Re-engineering the Enterprise: How Seismic Changes Are Shaping the Business of Tomorrow

Published by Invisible Technologies, Invisible Technologies on March 18, 2024

overview

Executive Summary

Ben Plummer, CEO of Invisible Technologies, asserts that markets and businesses are on the brink of a monumental transformation, unrivaled since the beginning of the Information Age. He says three pivotal forces - advancements in artificial intelligence (AI), the evolution of global talent markets, and changing competitive dynamics - are redefining the business landscape.

According to Plummer, a rising cost of capital is shifting focus from growth-at-all-costs to operational efficiency and profitability. This recalibration is crucial as businesses aim for growth amidst a moderating macroeconomic climate and increased competition, demanding precision in strategic decision-making with little room for error.

In response to the shifting talent landscape, the most dynamic companies are navigating this new environment by embracing the convergence of global talent markets and advancements in AI. This strategic realignment enables them to outpace competitors with superior solutions and cut fixed costs significantly.

However, the swift evolution of AI presents a formidable challenge; most companies find themselves unprepared, lacking the talent or understanding necessary to harness this technology effectively. Organizations that delay or resist incorporating AI into their strategic frameworks are at a significant disadvantage, risking irrelevance as they persist with antiquated practices in an age where AI's capabilities are expanding soundlessly.

Plummer's insights underscore the necessity for re-engineering the enterprise, urging businesses to fundamentally reassess their strategies, structures, and operations amidst these converging trends. The future of business, as depicted by Plummer, is one where AI and human collaboration enable strategic agility and operational efficiency. This necessitates a profound transformation in the approach to business leadership and management.

By acting now, businesses can secure a competitive advantage in a swiftly changing global marketplace and unlock unprecedented opportunities for growth and innovation. Those who embrace this transformation stand to gain significantly, while those who delay may be irreversibly left behind.


“Businesses and the markets in which they operate are about to undergo a drastic transformation, the scale of which hasn’t been seen since the beginning of the Information Age," says Ben Plummer, Chief Executive Officer of Invisible Technologies.

The CEO argues that three major trends are converging to redefine how companies are built and structured and revolutionize the very nature of work itself.

“There is a lot of talk about how AI will transform business organizations over the next few years, but even many of the wildest forecasts often underestimate just how much things will change,” he explains.

“That’s because the rise of AI isn’t unfolding in a vacuum. It’s occurring alongside significant shifts in global workforce dynamics and under the complicating backdrop of fluctuating economic conditions. These changes are not just influencing companies' strategies from growth at all costs to a focus on efficiency; they're actually constraining their ability to adapt and respond effectively,” Plummer notes.

“While economic conditions may ebb and flow, imposing necessary adjustments, the advancement of AI and the transformation of the workforce represent enduring trends reshaping businesses and workplaces.”

“From startups to multinational enterprises, business leaders who seize this moment to fundamentally reinvent their methods of value creation will unlock unprecedented opportunities, often in places least expected. Those who persist with outdated approaches risk not just falling behind, but facing irrelevance in a rapidly evolving market.”

Moving from Growth At All Costs to Efficiency and Profitability

The first trend Plummer notes is the impact that capital market trends are having on the broader economic landscape, with the past 15 years characterized by cheap and freely available capital, which companies could draw on to expand.

“Companies operated under unprecedented conditions, many frequently remaining unprofitable for over a decade as they pursued aggressive growth and market dominance,” Plummer says. “They took the view that, if the product was good, the returns would eventually come.”

This mentality allowed many of today’s leading companies to flourish. One such example is Tesla, now one of the world's most valuable companies, which recorded annual losses from its founding in 2003 until achieving profitability in 2020.

The innovators of the late 2010s and early 2020s, on their path to IPOs, were also allowed a level of capital inefficiency that wasn’t necessarily given to their forebears. Google’s journey to a market capitalization of over $1.7 trillion by March 2024, from just $26.1 million raised over three funding rounds, showcases remarkable capital efficiency and strategic foresight.

