Mastering the Fourth Industrial Revolution by the E-E-E Approach

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Raveena Mital's picture

It is not surprising that the hot theme in this year’s WEF is “Mastering the Fourth Industrial Revolution.” After all, we are at the brink of metamorphosis, turning from a digitization focused Third Revolution, to a cyber-centric fourth one, where everything will have a virtual existence. It is a time wherein humans will learn to walk hand-in-hand with robotic beings and deal across oceans without having to move a finger. Such a massive change brings with it both opportunities and drawbacks. Hence, as strong leaders we have to be mindful of this double-edged sword and create avenues that foster our communities to benefit from the advantages of evolution and overcome its challenges. For this, I recommend adopting the E-E-E approach: Educate, Empower and Extend.

 

Educate

As discussed in the WEF, this revolution brings massive technological innovation that will create lasting miracles of efficiency and productivity from a business standpoint.[i] Non-value adding costs such as transportation of goods will become nil and communication across various channels will become possible. The cost of trading will be diminished. Although these factors favor economic growth, they can hamper the labor market. There will be a drastic change in demand for the skill-sets required by employees because simple tasks will be automated by technology. This has already spread into many industries. For example, the job of a traditional bookkeeping accountant has been replaced by computer software that can categorize, calculate and analyze heaps of data.[ii] Why would employers then want to retain workers for tasks for which they can get done through turnkey software? Does that mean the end of accountancy as a profession? Certainly not. As academics point out, what this really signals is a shift towards the role of accountants, from simply handling the books, to actually developing a strategic management role in company affairs.[iii] Accountants have to develop soft skills such as leadership, effective communication, sound analysis of non-financial matters and learn how to package their ideas into a sound strategy that they can convince the top executives to adopt. Their job now is not only to learn the technicalities behind the balance sheet, but also understand its impact for the company and the various stakeholders. Similar logic holds for other professions. Because the mechanical processes are now becoming automated, it is high time that businesses begin to educate their employees on-the-job of the new skills they should adopt- those skills, which cannot be replaced by a robot. Instead of firing low-skill-low-paid workers, the focus should be on educating them to acquire the new skills. This way, this huge segment of the world’s population can also benefit from the Fourth revolution without having to lose their jobs. Yes, this concept does require companies to invest funds into their staff training programs; however, such an investment has a positive NPV because ultimately it is the companies themselves that can benefit from the skilled workers they produce.

 

This idea has also been embraced in practice by many firms such as Credit Suisse, Ernst & Young, Deutsche Bank etc. They readily provide intensive training programs for their entry-level staff in the “Graduate Program” where the chosen few have the privilege of learning more about the company and the types of programs/software/activities it runs, while on the job. This type of training is more effective than simply having candidates learn from textbooks in schools and universities as such learning does not specifically tell them how to develop the skills sets a certain company wants; how to learn those programs that are adopted in a certain company. Therefore the responsibility is on each company itself to train its employees based on its needs and then have them retained in the company. Such programs should not just be limited to the entry-level joiners or developed markets but should expand in every place/position the company has existence.

 

Empower

This second “E” relates very much to the first one. When you educate an employee to possess certain skills that cannot be automated, it is also important you empower him/her to then apply those skills in practice. After all, it is robots that can be controlled, not humans. If ultimately businesses fail to delegate duties to their professionals, they will never be able to host new ideas and points of view.

 

But empowerment is not just limited to employees. WEF has discussed that this new revolution will favor those who can provide intellectual capital or supply something new into the market; everyone else will lose out.[iv] In order to prevent this disparity from happening between individuals who win in this situation and those who don’t, the focus of the governments and various communities should be to help empower those people who host great talent but have no means to bring their ideas into the market. Both financial and non-financial support should be provided to such people: from giving them sound guidance on how to develop their idea into a business plan to helping them acquire sufficient capital to start operations. India has adopted a similar strategy by taking further Modi’s “Startup India” scheme where citizens with exuberant business ideas/plans will be rewarded by turning their thoughts into running projects.[v] Modi has promised to support all kinds of businesses- big or small- in this scheme, and provide tax benefits to young entrepreneurs. Whilst the budding talent will benefit from this support, India will in turn progress rapidly by the new ideas it puts up into world markets, which are already expanding thanks to globalization. So all in all, such a strategy will put many at a benefit, preventing this revolution from simply being a zero-sum game.

 

Extend

The final “E” here applies to protect people against one of the major dangers of the upcoming revolution: loss of privacy. In order to overcome individuals from losing their identities and information to the cyber world, governments, businesses, schools, hospitals and various other stakeholders have to “extend” their security measures to the brim. They have to extend laws relating to data protection and privacy in order to make sure peoples’ confidential information online or in intranets is not leaked or misused by unauthorized users without consent. This does not simply apply to existing clients or users. Companies, universities and hospitals are also required to protect the data of their ex employees/students/patients as well. Currently strict legislation exists to protect information exchanged between lawyers and clients (legal professional privilege) but this should be extended to cover a wide variety of people.

