Digital transformation is a topic that has gained focus in the business world over the last two decades. Since 2010s SMAC technologies (social, mobile, analytics, and cloud) have accelerated digital operations of businesses globally, as well as helping organizations to achieve maximum reach and closeness to consumers at minimal overhead costs. The explosion of structured and unstructured data created through global adoption and use of online channels, mobile devices, sensors and wearable technologies, connected devices, and social media, has created new business opportunities built on the basis of customer-generated data. While each of the SMAC technologies brings value and impact to businesses individually, the convergence of these technologies has created a disruptive force that has transformed the global business landscape.

As the influence of digital has increased, organizations have initiated digital transformation initiatives in an effort to leverage technology solutions to generate business returns and satisfy evolving consumer demands. With the exception of several digital leaders, most organizations across industries initiated digital transformation efforts that focused on implementing technology solutions within limited functional or market-facing areas of the business. Before 2020, digital business transformation existed for organizations as “nice to have” or “on the radar of” strategic initiatives. Although most businesses recognized the sizeable shifts that were occurring in response to digital, technological, cultural, and social factors, there was still a lack of urgency and prioritization for organization-wide transformation. Before the coronavirus pandemic, digital implementations were in reaction to specific events or needs, experienced within isolated parts of the organization.

The pandemic brought digital business transformation to the forefront of corporate strategy and the global business landscape due to the rapid acceleration in digital channel adoption for communication and acquisition. As physical lockdowns became the new normal, companies and consumers increasingly adopted digital solutions, providing and purchasing more goods and services online than ever before in the history of modern commerce. Organizations across the world rapidly shifted towards interacting with customers through digital channels, creating digital or digitally enhanced offerings, as well as overall digitization of the core internal operations (McKinsey 2020). Many organizations implemented these changes 20 to 25 times faster than expected, driven by business continuity requirements. In some cases, companies were able to implement digital solutions 40 times faster, for example in switching to remote working environments. The pandemic triggered existential challenges for most organizations, forcing business leaders to reconsider digital transformation as a top priority.

Although it may seem like a new buzz word, digital transformation has had a few waves of impact in the past. In 1948, MIT Professor Emeritus Claude E. Shannon wrote the landmark A Mathematical Theory of Communication (Shannon 1948). Shannon paved the way for modern digital communications with a revolutionary idea that the information content of a message consists simply of the number of 1s and 0s it takes to transmit it. This idea was gradually adopted by communications engineers, leading to the information age of today. A decade later, two critical technologies, viewed in the context of Shannon's publication, propelled the Internet into existence: the microchip and semiconductor transistor, technologies that are still commonly used today. What followed was a revolution—the ARPANET (abbreviation for Advanced Research Projects Agency Network, an experimental computer network that was the forerunner of the Internet), personal computers, and the World Wide Web propelled the enablement of analog computing to go digital.

These developments laid the foundation for digital transformation of the business world in the late 1990s, and then again in the mid-2000s when the SMAC technologies arrived. The internet boom hit in the 1990s with a bang, accelerating business ideas based on the new technology of that time. The technology developments conceived in the 1980s took flight in the e-business wave of the 90s with the rise of the Internet. I remember the sudden surge of interest that led to the hype phase in the late 1990s, when people came out of the woodwork to be part of the internet gold rush.

Hundreds of “dot-com” companies were started, and everyone wanted to invest in them. This caused valuations to shoot up and crazy ideas that crazy ideas that lacked concrete business models or a realistic chance of success were viewed as the next big thing. As millions of people decided to go online virtually overnight, companies like AOL expanded rapidly. The growth rate of technology investments averaged 24% each year from 1995 to 2000, largely in tech-to-automate solutions to create in-house efficiencies that led to better bottom line results.

Much of the current technology era of digital transformation feels similar to the late 1990s. A major drawback of digital transformation in the 1990s and 2000s was the focus on the needs of the company and was driven by operational efficiencies. The needs of the customer, or rather customer value proposition for technology implementation, were secondary. These initiatives were mainly led by IT project teams and handled through one-way dialogue by change management and training teams.

