The Emergence of the Fourth Industrial Revolution

The first industrial revolution was powered by steam and railroads, the second by electricity, and the third with Digitation and Computers in the 1960s. However, Klaus Schwab, the founder and executive the World Economic forum believes that we are in a fourth distinct Industrial Revolution by providing four main reasons.

The first being the Velocity of the revolution. Progress is moving at an exponential rather than a linear pace and new technology is opening the door for even more capable technology.

The second reason is the Depth of the revolution. Multiple technologies are being combined creating shifts in economy, business, society, and individuality. It is not only changing the “what” and the “how” of doing things but also the “who” we are

The third reason being the systems impact of the revolution. Entire systems are being transformed across and within countries, companies, industry, and society. For example, Airbnb’s not only changed the travel industry but also opened opportunities for people to explore the world

Klaus’s intention for the book is to make aware what the fourth industrial revolution is, what it will bring, how it will impact us, and what can be done to harness it for the common good.

Klaus believes that understanding what it is is important because shaping the 4th industrial revolution to ensure it is empowering and human-centered rather than divisive and dehumanizing is essential in maintaining human sustainability.

In the 4th Industrial revolution, emerging technologies and broad-based innovation are diffusing faster and wider than previous revolutions hence the velocity. The hallmark of the 1st revolution, the spindle, took 120 years to spread out of Europe. It only the internet a decade to travel across the globe. Even when I did service work in Malawi, one of the poorest countries, children had access to cell phones yet not running water.

To put this in business terms, a unit of wealth is being created with less labor because digital businesses have marginal costs that trend towards zero. The role of capital and scaling business has been changed by this new revolution. Current heavyweights such as Instagram and WhatsApp did not require much funding to start up.

Artificial intelligence is also a distinct factor that sets this revolution apart. This progress is driven by an exponential increase in computing power and availability of data. Four years ago intelligent personal assistants such as Siri were just starting to emerge. However, now it is a standard on all smartphones whether it’d be Google, Apple, or Android.

Klaus then proceeds to define drivers of this revolution. What is pushing this revolution forward? Klaus outlines Megatrends that are the main drivers which all have one key feature in common, they leverage the pervasive power of digitation and information technology.

The First of these drivers are Physical drivers which includes, Autonomous vehicles, 3D printing, advanced robotics, and the creation of new materials.

The second of these drivers is the digital drive. Relationships between things and people that are made possible by connected technologies. Sensors and numerous other means of connecting things in the physical world to virtual networks are proliferating at a huge pace.

For example, RFID tags are allowing companies to track products throughout their entire supply chain process. This has increased the amount of data that can be analyzed essentially revolutionizing the supply chain industry. The digital world has also produced new approaches that revolutionize the way in which individuals and institutions engage and collaborate.

The third and last of the drivers are biological drivers. Progress has been achieved in reducing the cost and increasing the ease of gene sequencing. Klaus believes that synthetic biology is the next step in this revolution which is the ability to customize organisms by writing DNA. Many of our intractable health problems such as hereditary diseases have a genetic component which have the potential of being resolved with further innovation in this field.

Now that you know what digital transformation is, now it is time to understand how it will impact business and you. In regard to how it will impact the economy, Klaus focused on growth and employment. The 4th industrial revolution ushers in an era of accessibility for consumers, it has enabled many people to consume at a lower price. However, it has resulted in an era with great labor substitution. Many different categories of work have already been automated which creates the potential for a labor gap. Employment will grow in high-income cognitive and creative jobs while middle income routine and repetitive jobs would greatly diminish. It is very possible that in the future members of the workforce will have a portfolio of things to generate income.

On the business side of things there will be four major impacts. Customer expectations are shifting. With so many new innovations on the daily it is necessary for businesses to keep up. Products are also being enhanced with data to reach their maximum potential. New partnerships are being formed as companies learn the importance of collaboration and operating models are being transformed into new digital models.

However, I believe that the most important change of this revolution will be to the individual. The fourth industrial revolution will impact our identity. It will affect our sense of privacy, how we develop relationships, our health, and many more.