The Fourth Industrial Revolution—the promise of growth and prosperity from a machine intelligence‒enabled era of change—has been at the forefront of conversations about production for several years. Yet for many, this promise has failed to become a reality because the organizational models required to make technology truly work are missing.
To reap the value available from investments in technology, a few leaders have recognized the importance of evolving their own business models first. In our July 2024 article, “Today’s industrial revolution calls for an organization to match,” we discuss how success in this phase relies not only on technology, but also the fostering of management capabilities to empower workers to develop and change the business around them—within boundaries. Resolving this apparent dichotomy of achieving managed empowerment will enable some businesses to grow and differentiate themselves significantly faster than others.
Independence versus prescription
The key ingredient here, the human source code if you like, is the ability of managers to embrace achievement-oriented, or mission-led, leadership—to encourage experimentation and innovation while setting clear boundaries and expectations of outcomes and confirming people’s understanding. This, though, is easier said than done. Leaders and managers must intentionally build alternative muscles, accepting that detailed prescription is likely beyond them, even if they had access to unlimited time and effort. How are they to proceed?
Organizations need innovation and operational excellence. But the pace of technological change—and the fact that leaders will be managing people and teams who have their hands on technologies that they (the leaders) only partially understand—means that command and control simply won’t yield the productivity gains today’s economy needs.
As we have seen, productivity remains stubbornly low, particularly across developed economies. Leaders, HR departments, and their talent teams will be grappling with the slippery issue of mastering the independence-versus-prescription dichotomy for years to come.
Management redux
To paint a picture of successful Fourth Industrial Revolution management approaches, it’s worth calling out some of the practical challenges. Having an empowering discussion about a project, for example, can be reassuring for both a manager and a worker or team, but conversely it can lead to ambiguity of role clarity.
Successful operations management calls for explicit, broad, and intense communication. People with highly developed inter- and intrapersonal skills have a head start here. Managers who rely, or have relied, on more of a systemized, tick-the-box approach are going to struggle (exhibit).
OKRs rule
Leaders and managers need to achieve strategic goals without the wasted time and effort involved in trying to dictate exactly how the goals are to be achieved—or even in laying out the precise process. Employees intuitively know this, and the perils of micromanagement for experience and effectiveness are well documented.
Originally developed at Intel and expanded at Google, objectives and key results (OKRs) have emerged as an effective mechanism that encapsulates this balance. When employing OKRs, subunits use the strategy to articulate goals and align what they do each day with the organization’s direction. Many organizations have their own version of or language for this, but the underlying principles are what matter most.
Using OKRs effectively requires clarity from senior leaders about their strategic direction for the company. Accordingly, an empowered organization requires more effort from senior management, not less. Frequent communication, confirmation, and discussion of objectives and results enable a factory, for example, to tailor OKRs to specific circumstances. Frontline workers and managers can then make intelligent trade-offs between, say, maximizing profitability from current production and reducing potential costs for future changeovers.
Making the unusual the day-to-day
In essence, success will come from making ways of working that might have seemed “unusual” in the past, “business as usual” today—and to move to that management mindset as quickly as possible. Our article points to the example of flipping the ratio: instead of deploying 80 percent of people in recurring processes and 20 percent in projects, leaders can aim for 80 percent in projects.
Learnings from the few companies that have successfully transitioned to a project-based organizational model include the assembly of well-functioning internal talent markets, a culture and expectation for setting clear boundaries and goals, and the development of achievement-oriented leadership. Effective leadership of a project team requires different skills than those traditionally encouraged in line leadership roles.
Some parts of the journey to an achievement-oriented, project-based model are relatively uncontroversial: the democratization of data, continual reinvention alongside technological developments, and rapid skills building within workflows. Others are undoubtedly more challenging, as they involve deconstructing existing ways of working. These include moving from departments to ecosystems, abandoning habitual, detailed planning, and promoting the importance of projects over processes. As a shortlist, these final three elements are perhaps a good starting point for change-oriented, strategic internal conversations, and a good place for leaders hungry for productivity growth to focus their attention.
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