Just like in the 1990s, we are seeing many Fortune 500 companies devote significant resources, time, and investments to digitalization of business. However, a major difference to the earlier waves of digital transformation is that customers have now entered the equation in a significant way.

As described in a recent study of over 12,000 consumers worldwide (Salesforce 2020), it has become apparent that customers today have more access to information and less incentive to be loyal, and are firmly in control of their relationships with companies and brands. As the generations of digital natives grow, consumers are demanding more personalized products and services, as well as smooth interactions across multiple channels and touchpoints. Positive experiences are embraced while negative experiences spread like wildfire across online and social media channels. The same study found that 57% of customers stopped buying from a company because a competitor offered a better experience. The rise of the “cancel culture,” a modern form of snubbing, and lower switching costs have made business leaders sit up and take notice of the digital power of consumers, forcing them to embrace the digital transformation.

Global spending on the digital business transformation has accelerated and is forecast to reach $2.8 trillion in 2025, more than double the amount allocated in 2020 (IDC 2021), as companies prioritize organization-wide change for people, processes, technology, data, and governance.

Many companies are still tackling digital business transformation of today in a similar way to the dot-com era of the 1990s, with a company-centric and tech-first approach. However, sustainable success in digital business transformation requires organization-wide change and a new mindset that is ready to embrace it. Digitally enabled businesses create superior customer experiences that seamlessly close the gaps between digital and physical touchpoints. Both companies and individuals need to be able to accept and thrive in the new reality to fully benefit from the possibilities of the digital world.

This point was further emphasized during my conversation with Didier Bonnet, globally recognized thought leader on digital transformation and a Professor of Strategy & Innovation at IMD Business School. Didier pioneered the concept of digital transformation over a decade ago and is an author of the best-selling book Leading Digital, described as the “source code” for understanding the DNA of successful digital transformation. During our conversation, Didier indicated that organizations tended to spend 80% of the focus on digital and 20% on the transformation in their digital business transformation efforts. It should be the opposite, where a higher focus is placed on organization and people transformation enabled by digital technologies. As the global coronavirus pandemic hit, companies quickly deployed and adopted collaboration and productivity tools to enable business continuity. In the past, Didier had observed companies spending months in their attempts to train and engage employees in the use of productivity tools. I shared a similar experience several years ago when I led the charge to implement Yammer for employee communications at one of the Big Four consulting firms.

In addition, Didier highlights that the role of middle managers in particular has shifted in the business environment, where team structures are flattening and agile approaches are increasingly being utilized. The role of middle managers has shifted from leading and directing teams to enabling and shaping capabilities from the background. Managers with content knowledge are thriving in the workplace, where there is a shift of value contribution to people with high content knowledge or those with high sensitivity to the people side of business. He advises companies to use the pandemic as an opportunity to really re-think work and the business landscape. For example, as we move into the post-Covid norm, many organizations are still taking a command and control approach to discussing working models, i.e., number of days in the office or adoption of productivity platforms. This output mentality reveals short-term thinking, and few companies are truly diving deeper into the real value of work, how it is done, and whether there are better ways to structure the company and working models to create greater value in business.

This is an opportunity to innovate and shift a structure that we have set up since the start of modern business times. According to Didier, more companies, when considering the future, think about the next generation of technologies such as AI, blockchain, and robotics. But the focus should be on innovating organizations and working models to create a new basis for tapping into the people elements and generating productivity at work. People need to start re-thinking organizational innovation, taking the pandemic as an incredible global experiment, drawing lessons from the way people have responded to the pandemic and the change in mindset that it has triggered.

