#WEF: Understanding the Fourth Industrial Revolution
Nicholas Davis explores the evolution of the digital world and how it's fueled the economy.
WORLD ECONOMIC FORUM - As Professor Klaus Schwab has previously described, the world is in the early stages of the " Fourth Industrial Revolution", a fundamental shift in how we produce, consume and relate to one another, driven by the convergence of the physical world, the digital world and human beings ourselves.
It's such an important concept that we've dedicated our Annual Meeting in Davos next year to mastering its implications.
The world has seen major shifts of this scale before. The first industrial revolution took place in the 18th century, as mankind moved from relying on the power of animals to mechanized power, the second occurred in the late 19th and early 20th centuries when a host of breakthroughs set in motion systems of mass production and communication, and the third over the last half century as computers opened up the digital world.
Compared with these, the fourth industrial revolution is happening at a faster pace, and across a wider area. Crucially, we have the opportunity to discuss it while it's actually happening, allowing us to shape its opportunities and mitigate its risks.
We can't do that, however, if we remain locked in a way of thinking that stems from the previous revolutions.
Accordingly, here are five ways to view the fourth industrial revolution:
1. THE FOURTH INDUSTRIAL REVOLUTION AS THE NEXT BIG "WAVE" OF ECONOMIC ACTIVITY AND INNOVATION FOR GOOD. COULD IT END OUR ADDICTION TO FOSSIL FUELS?
Thanks to a dramatic increase in global mobile connectivity and the incorporation of sensors, robots and powerful data analytics across both manufacturing and service industries, we are seeing the emergence of technologies that have the power to drive a whole new cycle of global economic activity.
The growth this enables could be profound, but we are also faced with new or more intense worries compared with previous industrial revolutions, particularly with regard to how benefits are distributed, how externalities are managed and how to ensure that increasing productivity and efficiency does not result in deflationary pressure and mass unemployment.
If we can make the right choices at a collective level, the benefits of this wave could be profound not just for humans, but also for the environment, as James Chin Moody and Bianca Nogrady describe in "The Sixth Wave", for the first time mankind has the opportunity to use our enhanced ability to track materials and redesign production and consumption systems to create economies based on resource efficiencies rather than resource consumption, thereby transitioning humanity away from the reliance on fossil fuels that has characterised all previous industrial revolutions.
2. THE FOURTH INDUSTRIAL REVOLUTION AS THE CONVERGENCE OF DIGITAL, HUMAN AND PHYSICAL DOMAINS: WHAT HAPPENS WHEN SOFTWARE "EATS THE WORLD"?
Another way to frame the Fourth Industrial Revolution is to appreciate the extent to which new technologies are causing three previously separate domains to rapidly converge, in the process challenging the way we see the world.
The first domain is that of the third industrial revolution - the digital world, or perhaps more broadly, "the technosphere". Software has gone from a useful tool in the form of spreadsheets and analysis packages to, as Marc Andreesen put it, "eating the world".
The second domain is the natural and physical environments around us, about which we are gaining far more awareness and control thanks to the use of sensors and the expansion of "the internet of things" that is rapidly digitizing the physical world. Continuous feeds of data from billions of connected objects are giving us new ways to perceive and understand patterns in the physical world.
The third domain is us as human beings - the third industrial revolution began the process by which personal, interactive technologies became commonplace, and the fourth industrial revolution is giving the opportunities to truly merge and adapt our bodies with technology.
This convergence across the physical, digital and human worlds is being driven not just by new technologies, but also by the advent of platforms and systems that create the opportunity for more and more people to experiment with them.
A good example of this is the increasingly widespread ability to edit genes. The explosion in interest by researchers and entrepreneurs is due not only to the development of the CRISPR/Cas9 tool (far more effective and efficient than prior methods), but also thanks to the existence of global platforms for information sharing and the ability for RNA inputs and gene sequencing services to be purchased online. Such platforms make it far easier and more likely for what Andrew D. Maynard recently described as "fusing technologies" to have a transformative effect.
- THE FOURTH INDUSTRIAL REVOLUTION AS A DISRUPTOR OF EXISTING POWER STRUCTURES. THE QUESTION OF WHO GAINS AND WHO LOSES IS FAR FROM SETTLED.
"Power is everywhere: not that it engulfs everything, but that it comes from everywhere." ― Michel Foucault, History of Sexuality.
All industrial revolutions bring disruption - economic, political and social - and the fourth industrial revolution heralds significant changes for businesses, governments, media and civil society organisations which have dominated in recent decades.
One of the hallmarks of globalised, dematerialised markets is their tendency to grant outsized rewards to "stars", products, individuals or firms who through luck or special talent gain early and widespread attention at the expense of those less lucky or not quite as good. Meanwhile the very existence of global platforms to enable such distribution by lowering transaction costs also suggests huge gains for those who own the platforms and related infrastructure, creating new concerns for exacerbated inequality within countries.
