'The Fourth Industrial Revolution: what it means, how to respond' - by Klaus Schwab Founder and Executive Chairman, World Economic Forum - Thursday 14 January 2016
[........."The Fourth Industrial Revolution,
finally, will change not only what we do but also who we are. It will affect
our identity and all the issues associated with it: our sense of privacy, our
notions of ownership, our consumption patterns, the time we devote to work and
leisure, and how we develop our careers, cultivate our skills, meet people, and
nurture relationships. It is already changing our health and leading to a
“quantified” self, and sooner than we think it may lead to human augmentation.
The list is endless because it is bound only by our imagination".......]
(see video at article link) https://www.weforum.org/…/the-fourth-industrial-revolution…/
"We stand on the brink of a technological revolution
that will fundamentally alter the way we live, work, and relate to one another.
In its scale, scope, and complexity, the transformation will be unlike anything
humankind has experienced before. We do not yet know just how it will unfold,
but one thing is clear: the response to it must be integrated and
comprehensive, involving all stakeholders of the global polity, from the public
and private sectors to academia and civil society.
The First Industrial Revolution used water and steam
power to mechanize production. The Second used electric power to create mass
production. The Third used electronics and information technology to automate
production. Now a Fourth Industrial Revolution is building on the Third, the
digital revolution that has been occurring since the middle of the last
century. It is characterized by a fusion of technologies that is blurring the
lines between the physical, digital, and biological spheres.
There are three reasons why today’s transformations
represent not merely a prolongation of the Third Industrial Revolution but
rather the arrival of a Fourth and distinct one: velocity, scope, and systems
impact. 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.
The possibilities of billions of people connected by
mobile devices, with unprecedented processing power, storage capacity, and
access to knowledge, are unlimited. And these possibilities will be multiplied
by emerging technology breakthroughs in fields such as artificial intelligence,
robotics, the Internet of Things, autonomous vehicles, 3-D printing,
nanotechnology, biotechnology, materials science, energy storage, and quantum
computing.
Already, artificial intelligence is all around us,
from self-driving cars and drones to virtual assistants and software that
translate or invest. Impressive progress has been made in AI in recent years,
driven by exponential increases in computing power and by the availability of
vast amounts of data, from software used to discover new drugs to algorithms
used to predict our cultural interests. Digital fabrication technologies,
meanwhile, are interacting with the biological world on a daily basis.
Engineers, designers, and architects are combining computational design, additive
manufacturing, materials engineering, and synthetic biology to pioneer a
symbiosis between microorganisms, our bodies, the products we consume, and even
the buildings we inhabit.
Challenges and opportunities
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 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, I am 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.
The impact on business
An underlying theme in my 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 impact on government
As the physical, digital, and biological worlds
continue to converge, new technologies and platforms will increasingly enable
citizens to engage with governments, voice their opinions, coordinate their
efforts, and even circumvent the supervision of public authorities.
Simultaneously, governments will gain new technological powers to increase
their control over populations, based on pervasive surveillance systems and the
ability to control digital infrastructure. On the whole, however, governments
will increasingly face pressure to change their current approach to public
engagement and policymaking, as their central role of conducting policy
diminishes owing to new sources of competition and the redistribution and
decentralization of power that new technologies make possible.
Ultimately, the ability of government systems and
public authorities to adapt will determine their survival. If they prove
capable of embracing a world of disruptive change, subjecting their structures
to the levels of transparency and efficiency that will enable them to maintain
their competitive edge, they will endure. If they cannot evolve, they will face
increasing trouble.
This will be particularly true in the realm of
regulation. Current systems of public policy and decision-making evolved
alongside the Second Industrial Revolution, when decision-makers had time to
study a specific issue and develop the necessary response or appropriate
regulatory framework. The whole process was designed to be linear and
mechanistic, following a strict “top down” approach.
But such an approach is no longer feasible. Given the
Fourth Industrial Revolution’s rapid pace of change and broad impacts,
legislators and regulators are being challenged to an unprecedented degree and
for the most part are proving unable to cope.