In the pre-Covid landscape, companies were concerned about robots and AI taking over and people losing jobs. Didier counters this, believing that existing jobs will change and phase out, while new jobs and related tasks will be created. Organizations need to address this shift, to ensure their workforce is sufficiently prepared and upskilled to thrive in this new digital environment. For example, over the past decade, there has been a significant acceleration in automation of factories and manufacturing facilities. This has not eliminated the need for human skills, but rather resulted in increasing automation of tasks within job functions although not automating the role in full. We need to focus on getting people comfortable working with technologies and understanding algorithms, enabling more intelligent working environments.

Critical Success Factors for Sustainable Digital Business Transformation

Digital business transformation is a fundamental change of an organization's culture, operations, and ecosystem by leveraging technology to create value. A common misconception is that digital transformation is rooted in technology or disruption. On the contrary, it is about transforming value creation, capture, and delivery of the business through the intelligent use of people, process, and technology solutions. Over the past two decades, I have led numerous business and digital transformation initiatives. As part of this work, I have experienced critical challenges and opportunities created by the change efforts, as well as how to successfully navigate the complexities of uncertainty, internal politics, skepticism, and fear.

In order for organizations to jumpstart their digital business transformation efforts, several critical success factors are required to help make the case for change, earn support, and initiate the steps that lead to successful transformation.

• Purpose    The starting point is an integrated strategy with clear digital business transformation goals, where the why, what, and how of the strategy are clearly described and linked to quantifiable business outcomes. The transformation should describe meaningful change that aligns with the purpose of the organization and the values embedded in the culture and people. The purpose plays a critical role in bringing stakeholders together, collectively moving towards a common direction. Chapter 4 explores the purpose-driven organization and related approach in more detail.
• Customer    The customer is at the core of any organization. In today's environment, the behaviors and preferences of customers are evolving rapidly. In the last decade, mobile devices, global connectivity, and online platforms have given rise to connected consumers, who are demanding new levels of interaction with all brands. They seek hyper-personalized interactions, instantaneous responses, predictive products and services, as well as frictionless engagement across all channels. Digitally enabled businesses have been able to tap into these new requirements, further accelerating the shifts in consumers.

  In this crowded digital environment, companies truly struggle to stand out. Consumers are shifting away from product-based interactions, demanding more meaningful experience-focused interactions across channels and touchpoints. Digital business transformation initiatives help organizations expand reach, engage on deeper levels, as well as scale personalized interactions at minimum cost. In reality, this involves proactively shifting repetitive actions and interactions in the customer journey to the background with automation, and prioritizing creating impactful experiences.

  These experiences—moments of truth—require a laser focus on the wants and needs of current and future customers, ensuring technology adoption delivers valuable business outcomes. “Moments of truth” are defined as moments when a customer or user interacts with your brand, product, or service to form or change an impression about your company. Focus on finding micro-moments where the organization can engage with customers to further solidify the relationship and create lasting impressions.

  Digital and online channels provide a great way to engage with customers. Today, other great digital solutions are easy to implement. For example, there are numerous AI-based virtual assistants and chatbots in the market today that are cost-effective and have never been so easy to implement but which create a big impact when implemented well. These enable companies to supplement customer engagement and fill the breaks in the customer journey with value-added interactions.

• Process    Any transformation in the organization is supported and driven by changes to the business process landscape and operational infrastructure. New elements in the organization, whether they involve a technology solution implementation, shift in digital products and services, or even digital revenue stream, will involve process changes to scale and deliver sufficient business outcomes. This will include related policy changes, as well as effective monitoring of progress around processes and outcomes, with sufficient data availability and quality.

  Digital business transformation requires organizations to go beyond improvement exercises to redesigning the process landscape through optimization, digitization, and automation. Reengineering focuses on completely changing the process for an overall different result, as opposed to incremental improvement that tweaks an existing process to optimize it.

