Mastering the Fourth Industrial Revolution

comments 0

Comment

share

Share

0

Rate

The first three industrial revolutionsbrought us machination, rail travel, the lightbulb, radio, automobiles, mass production and the modern personal computer[1]. By any standard, all have made telling contributions to human existence. The so-called Fourth Industrial Revolution certainly has a lot to live up to.

 

The good news is that it might just surpass everything that has gone before. Whereas possibilities for advancement in previous industrial revolutions were linear, this one, in some ways at least, allows exponential possibilities. What’s more, it will surely be a cleaner form of revolution, without many of the enormous externalities (the environmental damage of fuel consumption and inevitable waste in mass production) of its predecessors.

 

When the World Economic Forum held its Annual Meeting in 2016, its theme was ‘Mastering the Fourth Industrial Revolution,’[2] a theme well worth addressing. If time shows that we are in fact living in a form of industrial revolution, our actions now will dictate whether future generations look back with admiration or instead look back and wonder how we failed to grasp the size of the opportunity in front of us.

 

Grasping the opportunity

In 1843, the Scottish writer and historian, Thomas Carlyle wrote ‘Past and Present,’ a critique of 18th century British industrial society[3]. One of the chapters therein coined a phrase for business leaders at the time which we have used ever since: “Captains of Industry.” Carlyle’s praise for them was at least in part because he believed that their success would in turn drive the success of others.

 

The fourth industrial revolution makes everyone a potential captain of industry. One recent article[4] captured this quite accurately: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate.”

 

If it all sounds a little vacuous, the central point is not that Mark Zuckerburg’s innovation has contributed anything like what James Watt’s did, but rather how empowering digitalization is. And it’s not just digitization. The advent of 3D printing (“additive manufacturing”), turns mass production on its head. The capital that was once a factory floor or industrial plant now sits on your desktop awaiting your instructions.

 

Quantifying Progress

It’s somewhat ironic that in a time where we’ve gained an obsession with quantifying everything, tracking progress in this revolution isn’t always easy. Worse, it’s not always visible. The rapidly falling cost of technology is really only useful if that technology is causing an upturn in productivity. The Solow Paradox states that technological progress, if anything, has led to a slowdown in productivity growth across the board.[5]

 

This is not yet cause for alarm. In the 1980s, a noted British economist, Nicholas Craft, found that the first industrial revolution wasn’t accompanied by the high levels of productivity growth that had always been widely assumed[6]. As of yet, nobody has pinned down why modern-day technological changes aren’t leading to huge productivity gains. I would suggest, among other reasons for this, is a dash for short-term, faddish-yet-profitable ideas yielding negligible gains in productivity.

 

Peter Thiel describes this as: “because people are making such vast fortunes in software, we infer that this is the most valuable thing in the world being done full stop. So, if people at Twitter make billions of dollars, it must be that Twitter is worth far more than anything Einstein did.”[7] It’s critical if we are to master the Fourth Industrial Revolution that we aim for Einstein and not Twitter.

 

The Revolution will not be in 140 characters

There’s a real danger that the world is missing opportunities for real innovation by focusing on frivolities. One website[8] parodies this fascination we have of applying the potential of the Fourth Industrial Revolution to everyday items (broadly termed “the internet of things”), to make nothing of any real value-added. One of the better examples exhibited is cutlery that regulates your eating speed (naturally, using “big data”).

 

The example provides a salutary lesson: the Fourth Industrial Revolution can be a phenomenal success story in the history of mankind with advances everywhere from energy to medicine. But we’re not there yet, and the time that a talented engineer takes to develop something useless is time that could have been spent building the phenomenal success story. Perhaps we’ve been brought up in a time of incremental changes and as a result, we’re unaccustomed to going for the “moon shots.” As Carlyle stated in his chapter on Captains of Industry: “God knows it will be hard but no noble task was ever easy.”[9]

 


[1] The Economist (2014), “The third great wave.” Special Report: The World Economy, October 4th, 2014.

[2] WEF (2016) “What is the theme of Davos 2016.” WEF. Available online at: <http://www.weforum.org/events/world-economic-forum-annual-meeting-2016>

[3] Carlyle, T. (1843), “Past and Present.”

[4] Goodwin, T. (2015), “The battle is for the customer interface.” Tech Crunch, March 3rd, 2015. Available online at: <http://techcrunch.com/2015/03/03/in-the-age-of-disintermediation-the-bat...

[5] Solow, R. (1987), “We’d better watch out.” The New York Times, July 12th, 1981, p.12.

[6] Craft, N.F.R. (1986), “British Economic Growth during the Industrial Revolution.” Oxford Press.

[9] Carlyle, T. (1843), “Past and Present.”