On the other hand, Uber’s narrative before its 2019 IPO paints a starkly different picture. Despite raising $24.2 billion, Uber’s share price had declined by almost a third by year's end as it burned through capital on aggressive expansions and investments like autonomous vehicles and food delivery.

Plummer argues the era of prioritizing growth over profitability has ended, influenced by economic uncertainty, higher interest rates, and competitive pressures. Today, investors value cash flow and sustainability, reflecting a strategic pivot in the business landscape.

“It’s no longer a case of growth at all costs for many investors,” he says. “There is much greater emphasis on efficiency and profitability.”

However, efficiency is not the only critical factor; agility has become equally vital. The ability to pivot rapidly, adapt to market changes, and innovate with speed is now a cornerstone of modern business strategy. This applies to both startups and established enterprises, which now must navigate rapidly changing market conditions, technological advancements, and shifting consumer expectations with unprecedented speed.

“More than just competing, if companies want to win, they increasingly need to prove that they’re not just lean and capital efficient, but also capable of agile adaptation and innovation,” Plummer adds. This need for agility and the demand for efficiency creates a dual challenge for many organizations.

“This isn’t a muscle that’s well developed in many organizations,” Plummer notes, highlighting a gap that complicates navigating the multitude of existing challenges businesses face today.

Global Labor Market Disruption

As capital becomes more challenging to access, Plummer highlights a concurrent global labor market disruption driven by technological advancements, the COVID-19 pandemic, and evolving employment expectations.

This goes beyond mere remote work; it is fundamentally altering how businesses access global talent, accelerated by the pandemic's push for digital work practices and a collective reevaluation of work-life priorities.

“The pandemic mandated a digital-first strategy for work across the board,” Plummer says. “This significant, though often superficial, shift towards digital, coupled with the rush to return employees to offices post-pandemic, missed the deeper, lasting opportunity towards a more flexible, fractional work model.”

The gig economy’s surge and the move towards contract and freelance work reflect this move. Platforms like Freelancer and Fiverr have dramatically changed traditional employment models. Between 2020 and 2022 alone, the number of freelancers in the United States grew 69.1% from 38.2 million to 64.6 million, making up 38% of the US workforce. This highlights a significant move towards the fractionalization of talent, emphasizing the value of autonomy and flexibility for professionals.

“There is a whole class of skilled professionals leaving their employers to sell their skills and work on their terms,” he says.

“In doing so, they’re often leaving their employers short of the best in-house talent, but they’re giving themselves autonomy, flexibility, and work/life balance while performing work that aligns with personal interests and values.”

This evolution signifies a change in workforce engagement’s very architecture, moving towards a more agile project-oriented business model.

“Today’s dynamic workplaces are not defined by physical spaces but by the talent itself,” Plummer notes. “They harness digital tools to seamlessly integrate remote employees, skilled and specialist freelancers, and AI into high-performing teams.”

Plummer underscores the emergence of a new global talent class as a pivotal advantage for forward-looking companies. This evolution allows businesses to tap into a global marketplace of on-call labor, enabling access to specific skills on demand and circumventing the limitations of a permanent workforce.

This strategy benefits companies, offers access to top talent, cost-effectiveness, agility, flexibility, speed, and scalability, and benefits individuals by providing flexibility, variety, autonomy, and competitive pay.

Plummer emphasizes, “This approach significantly cuts fixed labor costs and improves operational outcomes. Companies can now dynamically adjust their labor costs, scaling operations up or down as the market dictates.”

“Companies are now generating higher financial returns with a workforce that is both smaller and more technologically adept,” Plummer notes. “The productivity of a single modern worker can match that of multiple workers from previous decades.”

The Limits of 20th-Century Solutions for 21st-Century Problems

Plummer observes that, despite these profound changes reshaping the workplace, most enterprise leaders still tend to be run by outmoded management models. He cites a 2020 HBR article that noted that, despite the ‘cult of leadership’ becoming prominent in business, new management practices are virtually non-existent.