• Technology    Identifying and implementing fit-for-purpose technology solutions that create a modern architecture driven by business needs is another critical success factor for transformation. Sustainable digital business transformation will depend on creating this environment—one that is secure, scalable, deploys and adopts changes rapidly, and is able to seamlessly interact with a range of solutions. Technology is an enabler for digital business transformation, and in many cases the trigger for change as new solutions and capabilities allow organizations to create and deliver value faster and at lower cost.

  Organizations will need to reevaluate their technology architecture, including tools, applications, and platforms, to determine the effectiveness of the existing digital strategy. Additionally, it is critical to explore and make the best use of new and emerging technology solutions that are impacting the business and industry. The aim is to understand how these impact the current business operations and performance while exploring potential new opportunities.

  Business leaders will face the challenge of where to focus efforts, investments, and resources—transforming the existing landscape or implementing new solutions. This situation, referred to as dual transformation, requires consideration and tough decision-making. Chapter 7 provides guidance on how to manage this environment of dual transformation.

• Data & Insights    Transformation in an organization is guided by the data and often involves analyzing structured and unstructured data from a variety of sources to gain rapid insights. Organizations will be able to use these insights to determine key focus areas and strategic priorities, as well as opportunities that will guide the development and implementation of the digital business transformation efforts. In the current digital market, there is an abundance of data from various sources, including users, platforms, and devices. The combination of data and technology can help organizations review and streamline experiences across customer journeys, as well as optimize internal operations.

  Emerging technology solutions also offer a new range of data sources that can add greater value to the business. For example, the explosion of Internet of Things (IoT) applications across industries is generating a plethora of real-time data from humans and machines alike. These provide an unprecedented level of granularity and detail that, when utilized appropriately, allow organizations to respond to customer needs rapidly and even anticipate new needs. As implementation of automation and digitization initiatives start to generate additional data and information about operations, processes, customers, and market offerings, these should be utilized for continuous improvement within the transformation journey.

• People    At the core of digital business transformation are people. Leadership alignment, accountability and ownership, execution team capabilities and skills, as well as employees’ buy-in and commitment all play a critical role in the transformation journey. The type of leadership and culture required can be described as agile and adaptable, one that is purpose-driven and gives people the space to explore, fail fast, and learn quickly. In addition, high-caliber teams involved in the transformation process should have a clear understanding of the business ecosystem, consumer needs, and technology capabilities. Leaders need to set a vision and work cross-functionally to enable the transformation team to cut across preexisting organizational boundaries to deploy better solutions.

The Human Factor: Making or Breaking Digital Transformation

In the early 2000s, while working as a consultant for one of the Big Four firms, I was assigned to one of the largest projects in the company—SAP implementation for a telecommunications client. The management consulting industry was in its prime and it was a prestigious position to hold. I was proud to be part of this large project team and passionate about delivering good work to the client. The project team spent long hours and late nights preparing for the implementation of the finance and controlling modules of the SAP Enterprise Resource Planning (SAP ERP) system.

The project began successfully enough, as we mapped the existing process landscape and scoped the transition to the new system. The existing environment at the time consisted of mostly manual, human-led processes and a patchwork of rudimentary systems, including Microsoft Excel, that enabled the flow of complex work for the company. The IT transformation project was complex in itself and the project team was divided into process, technology, and data workstreams, as we focused on understanding the process landscape, technology infrastructure, and business requirements. Once the existing processes were mapped and new processes defined, we initiated the data migration and pilot implementation phases.

To the surprise of the project team, as well as the client company management team, the project resulted in longer hours and more intensive work. A core element of the business case for the SAP ERP system investment focused on increasing efficiency and productivity. A major pain point for the company was the heterogeneous data due to disparate system landscapes that make period closing a very labor-intensive and costly process requiring manual reconciliation efforts to integrate general ledgers to sub-ledgers, causing unnecessary process delays.

The new SAP ERP system promised a single integrated solution that provided a streamlined workflow and unified view of financial data and management reporting, as well as removing the need for reconciliation of multiple manual ledgers. The system had delivered on this. However, the number of hours required to execute the process in the company increased dramatically.

