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101: 1,2,3… Here comes the 4th Industrial Revolution

Digital Pulse looks at the Fourth Industrial Revolution: what is it, where did it come from and why should business take note? Here’s what we know so far.

Most of us remember studying the industrial revolution in school. Apart from true history buffs, it’s fair to say that most of us have gone about our lives with a fairly rudimentary knowledge of the industrial change that came about in the 1700s and left it at that.

But now that the fourth industrial revolution is around the corner, understanding it and its historical predecessors is key to solving the challenges facing society.

With that in mind, here’s a primer to get you up to speed.

Industrial Revolution I, II and III – Steam, Electricity and Digital

The First Industrial Revolution was about coal, water and steam, bringing with it the steam engine and innovations that enabled the large scale manufacturing of goods and products, such as textiles. Its impact on civilisation was immense. No longer centered around villages, farming and the local crafting of goods, people flocked to cities to work in factories under low wages and in terrible conditions.

The Second Industrial Revolution came about with the invention of electricity and enabled mass production (think production lines). Dating from the late 1800s to early 1900s, from this phase emerged the internal combustion engine, and thus the automobile. The period was marked with an increased use of steel and eventually petroleum, and the harnessing of electric current. It allowed much of the progress of the first industrial revolution to move beyond cities and achieve scale across countries and continents.

The Third Industrial Revolution was all about computers. From the 1950s onwards, computers and digital systems enabled new ways of processing and sharing information. Transistors, microprocessors, robotics and automation – not to mention the internet and mass communications – would eventually allow for the ultimate in scale: globalisation.

The cyber revolution

Which brings us to the Fourth Industrial Revolution, also referred to as Industry 4.0 or 4IR. According to the World Economic Forum which coined the phrase, it is one of “cyber-physical systems” – that is, the merging of the capabilities of both human and machine.1 This is the era of artificial intelligence, genome editing, biometrics, renewable energy, 3D printing, autonomous vehicles and the Internet of Things.

In essence, it can be seen as a doubling down on revolutions one to three. Instead of technology being a thing we use, and which changes us, it will now be truly embedded into our lives – and our bodies – to affect great change. There is an argument that this is just an extension of the third revolution, but in many ways the speed and intent with which emergent technology is changing can be said to distinguish it from the adoption of computer technology.

Pros and cons of 4.0

This is also where the drama comes in. The Fourth Industrial Revolution is one that has people particularly worried. There is an exponential speed of innovation at which humans, used to a linear progression of life, find hard to comprehend. One minute we struggled to keep Tamagotchis ‘alive’, now, robots are (not really) taking over our jobs. It seems like a ridiculous leap.

As the WEF points out however, “while the Fourth Industrial Revolution may look and feel like an exogenous force with the power of a tsunami, […] in reality, it is a reflection of our desires and choices.” Navigated wisely, the Fourth will bring us smart cities that reduce poverty and enhance standards of living, sustainable energy sources, environmental protection, more inclusive government process, social cohesiveness and collaboration, and make us healthier.

But while there will be benefits when it comes to the connection of people, the efficiency of businesses and ability of government, there are of course also risks. Professor Klaus Schwab, founder and executive chairman of the WEF, argues that the shifts in power brought about by such human-technological systems could also also bring about issues of inequality (who gets the benefits of what tech), security (everything will be connected) as well as challenges to the very nature of identity (privacy) and community (global vs local).

What does this mean for business?

It’s too early to say how all of this change will play out in the long term, but in the short term it’s likely that there will be gains to be made in the reduction of costs – for goods, services, transportation, communication and so on. Business will become smarter and more effective and the economy will benefit.2 For AI alone, PwC predicts a boost to the global economy of $15.7 trillion by 2030.

For organisations, this means an increase in the rate of disruption. Traditional value chains, already threatened, will continue to face rearrangement. Companies will need to be agile and innovative, and able to pivot quickly. A strong sense of business vision will be necessary to evaluate opportunities and challenges as they flow rapidly in. The ability to capitalise on data or play in the platform economy will enable business to disrupt before being disrupted.

And that, of course, is before even considering the changes that will continue to be brought about by consumers themselves.

As a recent article in strategy+business puts it, however, while 4IR poses a real risk for companies who fail to transform to an integrated digital world, those that do will benefit greatly. “Companies can use this new shared smart infrastructure to make their manufacturing and logistics more efficient, to offer innovative products and services, and to keep improving their production on the fly, responding in unprecedented ways to customer and consumer demand.”

Stop the world, I want to get off?

From in the midst of this change, it can seem incredibly daunting. There’s no denying that all four industrial revolutions have affected great transformation. Standards of living have waxed and waned, how and where we work has changed, and the things we value as consumers have moved from quality to availability and through to available-quality.

It’s understandable that executives could feel overwhelmed when wondering how to steer their organisations through such turbulence. With strategic work to align tech with vision, forward planning for inevitable change and resilience to guard against the unexpected, businesses will be able to come out on top. Those that prepare now and develop agile ways of addressing transformation will likely lead the way and benefit from doing so.

Vive la revolution, we say.


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