“These challenges have become more acute in recent years,” Plummer explains, “as we see business leaders still implementing practices that pre-date the internet, or even computers, in a digital native economy.”

“When you zoom out, there hasn’t really been a major evolution in the practices around how businesses operate since World War II,” he adds. “The foundational management practices many businesses operate on today represent a bygone era where work was predominantly manual and centralized in factories or similar settings.”

“Even the trends that we saw in the 1990s, such as outsourcing and downsizing, didn’t really change how enterprises were organized; they just made them slightly leaner, often at the expense of agility and quality.”

“So what we’re really seeing is these new conditions emerging to shake up companies, while at the same time managers are trying to solve the challenge by using ‘command and control’ theories that were developed in the industrial age.”

As evidence of this, he notes that labor productivity actually surged during the pandemic after years of sluggish or even negative growth. People tended to achieve more when working from home, often in fewer hours. Yet, the first instinct of most businesses when the world returned to normalcy was to recall employees into the office.

“It’s like many managers missed all the important learnings that should have been obvious from the past four years,” he observes.

“As a result, there is a growing disconnect between what many managers see as the ideal and the reality of what people now expect. Those that realize this are in a strong position to capitalize on it.”

The AI Mindset Shift

When introduced against this backdrop, the most talked-about trend - AI - takes on a whole new relevance.

Plummer observes that Large Language Models (LLMs) that operate within apps like ChatGPT are already augmenting some workers’ skills, helping make them more productive and efficient. However, he also observes that many enterprises have not taken advantage of AI to anything like its full extent.

“To date, there has been a significant discrepancy between consumer AI adoption and enterprise AI adoption, with many enterprises still scrambling to work out how AI will benefit them,” he says.

“They often know they’re going to have to do something, but they don’t know what, or - if they have an idea on what they want to do - they don’t even know where to get started,” Plummer observes.

He suggests the challenge extends beyond mere familiarity with the technology. “Many companies struggle because they’re not just unfamiliar with AI; it’s that the pace and complexity of AI evolution make it hard to grasp and integrate effectively,” he clarifies.

“Furthermore, there's a common misconception about AI being primarily a tool for generating responses to queries, as that’s the extent of their personal use. This narrow view overlooks AI's broader potential to transform business operations,” Plummer points out.

Plummer argues for a deeper, more strategic approach: recognizing AI as more than just an instant fix. It demands a comprehensive reevaluation of how businesses operate and envision their future.

“Adopting AI successfully means weaving it thoughtfully into the fabric of how a company functions. This isn’t about replacing old tools with new; it's about reimagining the very way we do business.”

“Re-Engineering” the Enterprise

Plummer argues there is far more to succeeding in this new paradigm than simply capitalizing on today’s globalized and decentralized labor market or implementing AI to make some processes more efficient. Instead, what’s required is a ‘re-engineering of the enterprise’ from the ground up.

“Companies need to move away from thinking about capability acquisition, hiring, procurement, and software development as separate issues and start thinking about them in an integrated way,” he says.

“This means getting to the core of what they actually do, what differentiates them from their competitors, and how they create value.”

As part of this process, Plummer says every enterprise should meticulously evaluate the elements that drive their outcomes. That includes assessing whether tasks are optimally performed by humans or AI and considering the balance between in-house employees and outsourced talent. When they do, he believes they’ll conclude most tasks are best performed by a combination of the two.

“AI is not automation in the traditional sense; it’s a dynamic tool that evolves over time and, in doing so, enhances human capabilities. That means organizations won’t always be able to slot AI neatly into how they work now. Instead, they’ll have to rethink and re-engineer their workflows.”

“We’re likely to see that the future workplace is not about AI replacing humans but more about AI and humans working together to create hybrid solutions that better deliver on a company’s value proposition.”

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