How, then, can they preserve the interest of the
consumers and the public at large while continuing to support innovation and
technological development? By embracing “agile” governance, just as the private
sector has increasingly adopted agile responses to software development and
business operations more generally. This means regulators must continuously
adapt to a new, fast-changing environment, reinventing themselves so they can
truly understand what it is they are regulating. To do so, governments and regulatory
agencies will need to collaborate closely with business and civil society.
The Fourth Industrial Revolution will also profoundly
impact the nature of national and international security, affecting both the
probability and the nature of conflict. The history of warfare and
international security is the history of technological innovation, and today is
no exception. Modern conflicts involving states are increasingly “hybrid” in
nature, combining traditional battlefield techniques with elements previously
associated with nonstate actors. The distinction between war and peace,
combatant and noncombatant, and even violence and nonviolence (think
cyberwarfare) is becoming uncomfortably blurry.
As this process takes place and new technologies such
as autonomous or biological weapons become easier to use, individuals and small
groups will increasingly join states in being capable of causing mass harm.
This new vulnerability will lead to new fears. But at the same time, advances
in technology will create the potential to reduce the scale or impact of
violence, through the development of new modes of protection, for example, or
greater precision in targeting.
The impact on people
The Fourth Industrial Revolution, finally, will change
not only what we do but also who we are. It will affect our identity and all
the issues associated with it: our sense of privacy, our notions of ownership,
our consumption patterns, the time we devote to work and leisure, and how we
develop our careers, cultivate our skills, meet people, and nurture
relationships. It is already changing our health and leading to a “quantified”
self, and sooner than we think it may lead to human augmentation. The list is
endless because it is bound only by our imagination.
I am a great enthusiast and early adopter of
technology, but sometimes I wonder whether the inexorable integration of
technology in our lives could diminish some of our quintessential human
capacities, such as compassion and cooperation. Our relationship with our
smartphones is a case in point. Constant connection may deprive us of one of
life’s most important assets: the time to pause, reflect, and engage in
meaningful conversation.
One of the greatest individual challenges posed by new
information technologies is privacy. We instinctively understand why it is so
essential, yet the tracking and sharing of information about us is a crucial
part of the new connectivity. Debates about fundamental issues such as the
impact on our inner lives of the loss of control over our data will only
intensify in the years ahead. Similarly, the revolutions occurring in
biotechnology and AI, which are redefining what it means to be human by pushing
back the current thresholds of life span, health, cognition, and capabilities,
will compel us to redefine our moral and ethical boundaries.
Shaping the future
Neither technology nor the disruption that comes with
it is an exogenous force over which humans have no control. All of us are
responsible for guiding its evolution, in the decisions we make on a daily
basis as citizens, consumers, and investors. We should thus grasp the
opportunity and power we have to shape the Fourth Industrial Revolution and
direct it toward a future that reflects our common objectives and values.
To do this, however, we must develop a comprehensive
and globally shared view of how technology is affecting our lives and reshaping
our economic, social, cultural, and human environments. There has never been a
time of greater promise, or one of greater potential peril. Today’s decision-makers,
however, are too often trapped in traditional, linear thinking, or too absorbed
by the multiple crises demanding their attention, to think strategically about
the forces of disruption and innovation shaping our future.
In the end, it all comes down to people and values. We
need to shape a future that works for all of us by putting people first and
empowering them. In its most pessimistic, dehumanized form, the Fourth
Industrial Revolution may indeed have the potential to “robotize” humanity and
thus to deprive us of our heart and soul. But as a complement to the best parts
of human nature—creativity, empathy, stewardship—it can also lift humanity into
a new collective and moral consciousness based on a shared sense of destiny. It
is incumbent on us all to make sure the latter prevails".
This article was first published in Foreign Affairs
Author: Klaus Schwab is Founder and Executive Chairman
of the World Economic Forum
Image: An Aeronavics drone sits in a paddock near the
town of Raglan, New Zealand, July 6, 2015. REUTERS/Naomi Tajitsu