The project team resorted to conducting a step-through investigation of the system to identify potential bottlenecks, errors in the workflow, or migration issues. After an effort-intensive investigation period, the issue was finally uncovered—people! The client teams working with the SAP ERP system were not sold on the new solution and did not trust that it would deliver to their requirements. In essence, they did not want to change the way they were working and felt that their original workflows and systems they had put together delivered the business requirements. As a result, they continued with the existing environment, including large Microsoft Excel sheets and manual processes in the background, while reserving time at the end of the day to enter required data into the new system. This created a shadow organization that resulted in the increase of time and effort reported.

The project team had planned for success across every part of the project, but neglected to consider the most important element that could make or break the final implementation—the human factor. Digital business transformation essentially involves change, and an essential success factor is to be able to convince users to adopt, embrace, and advocate for the change that is being implemented.

As a conclusion, I am happy to share that the consulting project initiated a communication and change management workstream that prioritized gaining buy-in from the wider client organization teams. In addition to a communication plan, we conducted project roadshows across all functional units in the organization and in-depth training sessions for users of the new system. We also identified project champions from various business units to help advocate for the new solution and respond to questions, queries, and uncertainties that the employees might have regarding the new implementation.

The result: by the time the final module implementation was complete, we had developed a community of users and supporters throughout the organization that helped drive the successful implementation of the system.

This experience is not unique as I am convinced that many technology and transformation leaders have had similar experiences in their journey to implement change in an organization. Even to this day, with my focus squarely on digital business transformation and emerging technology implementation, I often encounter the “amygdala response.”

The “Amygdala Response”

The amygdala is an almond-shaped structure in the brain. It is involved in processing emotions. Early humans developed a fight-or-flight response to deal with threats and dangers. This is an automatic response to danger, and it allows people to react quickly, without the need to think. The amygdala is the part of the brain responsible for this reaction. When a person feels stressed or afraid, the amygdala releases stress hormones that prepare the body to fight the threat or flee from the danger. Common emotions that trigger this response include fear, anger, anxiety, and a feeling of loss of control.

The term “amygdala response” has been propagated in the business context in the book Exponential Organizations (Ismail 2014) to describe how organizations reject change. An organization can be likened to a living organism that functions to survive within its environment. As with the human body, organizations have an immune system as well, which organically develops out of systems, procedures, and mindsets that work together to remain in the comfort zone of past successes and keeps the system alive and running smoothly in the status quo. Just like the human body, an organization's immune system can also become hyperactive. The organization's immune system will go into overdrive to attack and disarm any new element or change that threatens the status quo, irrespective of whether this is a threat, disruption, or innovative opportunity. When this happens, there is a high chance of missing out on new market opportunities transforming the industry.

In the book, Ismail references the amygdala response as a major barrier to successful implementation of transformation and a critical need to address it early. For example, Walmart attempted to introduce e-commerce four times in order to compete with Amazon, but each time the immune system played a key role in preventing progress. The time and resources spent by Walmart during those four attempts were significant, by which point Amazon had grown beyond the point where Walmart would ever be able to catch up. Ismail indicates that it takes around three years for a C-suite to come around to a new idea—but in today's environment, companies do not have the luxury to wait around for this long before moving forward with transformation.

At the core of the amygdala challenge are people—board members and management teams that drive change; employees that adopt, embrace, and advocate for change; customers that trigger the change; as well as external stakeholders such as partners and suppliers that support the implementation of change. Understanding stakeholder motivations is a critical way to manage the amygdala response and drive sustainable digital business transformation. The next section explores the shifts in human behavior, their motivations, the role they play in transformation, and how to engage with them for success.

Shifts in Human Behavior

In the early 1900s, the Industrial Revolution started to spread across the world and transformed economic, health, and transportation industries, which led to numerous inventions and firsts in history. This was a major turning point in the history of the world because the Industrial Revolution impacted almost every aspect of humanity. It marked the transition to new manufacturing processes as local economies shifted from an agricultural and handiwork economy to an industrial and machine-based economy.

