Five Trends Changing our Business – Trend #1

Introduction

The article below is considered part one of a five-part series white paper on trends changing the nature of work, our workforce, and our economy. In the coming weeks, St. Charles will release one trend from the white paper as an article. If you are interested in reading all trends at once, you can register below to download the full white paper. The first trend up in our five-part series is The Increasing (Exponential) Speed of Industry Convergence. 

 

The Preface

We are now amidst what many call the Fourth Industrial Revolution (or Industry 4.0). The first industrial revolution involved the automation of work through water and especially steam power in the 18th century. The second, in the 19th century, involved using electricity, cost-effective steel, and principles of mass production. The third, starting in the 1960s, involved advances in computers, information technology, and the Internet (sometimes called the Information or Digital Revolution). The fourth expands on the third by adopting artificial intelligence, robotics, 3D printing, cognitive technologies, machine learning, and other intelligent systems fueled by advanced computing. These advances are so transformative that they change the nature of work, labor markets, our economy, and how we compete globally.

With the 3rd (digital) revolution, we changed our economy from one based primarily on manufacturing to one based on services. Telecommunications, media, high tech, financial services, healthcare, and professional services now dominate our economy and make up most of our GDP and the Dow Jones. Even manufacturing has seen the rapid introduction of computer technology in the factories, devices, and vehicles we produce. At the same time, giant Asian economies’ (e.g., India and China) industrialized and their markets opened, while Europe formed the European Union (EU) to compete as one continental power. According to a Brooking institute study (2018), the United States (U.S.) is no longer the world’s manufacturing leader. We may never again be able to out-produce India or China with populations each four times larger than our own. In recent decades, we competed with the world based on innovation. As the world catches up with greater size, we have reinvented new industries altogether. But some wonder how we will keep that up.

Now we are competing on a global scale for the Fourth Industrial Revolution. Who will invent and dominate the fledging new industries of tomorrow? Who will the world come to for clean, renewable energy? Whose medical science and devices will the world turn to when the next pandemic hits? Who will the world’s factories, machines, and vehicles build intelligent tools and technologies into their products? Which of today’s industries will become obsolete, and who will replace them?

There were reasons why the United States competed so well in the previous three contests. Our national resources, unique labor market, economic policies that reward entrepreneurialism and investment in innovation, and an education system that produces exceptional scientists and engineers. Our ability to adapt and reinvent ourselves to the times has been critical. The way we reorganize work, and ourselves, to meet the challenges of each new generation—our openness to change and our ability to learn continuously.

Five Trends Changing the Nature of Work

The world is changing again – and it is simultaneously driving several trends changing the nature of work, our workforce, and our economy. These five trends are:

  1. The increasing (exponential) speed of industry convergence
  2.  The shift toward more independent and contingent workforces
  3. The exit of baby boomers and entrance of Gen Z into the labor market
  4. The shift toward human-centered work design is driven by Industry 4.0 automation, and
  5. A push toward remote and flexible work coming from globalization (and global pandemics)

Taken together, these trends speak to a working environment quite different from any time in our past, and one which only some companies are preparing themselves for today.

1. The Increasing (Exponential) Speed of Industry Convergence

The average lifespan of a company is decreasing from ~60 years to closer to 15 years, according to a variety of studies from sources such as Yale University, HBR, Huron, KPMG, Credit Suisse, and the Santa Fe Institute” Companies that stood for 80-100 years find themselves displaced by fast-moving technology innovation. The smartphone alone sent shock waves through not just telecommunications companies but camera companies, music and recording media companies, daily planners, alarm clocks, and watches – and simultaneously spawned an entirely new industry and delivery channel through Apps. Disruption has become the new normal as companies now compete not just for market share but to survive the next industrial revolution. Driven by the interplay of emerging technologies, customers now perform tasks employees used to, global supply chains are flatter and closer together, barriers to entry are thinner than ever before, markets are a click away, and workforces themselves are becoming increasingly optional. Once, starting a company or developing a global marketing plan required months of planning and dozens of people. Today, a college student can do either over winter break.

And with these breathtaking changes come changes to people’s attitudes about work. Today’s workers must wonder what it means if the industry they work for may be gone in 15 years. How will they survive having to change careers two to three times in a lifetime? What value does loyalty have when the company or industry may be gone? What value does a college degree have if the job I eventually get has not even been invented yet? Why should I work so hard for an employer when they cannot offer me stability in return, the barriers to self-employment are so low, and its flexibility is so enticing? What good are benefits if they are not portable enough to survive the inevitable career changes? And how do I keep pace with the profound change technology brings, especially as I get older?

