Since Prometheus stole the fire of knowledge from right under the noses of the gods on Mount Olympus and bestowed it upon mankind, humans have not stopped fiddling with it and creating striking innovations all throughout their evolution.
Over the course of history, mankind has perfected its industry by not only relying on technical evolution but also by reinventing it as new resources have created new technical means. Therefore, industry has benefited from qualitative advancements which have sometimes been so ingrained in a certain time period and have had such an overwhelming impact that we have dubbed them “revolutions”. Lets take a quick look back in time at these first three industrial revolutions to define the contours of a fourth revolution which is taking shape right before our very eyes.
THE FIRST INDUSTRIAL REVOLUTION – 1765
Following a slow period of proto-industrialization, this first revolution spans from the end of the 18th century to the beginning of the 19th century. It witnessed the emergence of mechanization, a process that replaced agriculture with industry as the foundations of the economic structure of society. Mass extraction of coal along with the invention of the steam engine created a new type of energy that thrusted forward all processes thanks to the development of railroads and the acceleration of economic, human and material exchanges. Other major inventions such as forging and new know-how in metal shaping gradually drew up the blueprints for the first factories and cities as we know them today.
THE SECOND INDUSTRIAL REVOLUTION – 1870
Nearly a century later at the end of the 19th century, new technological advancements initiated the emergence of a new source of energy: electricity, gas and oil. As a result, the development of the combustion engine set out to use these new resources to their full potential. Furthermore, the steel industry began to develop and grow alongside the exponential demands for steel. Chemical synthesis also developed to bring us synthetic fabric, dyes and fertilizer. Methods of communication were also revolutionized with the invention of the telegraph and the telephone and so were transportation methods with the emergence of the automobile and the plane at the beginning of the 20th century. All these inventions were made possible by centralizing research and capital structured around an economic and industrial model based on new “large factories” and the organizational models of production as envisioned by Taylor and Ford.
THE THIRD INDUSTRIAL REVOLUTION – 1969
Nearly a century later, in the second half of the 20th century, a third industrial revolution appeared with the emergence of a new type of energy whose potential surpassed its predecessors: nuclear energy. This revolution witnessed the rise of electronics—with the transistor and microprocessor—but also the rise of telecommunications and computers. This new technology led to the production of miniaturized material which would open doors, most notably to space research and biotechnology. For industry, this revolution gave rise to the era of high-level automation in production thanks to two major inventions: automatons—programmable logic controllers (PLCs)—and robots.
The first industrial revolution used water and steam to mechanize production, the second used electric energy to create mass production and the third used electronics and information technology to automate production. Today a fourth industrial revolution is underway which builds upon the third revolution and the digital revolution that has been taking place since the middle of the last century. This fourth revolution with exponential expansion is characterized by merging technology that blurs the lines between the physical, digital and biological spheres to completely uproot industries all over the world. The extent and depth of these changes are a sign of transformations to entire production, management and governance systems.
INDUSTRY 4.0
Here we are…the fourth revolution is unfolding before our eyes. Its genesis is situated at the dawn of the third millennium with the emergence of the Internet. This is the first industrial revolution rooted in a new technological phenomenon—digitalization—rather than in the emergence of a new type of energy. This digitalization enables us to build a new virtual world from which we can steer the physical world.
The industry of today and tomorrow aim to connect all production means to enable their interaction in real time. Factories 4.0 make communication among the different players and connected objects in a production line possible thanks to technology such as Cloud, Big Data Analytics and the Industrial Internet of Things.
The applications for the industrial sector are already enormous: predictive maintenance, improved decision-making in real time, anticipating inventory based on production, improved coordination among jobs, etc. Day after day, all these improvements are gradually optimizing production tools and revealing endless possibilities for the future of industry 4.0, the crossroads for an interconnected global system.
However, this fourth industrial revolution could be the first to deviate from the energy-greed trend—in terms of nonrenewable resources—because we have been integrating more and more possibilities to power our production processes with alternative resources. Tomorrow, factories 4.0 will be embedded in smart cities and powered by wind, sun and geothermal energy.
The changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril.
This move is not motivated by altruism. It makes business sense. Current technology trends are turning IT from a capital expenditure to an operating one—thus positioning your company at the heart of the new optimisation services enabled by connectivity is a great way to deliver increased value to customers while simultaneously generating new revenue sources. Additionally, it helps establish long-lasting relationships with both suppliers and customers. In fact, 68% of CEOs see data and analytics technologies as generating the greatest returns in stakeholder engagement, according to a global survey released last week at Davos by PricewaterhouseCoopers.
With technology and now innovation playing such important roles, access to talent becomes key to maintaining a competitive edge. Innovative hiring strategies will help, of course, so will the need for companies to develop and nurture an ecosystem of innovation around them. To deliver, such ecosystems must include suppliers and customers—also third-party providers and, sometimes, competitors.
The result is a move to more open forms of innovation and collaboration, but such move will require cultural change. The key question, is “how do you make sure that everybody [in the company] feels that there is a real revolution going on?”
Leadership from the top is obviously necessary, but it’s not sufficient. One of the reasons, is the concern that some employees might have over what their company’s digital transformation means for their work and for their job security. This technological revolution has inherently within it the capacity to transform fundamentally the way work is performed. Not just the number of jobs but the way the work is undertaken.
There is no easy answer. For instance, in the same way that some new jobs will inevitably be created, others are bound to disappear. We have technologies that are really good at doing routine work now—both physical and intellectual. Jobs that relied on these routines are not coming back.
Overall, however, the civil and business communities are quite optimistic about the job-creation potential of the fourth industrial revolution. According to GE’s 2016 innovation barometer, a global innovation survey of 2,748 business executives and 1,346 members of the informed public, just 17% of executives and 15% of informed civil society members believe that the digital revolution will have a negative impact on employment. This is a stunning result that flies in the face of all the scaremongering articles telling us that innovation will destroy jobs.
There is now a much greater understanding that the industry of the future is one where humans and machines will work side by side, and that this will result in more and better jobs.
Reforming education to ensure that the existing workforce is retrained and the upcoming one is properly skilled will be an important priority in the short term. Attention still needs to be paid to the distributive aspects of the fourth industrial revolution and the need to ensure that the increased value-generation arising from technology helps mitigate income inequality, not strengthen it.
In the longer term, governments will also have to adjust their systems to reflect the way digitisation is affecting how we work. The recent series of actions against sharing economy giants like Uber or Airbnb, for example, are clear signs that our regulatory systems have not yet fully absorbed the disruptions brought about by these new business models. Going forward, the rise of the so-called gig economy will also force governments to rethink how services that are essential to a developed economy, such as healthcare or pension schemes, are financed. The traditional mechanism for delivering those kinds of benefits has been through employer contracts. Well, those employer contracts are a reducing share of the workforce, so we have to start to think about this now.
For companies and governments alike, therefore, a key task will be to define the ethical values that will guide this new phase of industrial revolution. After all, progress does not come from the technical advances we achieve or the innovations we create—it comes from what we make of them.
Within this context of profound technological and societal changes—because the two always go hand in hand during industrial revolutions—which is taking us towards global digitalization.
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