With new machines — and new business models — based on information, the rules of the game are being rewritten. Using findings from our recent study, we outline the tactics for success related to the future of your work.
If you’re wondering what the hype around digital is all about, consider this number: $364 billion per year. That’s the amount of revenue being driven by digital technologies and approaches to doing business among 2,000 leading companies we studied recently around the world. And if that’s not enough to get your attention, consider that by 2018, that amount will more than double, to $770 billion.
Clearly, something big is going on. That’s why Cognizant’s Center for the Future of Work sought to better understand the digital shift and how it will change work, commerce, attitudes, skills and even our understanding of “value.” Together with renowned economist Nouriel Roubini, we surveyed top executives, futurists and digital natives to gain insight into how the future of work is already coming to life today.
The upshot: The work that got us to the present won’t get us to the future. Digital is inexorably moving from toys of convenience to powerful tools applied to work that really matters. Your work ahead is to apply this new crop of smarter technologies to remake your business activities — from sales and marketing, to production and supply chain management.
Top insights from our survey include:
The scope, scale and importance of the digital revolution will surprise us all.
While digital’s impact on revenue will vary by industry, no sector will be excluded. The trend is most pronounced in retail, but even in life sciences — the least digital industry we studied — the uptick is material. Across industries, digital transformation will result in $20 trillion in revenues by 2018.
You’ve got to pay to play.
On average, respondents say their organizations are investing 12.1% of their revenues each year into becoming digital, and by 2020 that will increase to 16.5%. Compare those numbers with historical spending on IT, which runs 5% to 7% of revenue. It’s becoming more apparent that a dollar spent on digital is better than a dollar spent on pretty much anything else at the moment. Study respondents expect returns on investment to average out at 86.1% between now and 2018. The more you invest, the more you make and can reinvest — until your business is in a position to outcompete those that take a more conservative stance.
Cost savings are an untapped goldmine.
Meanwhile, digital’s impact on cost has thus far been meager. While leaders in most companies are concentrating on front-end, customer-facing activities for applying digital (shiny new apps, groovy websites, sensor-enabled shoes), they should also be looking at opportunities in their middle and back offices for process automation to clean up inefficiencies. Smart leaders are using that newly freed digital dividend as investment fuel for innovation.
The future of work is the mirror image of the future of AI.
When asked which technologies would be the biggest game-changers for how we work between now and 2018, the vast majority of executives named big data/analytics (99%) and — more surprisingly — AI (98%). If you aren’t taking steps now to plan and act for 2020, much less 2025, you’ll very quickly find yourself fighting a 21st century war with 20th century weapons. Process-by-process throughout your entire value chain, you should identify ways to apply AI to change how work is done and how customers engage with your business.
Being digital means being a better human.
Almost all respondents (97%) agree that jobs and required skills will change significantly because of digital transformation. In particularly, they said, their work would become more strategic as rote tasks morph into the machine. While some tasks — and full jobs — will be assumed by machines, it’s also true that human-specific traits will grow even more important. Engaging with others, collaborating, leading, applying judgment, being creative, thinking abstractly — all of these activities will become even more essential. Our work ahead will require us to double down on the activities where humans have — and will continue to have — an advantage over silicon.
Steps to Take Now
In many ways, we’re only just beginning to understand what truly “digital” work is. Rather than replicate old ways of working with new tools, we need to create entirely new ways of working, created by the new tools. Here are just a few ways to get started:
Don’t optimize fading business models. You and your teams need to ask, “Do we have the right business model and the right technology model to compete in our industry going forward?” No longer can these questions be asked once a year at the annual senior executive offsite. They should now be asked every day in the unglamorous offices where the “real work” is done. Optimizing an obsolete product, service, business strategy or process is a recipe for irrelevance.
Prioritize, prioritize, prioritize. If deepening, broadening, strengthening, extending or improving your digital presence isn’t the number one thing on your “to-do” list when you get out of bed first thing every morning, you might want to go back to bed. The world is quickly becoming “digital first,” whether it’s upgrading the sales interface or the supply chain.
More please! If your company’s investment profile is not in line with these trends, then you’re playing by yesterday’s business rules. You will win points for asking for more budget for digital initiatives — rather than less — in the next budget review cycle. This is no time for shrinking violets to pull back from the fight.
Go big. Go digital. Or … well, you know the rest. The next years will be a rocket ride. Whether your business soars or falls depends almost entirely on embracing the digital opportunity. It should be your number one priority to signal that rewiring the company or organization to take advantage of the new machine (with analytics and AI at the heart of the rewiring) is imperative and non-negotiable.