BCG Henderson Institute

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Enterprises everywhere should take this adage to heart: “Those who do not learn from history are doomed to repeat it.” The digital age promises a transformation as profound as the Industrial Revolution — a period that also happened to impose poor working conditions, child labor, lowered life expectancies, and social unrest (even amid astounding economic growth).

One lesson learned from the Industrial Revolution is that technological innovation requires, in parallel, social innovation. A key component of a workplace transformation is building a powerful, mutual bond between the employees and the enterprise — and ignoring this essential element can have disastrous consequences. By directly addressing that bond and doing so during the early days of the latest digital technologies, such as artificial intelligence (AI) and machine learning, we have the opportunity to ward off threats and welcome instead an industrious revolution.

How? Through what we call a learning contract. The learning contract is designed to reinforce and enhance the modern enterprise-employee relationship. It requires employers and employees to commit to reskilling and upskilling for new roles — those performed today and those on the horizon — so that they are continually preparing for the next technological disruption in the workplace. Critical components of this new form of social contract, on both sides, include a continuous commitment, ability, and opportunity to learn.

This change in the skill imperative is vital: already, digital-age disruptions are upending the landscape of skills and education, and they will continue to do so. Many of the skills learned in traditional higher-education institutions are becoming irrelevant by the time employees reach their 30th birthday.

History instructs again: At the turn of the century, famed business thinker Peter Drucker predicted, “The only skill that will be important in the 21st century is the skill of learning new skills. Everything else will become obsolete over time.”

Companies are increasingly recognizing the survival-critical nature of learning. The issue needs to be on the CEO agenda. It’s time to redefine today’s employer-employee social contract by confronting digital disruption, using a learning contract to connect employees to learning opportunities, and reshaping roles within the organization to accommodate an intense focus on learning.

The Industrial Revolution was built on two core technologies, the steam engine and electricity, which forced a deskilling of the workforce by replacing the work of skilled tradespeople with the productivity of machines. In contrast, the technologies of the digital age — information and communications technologies and AI — will require higher levels of skill and creativity from the human workforce: a reskilling (to help people whose skills have become obsolete) and an upskilling (to build new skills required by the digital age).

Thus, for enterprises, surviving the digital age and the disruptions that accompany it requires access to a workforce with a suite of new skills and competencies. That critical access rests on their ability to build and retain talent — specifically, the ability to effectively encourage a workplace mindset and culture primed to continuously anticipate change and develop new skills accordingly.

And for employees, the reality is that digital-age workplaces need certain new skills and don’t need certain old ones; to be employable, people need to become proficient in new areas, gain the skills valued in the digital age, and learn how to learn. (Exhibit 1 shows how the learning contract will change the employee experience.)

All of this means that enterprises and their employees must enter into a covenant — the learning contract — for ongoing skill development so that business performance can improve, enterprises can continue to thrive in the digital age, and individuals can remain meaningfully employed.

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