By: David Harroch, Booking Ninjas
The 4th industrial revolution is building on the 3rd industrial evolution known as the digital revolution that has been occurring since the middle of the last century. It is described by a mixture of technologies that is hiding the lines between the physical, digital and biological spheres. Three reasons exist which show why today’s transformations represent not just an extension of the 3rd Industrial Revolution but rather the arrival of a fourth and distinct one which includes Velocity, Scope and Systems Impact.
The 4th Industrial Revolution indicates chains of social, political and economic disorders that will unfold over the 21st century. Building on the extensive availability of digital technologies that were the result of the 3rd industrial revolution, the 4th revolution will be propelled largely by the union of digital, biological and physical innovations. Like the 1st Industrial Revolution’s Steam-powered Factories, the 2nd Industrial Revolution’s application of science to mass production and manufacturing and the 3rd Industrial Revolution’s start into digitization, the 4th Industrial Revolution’s technologies, such as artificial intelligence, genome editing, augmented reality, robotics, and 3D printing are rapidly changing the way humans create, exchange and distribute value. As occurred in the previous revolutions, this will profoundly transform institutions, industries, and individuals.
More importantly, this revolution will be guided by the choices that people make today where the world in 50 to 100 years from now will owe a lot of its character to how we think about, invest in and deploy these powerful new technologies. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.
Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game—any of these can now be done remotely.
In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth.
At the same time, as the economists Erik Brynjolfsson and Andrew McAfee have pointed out, the revolution could yield greater inequality, particularly in its potential to disrupt labor markets. As automation substitutes for labor across the entire economy, the net displacement of workers by machines might exacerbate the gap between returns to capital and returns to labor. On the other hand, it is also possible that the displacement of workers by technology will, in the aggregate, result in a net increase in safe and rewarding jobs. We cannot foresee at this point which scenario is likely to emerge, and history suggests that the outcome is likely to be some combination of the two.
However, we’re convinced of one thing that in the future, talent, more than capital, will represent the critical factor of production. This will give rise to a job market increasingly segregated into “low-skill/low-pay” and “high-skill/high-pay” segments, which in turn will lead to an increase in social tensions.
In addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution. The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital the innovators, shareholders, and investors which explains the rising gap in wealth between those dependent on capital versus labor.
Technology is, therefore, one of the main reasons why incomes have stagnated, or even decreased, for a majority of the population in high-income countries: the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased. The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle. This helps explain why so many workers are disillusioned and fearful that their own real incomes and those of their children will continue to stagnate. It also helps explain why middle classes around the world are increasingly experiencing a pervasive sense of dissatisfaction and unfairness. A winner-takes-all economy that offers only limited access to the middle class is a recipe for democratic malaise and dereliction. Discontent can also be fueled by the pervasiveness of digital technologies and the dynamics of information sharing typified by social media. More than 30 percent of the global population now uses social media platforms to connect, learn, and share information. In an ideal world, these interactions would provide an opportunity for cross-cultural understanding and cohesion. However, they can also create and propagate unrealistic expectations as to what constitutes success for an individual or a group, as well as offer opportunities for extreme ideas and ideologies to spread.
An underlying theme in our conversations with global CEOs and senior business executives is that the acceleration of innovation and the velocity of disruption are hard to comprehend or anticipate and that these drivers constitute a source of constant surprise, even for the best connected and most well informed. Indeed, across all industries, there is clear evidence that the technologies that underpin the Fourth Industrial Revolution are having a major impact on businesses.
On the supply side, many industries are seeing the introduction of new technologies that create entirely new ways of serving existing needs and significantly disrupt existing industry value chains. Disruption is also flowing from agile, innovative competitors who, thanks to access to global digital platforms for research, development, marketing, sales, and distribution, can oust well-established incumbents faster than ever by improving the quality, speed, or price at which value is delivered. Major shifts on the demand side are also occurring, as growing transparency, consumer engagement, and new patterns of consumer behavior (increasingly built upon access to mobile networks and data) force companies to adapt the way they design, market, and deliver products and services.
A key trend is the development of technology-enabled platforms that combine both demand and supply to disrupt existing industry structures, such as those we see within the “sharing” or “on-demand” economy. These technology platforms rendered easy to use by the smartphone, convene people, assets, and data—thus creating entirely new ways of consuming goods and services in the process. In addition, they lower the barriers for businesses and individuals to create wealth, altering the personal and professional environments of workers. These new platform businesses are rapidly multiplying into many new services, ranging from laundry to shopping, from chores to parking, from massages to travel.
On the whole, there are four main effects that the Fourth Industrial Revolution has on business on customer expectations, on product enhancement, on collaborative innovation, and on organizational forms. Whether consumers or businesses, customers are increasingly at the epicenter of the economy, which is all about improving how customers are served. Physical products and services, moreover, can now be enhanced with digital capabilities that increase their value. New technologies make assets more durable and resilient, while data and analytics are transforming how they are maintained. A world of customer experiences, data-based services, and asset performance through analytics, meanwhile, requires new forms of collaboration, particularly given the speed at which innovation and disruption are taking place. And the emergence of global platforms and other new business models, finally, means that talent, culture, and organizational forms will have to be rethought.
Overall, the inexorable shift from simple digitization (the Third Industrial Revolution) to innovation based on combinations of technologies (the Fourth Industrial Revolution) is forcing companies to reexamine the way they do business. The bottom line, however, is the same: business leaders and senior executives need to understand their changing environment, challenge the assumptions of their operating teams, and relentlessly and continuously innovate.
The model that’s beginning to take form is a world where data is a resource of increasing supply thanks to large data providers, IoT devices, and the Internet. The data can be leveraged by AI algorithms that refine it and use it to take intelligent actions in the real world. These actions are facilitated by DLT technology that connects everything together, triggers the reconciling of trade, and records it all in a shared ledger. Once the networks are put in place, they run themselves and can ever grow smarter over time. This is the fourth industrial revolution.
The human economy is not going to disappear completely, but it’s safe to say that the autonomous economy is going to eat into it more and more each year. Robotics is going to displace manual labor and data-driven, AI-enabled smart contracts are going to replace intelligent labor, such as lawyers, accountants, third-party intermediaries, data entry positions, and insurance adjusters. It’s just the beginning too, as an immense amount of developers are likely to start flocking towards developing AI algorithms and smart contracts. The more people that get involved, the more velocity the movement picks up.
Booking Ninjas has a vision of leading the majority of the hospitality industry to the possibilities of the 4th industrial growth. They provide unique solutions to businesses who intend to take their property and customer management to the next level. Find more about them at https://www.bookingninjas.com
