam engine vastly improved the quality of life and disposable incomes of
the masses, Industry 4.0 has the ability to do the same via new products like smart phones,
tablets and computers which have enabled affordable access to the digital world (Tassel,
2019). Today, three billion people have access to cellular devices, with a 10% year-on-year
growth rate. This has greatly increased our daily efficiency and the satisfaction garnered
throughout our lifetime (Schwab, 2016).

Industry 4.0 will also have major impacts on the supply side with regards to increased
productivity and efficiency by reducing transportation and communication costs, streamlining
logistics and supply chain methods and reducing the costs of trading which will allow
organizations to tap in to new markets and propel growth. Additionally, technologies like
autonomous equipment and vehicles, robots, additive manufacturing (3D printing) and the
Internet of Things and the cloud will all aid in revolutionizing how organizations operate (Marr,

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2019). It will also allow organizations to refine and enhance the quality, speed, or price at which
value is delivered by accessing global digital platforms for research, product development,
marketing, sales, and distribution methods (Schwab, 2016).

However, there are significant and undeniable threats that can arise from industry 4.0, the most
prevalent being inequality and security. As per the Credit Suisse’s Global Wealth Report 2018,
“the richest decile (top 10% of adults) owns 85% of global wealth, and the top percentile alone
accounts for almost half of all household wealth (47%)” (Shorrocks, Davies and Lluberas, 2018).
There is a high possibility of this staggering gap increasing is due to a couple of reasons.
Firstly, the most emphasized driver of inequality is the prospective for high levels of
unemployment. Only a negligible 0.5% of the American workforce is employed today in sectors
that did not exist at the start of the 21st century (Arthur, 2015). Additionally, the unimpressive
amount of jobs that are being created require high level of education and specialization when
compared to the physical and routine jobs that are being eradicated.

Gender inequality may also exacerbate because in the past only male dominated jobs like
construction, manufacturing and mining have been affected but with the advances in artificial
intelligence, female dominant roles like retail and administration may also be affected. Lastly,
the accessibility and affordability of these technologies and innovations that make life more
efficient and enjoyable tend to be towards the fortunate few (Davis, 2016).

The second threat resulting from Industry 4.0 is security. In a highly interconnected world with
rising levels of inequality instances of social unrest, segregation and violent extremism can
occur as a result of worsening poverty. The battlefield for conflict is also changing from
physical locations to cyberspace as opponents scramble to steal each others data and hinder
the other’s decision making ability. Lastly, with technological advancement comes the threat of
better weapons which increase the destructive capabilities of the owners of this technology
and increase the devastating effects these weapons can inflict on humanity (Davis, 2016).

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Detailed discussion of the chosen area (Leadership Resilience)

As we have already discussed, Industry 4.0 is impacting all organizations across multiple
sectors. This has given rise to disruptors arising in many industries and it has fallen on the
shoulders of the leaders of these organizations to manage the impact of these disruptors and
navigate their company’s through the waters of volatile, unpredictable, complex and
ambiguous (collectively known as VUCA) operating conditions (Bawany, 2017).

Today’s leaders (and future leaders) are tasked with the near impossible task of maintaining
stakeholder confidence and respect during these turbulent and uncertain times. This task has
been made more difficult with the increasingly disruptive global economy, climate of cynicism
and mistrust, brutal economic conditions and ruthless politics by any judgment (Bawany,
2017).

This begs the question, how many of today’s executives are ready for the Fourth Industrial
Revolution? As per a report established by Deloitte Insights, only one-third (33%) of the leaders
surveyed are highly confident they can act as beacons for their organizations during this time
of change (Deloitte Insights, 2019). And only 14% of C-Suite executives are confident that their
companies are prepared to harness the changing dynamics associated with Industry 4.0
(Renjen, 2018).

