The “BASIC” Framework: Leadership Imperatives for Industry 4.0

In a 2015 article, Klaus Schwab coined the term “Fourth Industrial Revolution” (Industry 4.0) to describe the dramatic transformation that “cyber-physical systems” will have on our lives, as they merge the capabilities of humans and machines.

Interconnectedness is at the heart of various disruptive technologies that constitute Industry 4.0, including big data, artificial intelligence, Internet of things, augmented reality, virtual reality and robotics, to name a few. Together, these technologies can dramatically change design, production, implementation, operation and service of manufacturing systems, products and components.

Industry 4.0 affects all business areas as companies need both virtual and physical structures that enable collaboration between machines, devices and people, and rapid adaptation along the value chain.

To get the most out of Industry 4.0 technologies, organizations must invest heavily in building capabilities in data and connectivity, analytics and intelligence, conversion to the physical world and human-machine interaction.

This calls for a new approach to leadership—what has been termed “Leadership 4.0.” The BASIC framework for Leadership 4.0 outlines five key imperatives suggested by the acronym—Boldness, Agility, Sagacity, Inclusiveness and Communication.

We begin with what is often cited as a fundamental component of leadership: Boldness. Leadership 4.0 calls for faster decision-making and rapid adjustments to evolving business situations and threats from competition. A 4.0 leader must be bold in her decision-making. Tackling disruptive changes requires more than the usual boldness. According to a KPMG report on Industry 4.0, “this means nurturing innovation, developing disruptive thought processes aimed at devastating the status quo and looking for opportunity in every element of the value chain—from which products are designed, how they are produced, to who they are sold to and how they are purchased.”

Adjusting to uncertain, complex and fast-changing business environments is crucial for operating successful businesses. Proactive approaches and swift policy responses require Agility—the ability to adapt quickly to an emerging situation or a sudden change in stakeholder expectations.

At its Urus SUV factory in Sant’Agata Bolognese, Lamborghini has adopted several elements of Industry 4.0. The automaker’s approach centres on the concept of flexibility, and makes it possible to intervene at each workstation with extreme ease whenever steps need to be added or eliminated. This has resulted in a boost to production and sales numbers.

Although boldness and agility can elevate a business’s ability to tackle and adapt to disruptive technologies and changes, these imperatives must be tempered as hasty decisions can run a business aground. The third key imperative, therefore, is Sagacity: the combination of wisdom and keen business insight, which will help a leader to avoid pitfalls and unnecessary risk in rapidly evolving business situations.

The next imperative for Leadership 4.0—Inclusiveness—is particularly important for millennials, who espouse to the new age philosophy of working together than taking orders. Inclusive and collaborative leadership model is now the preferred choice over the hierarchical leadership model. According to a survey by Deloitte, 51 percent of the respondents rated “C-suite collaboration” as very important—making it the most important issue in the survey. Through inclusive and collaborative leadership, managers and executives can create a cooperative and conducive environment—energizing team members, unleashing their creativity and cultivating a happy and productive work culture. Diverse workspaces of the future will demand a renewed focus on inclusivity to achieve greater innovation and collaborative outcomes.

Communication is at the heart of the interconnectedness of Industry 4.0. By raising speed, efficiency, and smartness of execution, this interconnectedness can be a dramatic force for the good. Communication, therefore, is one of the key imperatives for Leadership 4.0. A good 4.0 leader must be able to communicate a clear vision in a complex environment.

Advanced technologies can have complex societal and ethical implications that require business leaders to make difficult decisions about how to use these tools responsibly. Proactive communication within the organisation will be key to success. Employees that are apprehensive about potential obsolescence and layoffs need a clear roadmap in order to be prepared for, and involved in the changes that Industry 4.0 will bring.

Furthermore, the digital era has ushered in a flood of misinformation and fake news. An oft-repeated idiom refers to a lie travelling halfway around the world, while the truth puts on its boots. Therefore, a core imperative for a 4.0 leader is the ability to spot fake news that can adversely affect the organisation or its stakeholders, and to counter it swiftly. The fight against fake news must move beyond boardroom laments, and into the shop floors and locker rooms of organizations.

The BASIC framework offers a sustainable model for leaders who are at the forefront of managing rapid transformation in the wake of Industry 4.0. It can help leaders address genuine concerns and apprehensions of employees, build future-ready organizations and tackle emerging business challenges. Above all, we believe it is a model that helps keep people at the heart of decision-making.