As Sophocles said, “Heaven never helps the man who will not act.”
Legend has it that if you drop a frog into hot water, it jumps out. But put the same frog in cold water and heat it gradually, and the frog stays put. Lulled into complacency, it simply boils to death.
For business leaders, the teaching is relevant and profound. As change heats the pot that forms our world, our impulse is to resist change. But this could be a mistake. Just look at how we continue to advance global warming—or cling to dying industries. We owe it to ourselves and each other to do better.
What follows are six truths about the future of business I envision as a veteran CEO in the people analytics industry that I would encourage every leader to consider.
1. Decisions will be supported by big data
Executives rely on gut instincts. We have to: The pressure to make rapid-fire decisions is constant. But according to Daniel Kahneman’s Nobel-winning research and his book Thinking, Fast and Slow, the cognitive biases that inform gut decisions can lead to false conclusions. With the mind-boggling volumes of consumer and internet of things (IoT) data being generated with every click, share and swipe, I believe it’s imperative that data become an integral part of how we make decisions. Take, for example, the marketing field; once powered by gut instinct in the age of Mad Men, marketing can now leverage complex data analytics to inform decision making for everything from buying ads to creating social media content.
Collecting data is the easy part. What’s harder is discovering insights—and then learning to believe them. New analytics solutions arrive daily to help curb biases, correct errors
2. Virtually every company will be a global company
Globalization is likely here to stay. According to the European Centre for International Political Economy, it can make products cheaper, provide access to growth opportunities, and mitigate cost inflation.
How do we thrive by selling to and buying from other cultures? Do we work through a multitiered distribution system or produce and partner locally? There are many factors to consider. But every country I know of that has ever attempted to exit from international trade has stagnated.
This shift could be particularly challenging to Americans accustomed to the notion that the U.S. is king. In 2013, McKinsey estimated that by 2025, more than 45% of Fortune 500 companies will be from emerging markets, including greater China.This does not mean that the U.S. has to give up its exceptionalism. We can lead by example. Above all, I believe we have to participate in order to be taken seriously.
3. Your company can benefit from being an artificial intelligence (AI) business
Over time, software has become one of the primary levers for generating value in business. We use it to automate manual processes and enable instant and complex communication. All of these advances, from my perspective, arose from the speed and accuracy of computer processing, with little incremental knowledge gained.
Artificial intelligence adds a crucial dimension: machine learning and optimization based on data. Now, to stay viable, every business will likely need to invest in AI. Gartner estimates that 85% of CIOs will be piloting AI programs by 2020.
The question becomes not if you will incorporate AI, but how. Will you invest in automating customer care, greater quality control on production lines or machine learning to help workers learn how to serve customers more proactively? Choosing which functions will benefit from AI, and when, will be of critical importance.
4. The skills gap is at your doorstep
For the first time I’ve seen in recent U.S. history, CNBC reported we had more job openings than corresponding skilled labor in July 2018. A decade ago, many of these jobs didn’t exist. The term “data scientist” was coined in 2008; now, CIO reports that job postings for data scientists on Indeed are up 75% from 2015.
While people over 50 can probably still reliably expect to stay in their trained profession, this is not true for younger workers. To remain relevant, I expect they will need to completely reskill themselves every 7–10 years.
As the half-life of a skill (now two-and-a-half to five years, according to Deloitte) falls, and data and AI proliferate, we need to look beyond simple recruiting to broad-based retention and retraining. Our challenge will be to identify the necessary skills and develop adequate training. It will be difficult for universities to predict demand. Companies must assume responsibility, since they may be the first to recognize—and suffer from—the skills gap.
5. Cryptocurrency could come to your industry soon
Cryptocurrency enables people to buy anything, anywhere—without taxation, an audit trail or government oversight. Today, cryptocurrencies are known for their part in shady business practices. But they are here, likely forever, despite governmental attempts to legislate them out of existence. Businesses may need to figure out how to co-exist with cryptocurrencies—even to the extent of using crypto in lieu of established currencies.
6. You’ll soon be grappling with tough, climate-driven questions
According to The Wall Street Journal, Hurricane Florence and Irma each caused well over $30 billion in damage, taking fatalities and leaving many homes flooded and powerless. Last summer, it seemed at times that the whole North American West Coast was on fire.
Emergency planning is an obvious imperative for every CEO. But as climate-related emergencies become commonplace, considerations and costs will accumulate. Where do you put your manufacturing plants and your computer server farms? Do you concentrate your facilities in one place, or do you distribute them to diversify risk? What happens when entire coasts or low-lying states are inundated with seawater? Do you have an adequate power supply to deal with extreme temperatures?
We are already (literally) feeling the heat. While governments may be unwilling to take unpopular action, businesses cannot afford the luxury of fiddling while Rome burns. Boards may not forgive the CEO who did not prepare for the climate emergency or the cryptocurrency takeover. Let’s take action before the water boils—and it is too late.
This article first appeared in Forbes.