This is where leadership resilience comes in to play. Resilience can be defined as the capacity
to recover quickly from difficulties which is exactly what is required of leaders of Industry 4.0.
To be resilient, today’s digital leaders require 5 characteristics. “(1) Thought leader, having the
capability to be tough in facing market and competition change; (2) Creative leader, having the
creativity and innovation mind set to formulate the idea into reality; (3) Global Visionary Leader,
being able to provide direction and become an orchestra in transforming the digital business
transformation; (4) Inquisitive Leader, having learning capability to face complex and dynamic
ecosystem due to volatility, uncertainty, complexity and ambiguity (VUCA) factors; (5) Profound
Leader, having in-depth knowledge and comprehension to make interpretation, assumption and
synthesizing of information in making decision.” (Mihardjo et al., 2019).

In addition to these characteristics, a resilient leader must also acquire the right mindset.
Leaders need to be open to change rather than the traditional autocratic ways of doing things.
They also need to develop good listening skills and learn to work with others to create new
ways of operating. This what the “Theory U” process entails.“Convening large, complex
stakeholder groups, making them listen to each other, bringing them on a journey of seeing the
system through the eyes of other stakeholders, taking them to a place of deep reflection and
stillness, and allowing them to connect to their own sources of inspiration and energy” (Paulin,
2014).

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An important element of this system is to develop the mindset of its leaders as more self aware
and actualized individuals that have the ability to remove their ego from the equation and allow
more space for real listening to take place (Paulin, 2014).

Resilient leaders also need to re-evaluate transforming business models. Industry 4.0 is not
only producing intelligent products that learn from their experience and self adjust as per
customer requirements but is also replacing existing businesses with new and innovative
business models (Gerberich, 2017). The taxi business and the hotel industry are prime
examples of this as Uber and AirBnB have changed the fundamentals of their industries at their
very core. It is not foolish to assume that in the coming decades, all existing business models
will dissipate only to be replaced by new models thus resilient leaders need to be in the
forefront of developing these new business models and internalizing them in to their
organizations (Gerberich, 2017).

Before these innovative business models are implemented, it is important to assess the
readiness of an organization to internalize an Industry 4.0 strategy. There are 4 dimensions that
leaders need to look at: a) organization and nature (environment) b) organization and local
Communities c) organization and value chains d) Organization and employees (Sony and Naik,
2019) . The implementation of 4.0 business models will result in a radical change of the
complete work environment of organization and the more emphasis leaders place on the level
of readiness suggests that the implementation of Industry 4.0 will be highly successful.

Lastly, we will look at the 4 leadership styles that are paving the way forward amidst the myriad
of issues that heads of organizations are facing. The first type is “Social Supers” that focus on
solving or addressing societal and environmental issues to generate profitability. These types of
leaders believe that the workforce under their command is ready for the challenges brought in
by the forth in industrial revolution (Renjen, 2019).

The second type of leader that’s emerging is Data-Driven Decisives. These leaders have a clear
decision making process and use big data to make their decisions. They are also twice as likely
to suggest that they are well equipped to lead their organizations in to Industry 4.0 and also
admit that they know how to capitalize on it. Other distinguishing factors are that they are more
likely to invest in disruptive technologies, more concerned about the ethical use to technology
and equip their work force with the skills needed to prosper in this revolution (Renjen, 2019).

The third type of leaders are Disruption Drivers and they tend to heavily invest in technologies
to gain a competitive advantage over their rivals. They are usually very optimistic and confident
that they can lead their companies through Industry 4.0 and are ready to capitalize on
opportunities that present itself. Another edge these leaders have is that they tend to take a
holistic approach to making decisions (Renjen, 2019).

Lastly, we look at the fourth kind of leadership that is prevailing in Industry 4.0 which is Talent
Champions. These leaders focus on readying their work force further than their competition.

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They believe that they have a firm understanding of the competencies required by their
organization and that they have the correct composition of workers. They also embrace the
challenge of training their employees adequately (Renjen, 2019).

In conclusion, the intricacies of the technological change that is driving forward the Fourth
Industrial Revolution and the overall effect it is having on businesses and society as a whole,
means that all stakeholders need to collaborate on appropriate governance approaches. If we
are brave enough to take on the mantel of responsibility for the changes that are taking place
and work together to increase awareness and manipulate the narrative, we can move forward
in reshaping our economic, political and social systems thus taking full advantage of Industry
4.0.

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Bibliography
Peer Reviewed

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