It’s a basic expectation that leaders of technology, media and telecommunications (TMT) companies will keep an eye toward the future — watching for and anticipating change, as well as identifying opportunities to create it. Still, even when it’s obvious that change is imminent, many businesses fail to mount an appropriate and timely response that ensures that they can adapt.
The fear of not being able to respond effectively to change is reflected in the findings of the Executive Perspectives on Top Risks 2019 survey report from Protiviti and North Carolina State University’s ERM Initiative. For the third consecutive year, the following risk ranked first for firms in the TMT industry group: Rapid speed of disruptive innovations enabled by new and emerging technologies and/or other market forces may outpace our organization’s ability to compete and/or manage the risk appropriately without making significant changes to our business model.
With that finding in mind, here’s a look at three risks that leaders of these companies will want to keep in focus throughout 2019 as they remain vigilant about disruptive innovation and change. They will want to avoid underestimating the potential short- and long-term impacts of these risks on their organization as well as their industry.
Risk #1: The Speed of Emerging Technology
The pace of disruptive innovation has many business leaders concerned that their organizations will get left behind. It’s hard to truly appreciate just how rapidly many new technologies are emerging. The good news is that we already know which technologies are likely to cause the most disruption in the near term: artificial intelligence (AI), machine learning and robotics.
Of that group, AI deserves special attention. According to a global research study Protiviti sponsored and helped produce, Competing in the Cognitive Age, a “sizable majority of companies are fast-tracking AI applications and expecting to see significant gains in profitability, productivity, revenue and shareholder value in as little as two years.”
Evidence of that fast-tracking was evident at the consumer electronics trade show (CES) in Las Vegas earlier this year. AI was everywhere. It was frequently referred to as one of the key “ingredient technologies” that will be embedded into every product and service over the next decade. So, it’s a good bet that most TMT companies will be leveraging AI very soon, if not already. For many organizations, AI will be a core part of their future business strategy.
Risk #2: The Consolidation Trend
Corporate consolidation, especially among tech firms, is accelerating. Through mergers and acquisitions (M&A) deals, tech heavyweights (and some multimedia giants, too) are getting bigger and broadening their reach. Major players like Facebook, Google and Apple have been busy snapping up smaller competitors and other disruptive innovators, particularly promising AI startups. And new companies are positioning themselves as acquisition targets to take advantage of this trend.
Some observers suggest that the consolidation trend will cause the number of pure technology companies to shrink significantly over the next decade — and even more so in the decades to follow. At the very least, we’ll likely see the size and composition of many companies’ workforces changing dramatically over the next decade or so because of automation and AI.
The World Economic Forum’s Future of Jobs Report estimates, for example, that 75 million current job roles may be displaced by the shift in the division of labor between humans, machines and algorithms (although 133 million new job roles may emerge at the same time, according to the report). And leading AI expert Kai-Fu Lee, in a recent 60 Minutes interview, said he expects AI technology to be capable of displacing about 40 percent of the world’s jobs over the next 15 years.
All of these dynamics have leaders of TMT companies, large and small, pondering serious questions, including: Where will we fit into that future landscape? Will our organization even exist?
Risk #3: The Talent Crunch
The talent crunch in tech isn’t just about the lack of skilled talent available for hire. It’s also about retention challenges, including at the highest ranks of the organization. We’re seeing senior executives moving from traditional tech companies to startups. (A recent case in point: Intel’s chief strategy officer being named the chief executive of autonomous car startup Zoox.)
Business leaders are under pressure to build teams that will drive the organization forward and help it apply new technologies like AI and robotics — not an easy task in a tight labor market. And, as professionals, they need to keep their options open, looking for the right new player (or disruptor) they could potentially lead and help to grow.
Interconnected Risks — and Opportunities
The three risks outlined above are interconnected in that they all relate to change — which is unfolding at an unprecedented pace in both technology and business. TMT companies must be careful not to underestimate the importance of managing these risks proactively. Their ability to take advantage of new and disruptive technology, define their place in an evolving industry landscape, and cultivate and maintain a highly skilled and engaged workforce today may well dictate whether they exist tomorrow.
For more on this topic, including a discussion on how to address the three risks, read Protiviti’s POV: Three Risks for 2019 That Technology, Media and Telecommunications Companies Don’t Want to Underestimate.