The most significant shift that occurred during the Industrial Revolution was the impact on society and human behavior. Traditional ideas of Western civilization began to be replaced by radical new philosophical and economic ideas. The increasing reliance on science and technology of the time, the questioning of traditional agriculture methods, and the onset of profit-oriented market economies had triggered the Industrial Revolution and gave rise to new societal structures. This marked the origins of travel to work, where, for the first time since the Neolithic era, people started to work outside of their local environment, namely in factories or industrial sites.

Additionally, the Industrial Revolution marked a major change in the skills and capabilities required. In the agricultural era, physical and manual labor was dominant. A massive shift occurred as farm workers were reskilled to work with machines that needed to be fabricated or repaired. There were some short-term job losses, but different jobs were created that did not previously exist and new working models needed to be constructed to suit these new demands.

In many ways, these working models—rules of work and time schedules for common workers—set during the Industrial Revolution have been sustained for over 200 years into modern times. At first, factories needed to be tended to all the time, forcing employees to work between 10 and 16 hours a day. However, in 1926, the Ford Motor Company (founded by Henry Ford) made a ground-breaking change by being one of the first significant companies to change their work policy to 40-hour weeks with five working days, with no change in wages. This historic change marked the first step that soon inspired companies across the world to adopt the Monday–Friday workweek.

The working models of the Industrial Revolution have been largely maintained through the Second and Third Industrial Revolutions, although developments in skillsets, physical location of work, and enhancements in technology have rapidly shifted.

The Second Industrial Revolution, which occurred between 1870 and 1914, was a period of growth for existing industries and expansion of new ones, including steel, oil, and electricity. During this time, electric power was used to create mass production and major technological advances took place, including the telephone, light bulb, phonograph, and the internal combustion engine. With the transition from steam power to electricity, there were once again short-term job losses, but as steam mechanics reskilled to become electricians, more new jobs were created.

The Third Industrial Revolution, also known as the Digital Revolution, references the advancement of technology from analog electronic and mechanical devices to the digital technology available today. The Digital Revolution started in the 1980s, with technology advances including the personal computer, the Internet, and information and communications technology (ICT). Many jobs were then replaced by computers and robots, and computer literacy and related skillsets, for example software and hardware engineers, were in high demand. Once again, new jobs were created that previously did not exist.

Today, we are in the Fourth Industrial Revolution (see Figure 2.1), built on the foundation of the Digital Revolution, representing new ways in which technology becomes embedded within society, business, and our daily lives. The Fourth Industrial Revolution is marked by emerging technology breakthroughs in a number of fields, including robotics, artificial intelligence, nanotechnology, quantum computing, biotechnology, the IoT, decentralized consensus, 3D printing, and autonomous vehicles. The greatest aspiration of the Fourth Industrial Revolution is to improve the quality of life, reduce inequality of the world's population, and raise income levels. We will explore the human side of the top five disruptive technologies and their convergence, as well as the impact and applications for business in Chapter 8.

The impact of the Fourth Industrial Revolution is increasingly evident in the shift in skill requirements and working models across industries and companies. New digitally enabled companies are also implementing new working models that question the validity of Henry Ford's original 40-hour workweek, demonstrating that increasing autonomy could result in increased creativity and effectiveness in work output. In addition, the new generation of the workforce are wired differently from the workers of the previous industrial revolutions—they are motivated by a higher purpose, value, and quality of life, unlike previous generations that looked for security, stability, and consistency from employment. There are several key factors that have triggered the shifts in human behavior and motivations, now impacting the next industrial revolution.