 

Moreover, it is also time that individuals themselves extend their security measures to protect their information too. Social networking sites have been developed to help people link with their friends and families without geographic and monetary hurdles getting in the way. Over the Fourth revolution such online communication will only grow further. However, that does not mean people should use that platform to make “new friends” with unknown people online, especially because it cannot be determined who is sitting behind that artificially created profile picture. Often times such ignorant users end up being victimized in hideous crimes. One current example is of the 33-year-old IBM female employee who befriended an unknown man for 15 days on Facebook and invited him over to her flat; only to be killed and robbed on that fateful day.[vi] Clearly she was a well-educated woman, being employed in a MNC; however she did not extend her security measures enough. If people do not realize this soon enough, we may unfortunately have to hear many more such cases in the increasingly cyber-centric Fourth revolution. Figure 1 below illustrates the three-way relationship between the E-E-E approach.

 

Take-Away

Summing up, I believe the WEF’s discussion on the Fourth Revolution is very relevant as this is an inevitable evolution on the global agenda. Instead of thinking through why it’s happening, we should spend more time on listing its opportunities and threats for all the different stakeholders. We should be mindful of the varied impact this change will have on different individuals. Then we should take the E-E-E approach to help everyone reap the benefits of this revolution to a great extent and mitigate the negative impacts as far best as possible.

 

 

 

 

 

 

 

[i] Klaus Schwab, The Fourth Industrial Revolution: what it means, how to respond, World Economic Forum,

 http://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-w... (January 27, 2016).

 

[ii] Jonathan Poston, Can Software Really Replace Accountants?, Accounting Web,

 http://www.accountingweb.com/technology/accounting-software/can-software... (January 15, 2016).

 

[iii] CPA Australia. (2015). Strategic Management Accounting. Australia: BPP Learning.

 

[v] Tech Desk, PM Modi’s Startup India launch: What startups have to say about the scheme, The Indian Express, http://indianexpress.com/article/technology/tech-news-technology/start-u... (January 18, 2016).

 

[vi] Express News Service, Bengaluru murder: IBM employee found strangulated with laptop charger, The Indian Express, http://indianexpress.com/article/cities/bangalore/software-engineer-foun... (January 21, 2016).

 

 

 

 

Bibliography

 

Arianna Huffington, The Fourth Industrial Meets the Sleep Revolution, The Huffington Post, http://www.huffingtonpost.com/entry/fourth-revolution-sleep-revolution_b... (January 27, 2016).

 

CPA Australia. (2015). Advanced Taxation. Australia: BPP Learning.

 

Featured Image, Bringing the Fourth Industrial Revolution to Life, PD&D, http://www.pddnet.com/news/2015/11/bringing-fourth-industrial-revolution... (January 31, 2016).

 

John Micklethwait & Adrian Wooldridge. (2015). The Fourth Revolution: The Global Race to Reinvent the State. UK: Penguin Books.

 

 

References: 

[1] Klaus Schwab, The Fourth Industrial Revolution: what it means, how to respond, World Economic Forum,

 http://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-w... (January 27, 2016).

 

[1] Jonathan Poston, Can Software Really Replace Accountants?, Accounting Web,

 http://www.accountingweb.com/technology/accounting-software/can-software... (January 15, 2016).

 

[1] CPA Australia. (2015). Strategic Management Accounting. Australia: BPP Learning.

 

[1] http://www.weforum.org/agenda/2016/01/the-fourth-industrial-revolution-w...

 

[1] Tech Desk, PM Modi’s Startup India launch: What startups have to say about the scheme, The Indian Express, http://indianexpress.com/article/technology/tech-news-technology/start-u... (January 18, 2016).

 

[1] Express News Service, Bengaluru murder: IBM employee found strangulated with laptop charger, The Indian Express, http://indianexpress.com/article/cities/bangalore/software-engineer-foun... (January 21, 2016).

 

 

 

 

Bibliography

 

Arianna Huffington, The Fourth Industrial Meets the Sleep Revolution, The Huffington Post, http://www.huffingtonpost.com/entry/fourth-revolution-sleep-revolution_b... (January 27, 2016).

 

CPA Australia. (2015). Advanced Taxation. Australia: BPP Learning.

 

Featured Image, Bringing the Fourth Industrial Revolution to Life, PD&D, http://www.pddnet.com/news/2015/11/bringing-fourth-industrial-revolution... (January 31, 2016).

 

John Micklethwait & Adrian Wooldridge. (2015). The Fourth Revolution: The Global Race to Reinvent the State. UK: Penguin Books.