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22-08-17 - Jules Lejeune, FINAT
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The 4th Industrial Revolution – Enabling the Smart Factory

In his book “The Fourth Industrial Revolution”, Founder and Executive Chairman Klaus Schwab of the World Economic Forum describes the technological mega forces behind the fundamental changes that will impact (if not already) the way we live, work, consume and produce (see also the video below).

The 4th industrial revolution, or Industry 4.0, is described as the current trend of automation and data exchange in manufacturing technologies.

But things like robotics, artificial intelligence (AI), the internet of things (IoT), cloud computing, 3D printing and nanotechnology not only enable what has been called a ‘smart factory’. As Professor Schwab argues, it is not only about connecting machines and systems via the internet. The simultaneous wave and merger of technology breakthroughs that will connect the physical, digital and biological domains has broader implications.

Deep shifts in technology

The book lists a series of ‘deep shifts’ that are likely go beyond the ‘tipping point’ and become (or are already becoming) reality in daily life within the next 5-10 years, such as:

  • Implantable technologies such as smart tattoos, smart dust, smart pills and other implantable smart functionalities.
  • Digital presence of individuals (the Facebook ‘population’ has now exceeded the populations of China or India, ‘twitter world’ is larger than the US or Europe).
  • Vision and wearables as the new interface, with smart glasses augmenting the reality as seen by your eyes, watches looking after your health and fitness; baby clothes as monitors.
  • Internet connectivity, smartphone computing power and data storage available as a commodity to over 90% of the world population. One Google search query nowadays equals the computing power used by the entire Apollo programme in the 1960s. The hard drive cost per Gigabyte dropped from US$ 1 mln in 1980 to US$ 0.10 in 2010.
  • Over 1 trillion Intelligent sensors connecting things like machine parts with the internet, for instance enabling smart maintenance of cars and machines (IoT).
  • Connected homes (remotely controlled appliances and devices are expected to exceed 50% of household internet traffic soon).
  • Smart cities connecting buildings, infrastructure, transport, utilities and networks via the internet.
  • Big data being used by governments, manufacturing, services and agricultural businesses for decision making (the volume of available business data worldwide doubles every 1.2 years).
  • Driverless cars (or as, in the case of Dubai, drones) reaching 10% of all traffic on US roads.
  • Artificial intelligence, ‘deep learning’ software that adapts to data from previous mistakes being used in corporate decision making processes and replacing white collar jobs (for instance in corporate auditing).
  • Robotics replacing not only manufacturing but also service jobs.
  • Bitcoins and blockchains replacing at least 10% of regular currency and banking systems.
  • The sharing economy has introduced a new notion of ownership: Amazon doesn’t own a single store, Airbnb not a single hotel, Uber not a single car. Imagine what 4.0 means for the scalability of new business models!
  • 3D printing, also called additive manufacturing, the layer-by-layer printing of complex shapes from digitally shared files, will soon go beyond Gartner’s ‘hype cycle’ once the obstacles of speed, cost and size are taken. Next to the desktop market of rapid design and prototyping, customized tooling, personalized gifts etc., it is already (becoming) a significant industrial factor in automotive, aerospace and medical science, where 3D printed teeth, organs, braces and body tissues are already being transplanted.
  • Designing human genomes. There are still serious ethical and safety concerns about the sequencing and editing of genetic human properties need to be overcome, but the technology to do so is rapidly developing.
  • Neurotechnology. Rapid evolution of brain sciences are enabling what is called the neuro revolution: simulating, monitoring or even influencing brain activity, both in medical and non-medical applications (Elon Musk is setting up a company that links brains and computers).

An episode of Star Trek?

When reading and viewing all this, the reader might consider himself part of a science fiction film, but all this is happening, and at a dazzling exponential speed. One only needs to remember what the world was like 20 years ago before the introduction of the internet to the general public, or even only 10 years ago when the first iPhone was introduced, to imagine what the world could be like in 5 years.

Impacts

Schwab’s book is referring to a timeline of up to 10 years before the tipping point of these shifts is reached. Each of them has positive and negative impacts in one or more of 5 areas:

  1. Macro-economic (‘growth’, employment, labour skills).
  2. Business (customer value, productivity, innovation, business models).
  3. Governance (agility on taxation, consumer protection, security and privacy, infrastructure, public private interaction, international security and warfare).
  4. Society (inequality, community empowerment).
  5. Personal impacts (-digital- identity, ethics, human relations, privacy).

Call to action for governments: a vision and technology agenda that stretches beyond the next election

In business terms, these impacts also can be described as opportunities and risks. Assuming that entrepreneurs, (self-employed) startups and corporations have in their DNA to show leadership, grab opportunities and in doing so take certain risks, governments are there to stimulate public awareness, knowledge and skills and to make sure that the institutional ‘safety net’ for these risks that not only matches the current situation, but also anticipates the world beyond the next elections.

The role of associations

It is the role of associations like FINAT (Europe), TLMI (North America) or LMAI, all part of the global ‘L9’ alliance (coming to New Delhi in November next year!) to serve as ‘linking pin’ between public and private stakeholders in areas like:

  1. Education. Several Fortune Top 500 companies did not exist twenty years ago. two-thirds of school kids today will end up jobs that do not exist at this moment, while jobs that currently still exist will no longer be there. Knowledge that is currently still part of school curriculums will soon be embedded in digital technology. Against the background of continuous change, education systems cannot remain static. At the same time, industries will need to anticipate what the future skills and competences of their workforce are, and where the talent shortages lie.
  2. Regulations. Technology changes are not yet very high on the public agenda in all developed countries, although it must be said that climate change and energy transition are now generally accepted. What should be avoided is that the regulatory framework will be dictated by public incidents causing politicians’ attention, rather than pro-actively developed in joint consultation between governments and stakeholders. This applies to areas like data protection, intellectual property and consumer protection.
  3. International collaboration. Like with environmental policy and innovations, the 4th industrial revolution by definition is a matter of international interest, as it is so dependent on free access to international networks and the un-prohibited transfer of digital files, in compliance with harmonised international rules and regulations.
  4. Standards and best practices. It is a core task of associations to collect the best practices and develop voluntary standards and testing methods. Transferring private business resources (knowledge but especially manpower and funding!) and authorizing an independent business association that connects all stakeholders, is a must to reach the next stage of maturity and credibility. Governments, business, associations and the scientific community will need to join forces to reach solutions that each of them will not be able to achieve individually.

Associations are not about the order book of today or the deal of tomorrow. They help providing the framework that connects the present challenges with the opportunities of the future. They are an essential vehicle to exceed the issues of the day and turn hypes into a sustainable reality.

And they are ready to assume the challenge and to contribute to an exciting new world!

Jules Lejeune, Managing Director of FINAT

The Hague, March 2017

Illustration courtesy "Christoph Roser at [http://www.allaboutlean.com AllAboutLean.com", see also https://commons.wikimedia.org/w/index.php?curid=47640595?

industrial-revolution | industry-4-0 | technology | schwab | regulation | education | international-collaboration | standards-and-best-practices