Rapid Adoption of Digital Technologies

For decades, the rate of technology development, production, and adoption in the global market has been accelerating rapidly. A common illustration of this is the adoption rate comparison of the telephone, which took decades to reach 50% of households, and the cellphone, that took up to five years (see Figure 2.2). Technology innovations that were introduced more recently are being adopted more quickly. More than 50 years after the formulation of Moore's law—which holds that computing power doubles in capability every 18 to 24 months—mobile devices, sensors, AI, and robotics affect our lives more quickly and more pervasively than ever before.

The technology adoption life cycle is a description of customer behavior related to the acceptance of a new product or feature, which is often broken into innovators, early adopters, early majority, late majority, and laggards. Classical theory would suggest that the majority of customers could be the early majority and the late majority adopters.

While this rings true for Boomers and Gen Xers, the generations after these are characterized by increased levels of technical acumen, demonstrable by the ever-shortening times that pass between the introduction and full-scale adoption of new technologies. As such, the customer majority has shifted to early adopters and the difference between the late majority and laggards becomes insignificant.

In the current digital age, it is more than possible to achieve higher levels of market penetration for new technologies and innovations in shorter amounts of time. The speed of adoption also means that these technologies will lose their novelty and achieve mass adoption quicker, forcing innovators and companies to continuously improve and update to stay competitive, further driving the rate of technology development.

A 2017 study (Deloitte University Press 2017) highlights that business productivity has not kept pace with technological progress.

According to the study, the problem is rooted in the increasing gap between technological sophistication and rate of productivity in organizations. Essentially, organizations with low productivity quickly lose to competitors, and this comes down to how businesses organize, manage, develop, and align their people at work.

In the current digital world, people are fairly quick in adopting new digital technologies and innovative solutions. However, organizations are moving into the digital space and adopting technology solutions at a relatively slower pace, despite the fact that consumers and employees alike are demanding greater digital integration. The traditional functional areas of corporate planning, organizational structure, job design, performance measures, and management have not truly changed since the first industrial age. As illustrated in Figure 2.3, the curves demonstrate the need for organizations to adapt to technology and societal changes. Additionally, public policy relating to income, unemployment, immigration, taxes, and legislation, is developing at an even slower pace, resulting in further imbalances and challenges for businesses.

Future-of-work strategist Heather E. McGowan indicates that work–life balance will be one of constant adaptation, as highlighted in her most recent book, The Adaptation Advantage (McGowan and Shipley 2020). In it, McGowan describes the changes that rapid technology advancements are bringing to the business landscape and society in general. She also warns that each time human skills or capabilities are replaced by technology, for the sake of prioritizing efficiency and speed, we need to be cognizant of reskilling or upskilling ourselves to remain competitive and relevant in the workforce.

Technology is now deeply engrained in our daily lives, transforming almost every aspect of our personal and professional journey, soon even converging with our physical beings. Consider the rapid acceleration of human–machine integration and interfaces. For example, bio-printing human organs with the aim of manufacturing fully biocompatible human organs that will make organ transplants accessible to people around the world. Or even Elon Musk's Neuralink, aimed at implanting devices in paralyzed humans, allowing them to control phones or computers.

As automation takes on more significant roles in our daily lives, an increasing number of actions and decisions will be taken over by automation and autonomous technology. For example, the deployment of autonomous vehicles (AVs) is being explored in dense urban cities such as New York, San Francisco, Tel Aviv, London, and Beijing. Most of the current pilots are limited to expansive urban landscapes, like in Phoenix Arizona or the Bay Area (excluding San Francisco), that allow easier testing conditions, and the ability to cover longer mileage. However, suburban areas alone cannot maintain a profitable AV market due to limited demand and lower economic incentives. There is an urgent need for policy frameworks and legislation to enable the safe experimentation and development of the autonomous technology. Many industry experts agree that there is a need for defining ethical guardrails between society and autonomous technology.

As we progress deeper into the digital future, technology is becoming increasingly engrained in our psyche, embedding more deeply in our sense of value, purpose, and self.