And how do we, as human capital professionals, respond to these challenges? Here are a few trends to consider:

Skills-based Organizations (SBO)

Simply put, a skills-based organization (SBO) deconstructs how work is organized from jobs to skills. Today organizations are designed around jobs. Recruiting is based on job descriptions that often require qualifying degrees or job certifications. Organizations are aligned around jobs that fit into a reporting hierarchy. Workforce planning is dependent on headcount analyses. Compensation is based on job roles; HR systems are organized around job families. It is all very static and hierarchical. “Built for a slower, more stable environment.” In truth, though job descriptions typically enumerate many required skills, individual employees may or may not possess all the necessary skills at different points in their development.

In a skills-based organization, employees can access training to develop the skill they need because the learning catalog is organized around skills (not more extensive job training). Work is assigned through talent/opportunity marketplaces, where job tasks are posted and matched to interests posted by employees. Instead of struggling to hire someone to fill a job, a manager can more easily find the skill they need in-house or locate an external applicant with the required skill. Managers no longer need to find applicants with a 4-year degree; they can deconstruct job applicants by skills, hire someone 80% qualified, and develop the rest. It is similar to the way many contractors are engaged today. Implementing a skills-based organization enterprise-wide may eventually require rethinking reporting relationships and compensation protocols. Perhaps managers would no longer be compensated based on who reports to them but on what they achieve. It is even possible to imagine that skills in greater demand could lead to greater compensation or more rapid career development over time.

Few companies are currently organized in such a fashion. It may only be the learning and development (L&D) or staffing function that keeps a skills inventory for each employee. But many organizations are considering SBOs as a tool to drive greater speed, agility, and career growth opportunities for untapped resources. For some, this may be an entirely new way of thinking. For others, it is already growing out of the necessity to respond to the COVID-19 pandemic. But as the idea takes hold over time, it can reorganize the whole talent model as we acquire, develop, reward, deploy, and plan our talent needs around these new skills – as opposed to jobs.

 

Learning Experience Platforms (LXP)

Learning Experience Platforms (LXP) are a rapidly growing technology in the learning field. LxPs are tools that curate existing content and transform it into customized learning paths for the individual. They can curate both internally and externally developed content available to the organization. Most leverage Artificial Intelligence (AI) technology algorithms to help with the curation. In particular, they are designed to work not just at the course level, like your learning management system (LMS) – but with bite-sized, on-demand learning nuggets that can be consumed in the flow of work (articles, videos, podcasts, etc.). Several vendors, such as Edcast (Cornerstone) and Degreed, continued to see growth through the pandemic as organizations were driven to an even greater need for speed and agility.

 

Alternate Career Paths

Traditionally, the only path to career advancement was through promotion up a career ladder based on a greater scope of responsibility (more direct reports, more significant budgets, longer-term/more strategic goals, etc.). A career ladder that has fewer and fewer openings as one advance. But what if there were multiple ways to get promoted? What if one could get promoted through a career path of lateral moves through every company division or product/service the company offers? What if one were promoted based on acquiring and demonstrating more and more skills valued by the organization? What if one were promoted based on innovations brought to the company? Or through an illustrated history of improving performance in a core area year over year, driving ever greater quality with predictability? Why is getting better at your job not tied to career advancement? In many firms, it is actually punished. How often has a crucial role had two qualified candidates, only to find one with the promotion and the other leaving for advancement opportunities? Some examples to consider:

  • The skills-based organization offers an alternative way to develop professional skills, new experiences, and greater financial rewards without climbing roles of greater responsibility.
  • Many organizations have rotational programs or high-potential development programs that provide lateral experience with opportunities for traditional promotion.
  • Some organizations have dual career tracks, one which leads to greater responsibility and compensation traditionally, and another which leads to loftier job titles and compensation through an alternative path.
  • Matrixed organizations offer advancement along different lines of the corporate matrix.
  • Some project-based organizations continuously need workers all along the project ladder, so an ever-decreasing number of open positions need not limit promotions.

 

Education 4.0

Traditionally, a college degree is obtained once, generally in one’s twenties, and is meant to last a lifetime. But as mentioned above, the relationship between a college degree and the profession it prepares you for is becoming less direct. It remains relatively straightforward for many professional degrees, such as medicine, law, engineering, business, and accounting. For many other disciplines, however, one’s major in college may have little to do with the career one ends up pursuing. This is increasingly true in a world where industry shifts dramatically. It is a safe bet that a computer science major will not be programming in whatever language they learned 25 years earlier. Liberal arts majors routinely find jobs outside their primary discipline over time. And what college major in 1997 would have prepared anyone for a career at Facebook, Uber, or PayPal?

“This phenomenon referred to as “Education 4.0” has arisen from different factors such as the rise of the non-traditional learner, increasing demand for competency-based skills, and advancement in technology. With the evolving concept of lifelong learning, today’s learner is no longer a student after high school but may be working part-time or looking to pursue education after taking a break from work. A student who is willing to experiment with program structure, delivery, assessment, or credential instead of conforming to the present instructor-led model for teaching. Technologies such as learning analytics, open-source digital content, mobile-based learning platforms, etc., have made this personalization of learning possible.” Stakeholders from all parts of society have a role to play in realizing this vision.

 

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