A corresponding concern is inequality between countries. Here, both public policies and the current development stages of countries will have a huge impact on how gains are realised. As data and talent quickly become the highest-value inputs for organisations, cities all around the world can nurture local innovation ecosystems to rapidly take advantage of the new efficiencies enabled by the fourth industrial revolutions, and thereby meet the needs of citizens while producing sought-after products and services for global markets.
But just as possible, and indeed likely, are the continuation of pernicious "digital divides", exacerbated by public policies which inadvertently restrict open flows of data or people, creating innovation cul-de-sacs that can quickly fall far behind the frontier. And it is not clear that catching up to the innovation will be any easier in the world of the fourth industrial revolution. Many countries are still transitioning through previous industrial revolutions - what does a dramatic shift in global manufacturing thanks to robotization and 3D printing mean for India, where 47 percent of the population still works in the agriculture sector?
Another area that is being disrupted is the relative power between governments and citizens. The widespread use of digital communication, cryptography and public sensor networks (such as GPS and satellite imagery) has granted huge powers to citizens keen to hold governments to account, while global social media allows new movements to coalesce, organise and innovate alongside government to influence and even co-create public policy. However these same technologies are being used to oppress citizens and reduce the space for civic participation in many countries, often in the name of national security.
A critical question for the world in the fourth industrial revolution is therefore not whether or to whom power will shift, but rather to ensure that the inevitable shifts do not inadvertently create unmanageable inequality or critical security risks.
- THE FOURTH INDUSTRIAL REVOLUTION AS A RADICAL SHIFT IN THE FUTURE OF WORK, EDUCATION AND SKILLS. IT'S NOT MAN VERSUS MACHINE…
One of the most profound impacts of the fourth industrial revolution will be on what jobs people have and what skills they will need to succeed. Of course all industrial revolutions have shifted employment substantially - in the middle of the second industrial revolution in 1900, 41 perecent of the US labour force was employed in agriculture. This had dropped to 4 percent in 1970 as the third industrial revolution took off, and less than 2 percent today.
It shouldn't be too shocking that two Oxford researchers, Carl Benedikt Frey and Michael A Osborne, estimated that 47 percent of US jobs are at high risk from the changes underway in digitisation and automation. What is unprecedented in history is that this shift is anticipated over the next 20 years: a single generation rather than three or four, and impacts a far wider set of industries and workers.
Two sets of strategies seem reasonable in order to prepare ourselves and our children for these shifts.
The first is to invest in building and developing skills linked to science, technology and design so that we equip the world with people able to work alongside ever-smarter machines, thus being augmented rather than replaced by technology.
The second strategy is to focus more on those qualities that make us uniquely human rather than machines in particular traits such as empathy, inspiration, belonging, creativity and sensitivity. In this way we can reinforce and highlight essential sources of the value created by and within communities that is often completely overlooked in economic measurement the act of caring for one another.
- THE FOURTH INDUSTRIAL REVOLUTION AS THE TRIGGER FOR A NEW SET OF NORMS AROUND TECHNOLOGY AND HUMANITY. WE CHANGE TECHNOLOGY, TECHNOLOGY CHANGES US.
One last framework that might be useful in understanding the fourth industrial revolution starts from the perspective that technology is socially constructed and that the words we use to describe it matter. A lot.
The very word "revolution" itself, or other metaphors such as "waves", conjure images of an irrepressible, exogenous force that is out of our control and must be simply endured. It would be a shame for this to be the dominant narrative of the fourth industrial revolution.
The truth is that every day we, as individuals, members of families and communities and as citizens, make choices to adopt or use technologies in ways that influence aspects of the fourth industrial revolution. And those choices sometimes use the very power of converging technologies to highlight the need to reflect, pause and even abandon them.
This decision-making power is particularly concentrated in certain individuals and groups, including the companies that manage global digital platforms and governments that have the power to enable or block the development, commercialisation or adoption of emerging technologies. Yet the fact remains that the process of innovation and its diffusion is profoundly social, and driven by ethics and norms which are constantly in flux and to which we all contribute.
By being the first revolution where technology is in widespread ways penetrating our bodies, minds and even genomes in obvious ways, the Fourth Industrial Revolution confronts us with the realisation that we change technology and technology changes us. Such changes may be both fundamental and irreversible.
Thankfully, we are still at the beginning of this revolution and thus have the opportunity to discuss, debate and identify new norms and ethical principles to help guide us toward what Professor Schwab called "a new collective and moral consciousness based on a shared sense of destiny."
In order to achieve this we will need to work together across sectors, disciplines and organisations in new models of collaboration. As the International Organisation for Public-Private Cooperation, the World Economic Forum is invested in exploring drivers, impacts and opportunities to shape the trajectory of the fourth industrial revolution to truly "improve the state of the world". Nicholas Davis is the Head of Society and Innovation and Member of the Executive Committee at the World Economic Forum.
Nicholas Davis is the Head of Society and Innovation and Member of the Executive Committee at the World Economic Forum.
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