Rise of the Gig Economy

There are an increasing number of people, in fact millions across the globe, who are assembling multiple income streams and supplementary independent work, rather than choosing to remain within a structured salaried job. The steady rise of the gig economy, an independent labor market that includes freelance work and limited or short-term contracts, has been evident across several industries such as transportation, accounting and finance, legal, IT, as well as professional advisory services. Based on a study conducted by Mastercard (Mastercard Thought Leadership 2020), the estimated wage disbursement volumes in the global gig economy are projected to grow to $298 billion by 2023. The study also indicated that a significant portion of the gig workforce was connected to customers and job opportunities by digital platforms, such as Uber, Upwork, Etsy, and Airbnb (see Figure 2.4).

The gig economy has been further accelerated by the coronavirus pandemic, although the impact has not been uniform across all industries. Low-touch sectors that have been able to maintain social distancing requirements, such as food and goods delivery, have undoubtedly experienced a surge in demand. Other sectors that require social proximity, like asset-sharing services, have declined in demand.

Additionally, there has been a progression from narrow skills to a diverse and highly skilled gig workforce. The gig economy was initially the focus of people with specific skills, such as technical developers, physical workers, or app-based skill offers such as Task Rabbit or Uber. However, as organizations worldwide faced headcount freezes and layoffs, there was an increase in demand for highly skilled remote and virtual workers. Not surprisingly, business and professional employment platform LinkedIn launched a dedicated search filter for remote jobs on their platform in a bid to cater to the rising demands of job seekers and companies alike.

The Mastercard study estimates that by 2023 total disbursements are expected to more than double to nearly $300 billion, while the number of gig workers will reach almost 80 million globally. This expected growth will be driven by accelerating adoption within relatively new gig sectors, traditional gig sectors expanding into new markets, and secular changes reshaping the way people choose to work and to live. If we delve deeper into the demographics of the independent workforces, there is significant diversity across the four segments (McKinsey Global Institute 2016), including free agents who proactively choose gig work as their main source of income; casual earners who choose gig work as their supplemental income; reluctants who prefer traditional jobs but make independent work as a primary income; and finally the strapped, who need gig work out of necessity to supplement their income (Figure 2.5).

Digital platforms and online channels have contributed significantly to the rise of the gig economy by creating efficient marketplaces that offer scale and facilitate direct matching to potential customers and independent work. Although payment service providers are still exploring how best to serve the gig workforce, the growth in this sector will continue and is further fueled by the interests and aspirations of the global workforce. As we further consider the generation shifts from the previous section, Millennials and Gen Zers are increasingly participating in the gig economy, and may prefer it to full-time employment in a more traditional office environment. This would offer several advantages including flexible work hours, improved work–life balance, and access to an alternative income stream to supplement their interests or personal goals.

As we move into the post-pandemic era, businesses are faced with the great resignation—a new challenge that reflects the millions of people around the world who are quitting their stable jobs voluntarily to re-assess their own personal journeys and purpose. The attrition rates increased from 10% in 2020, to over 20% in 2021 (Gartner 2021). In the United States alone, it is recorded that 47.4 million people left their jobs voluntarily in that same year (CNBC 2022). The pandemic triggered a shift in mindset, as people across the world faced existential questions and re-evaluate their priorities. Waking up to a situation that questions their sense of value and belonging in companies, many are choosing to leave situations that do not align with their needs. The availability of alternative income sources, such as gig work, has made this decision to leave full-time positions even easier. The mass exit has created a surplus of open positions that businesses need to fill, and has leadership teams in a scramble to retain their highly skilled employees.

Undoubtedly, the gig economy is increasingly becoming a fixed element in the global business landscape due to the tangible economic benefits derived, for example raising labor-force participation, alternative working models, increased innovation, crowdsourced skills and capabilities, opportunity for reduction of unemployment, and increased productivity. The ultimate outcome will be that individuals will seek to have more proactive control in managing their work and income sources, and the gig economy, coupled with platform technology, will truly enable this reshaping of the world of work.