Industrial Revolution 4.0: Sociology of Work
Industrial Revolution 4.0: Sociology of Work
The paper will review the impact of industrial revolution 4.0 in reshaping the sociology of work and how people operate in businesses and governments. The disruptive technologies have led to the altering and disruption of the work categories, and government needs to invest in their education and businesses. The fourth industrial revolution has enabled automation and computerization of routine tasks as well as safer working environments. However, this revolution has cost some people their jobs. The changes to the labor markets because of the disruptive technology will create more efficient labor-intensive systems to support the business operations. Therefore, the research findings will improve industrial revolution 4.0 to create a transformative workplace for the employees.
Table of Contents
2.0 Modern Society…………………………..……………………………………………………4
Industrial Revolution 4.0: Sociology of Work
The main book is the Fourth Industrial Revolution, written by Professor Klaus Schwab, the Founder and Executive Chair of the World Economic Forum (WEF). The author was convinced that the industrial revolution has significantly changed the way people and communities live, work, and interact with one another (Schwab, 2017). The industrial revolution can be defined as the changes in society that have led to the elimination of boundaries between physical, digital, and biological environments with advances in technology, including artificial intelligence, robotics, and 3D printing, among others (Schwab, 2017). In the 20th century, the industrial revolution 4.0 has a significant change in the sociology of work and positive technological changes. The fourth industrial revolution refers to innovation using modern smart technology to automate manufacturing and industrial practices for greater production efficiency. The preceding revolutions have foreseen work being shifted from cottage industries operated entirely by the workforce to safe, mechanized, and automated factories (Schwab, 2017). The fourth industrial revolution is a digital revolution characterized by a fusion of digital, biological, and physical technologies. The capitalization of the 4th industrial revolution impacts the sociology of work has a positive change in modern society, economy, business, communication, and science.
Modern society has benefited from adopting innovative technology that makes work easier for the company and households. Smart technology has the following crucial design principles: interconnection, information transparency, technical assistance, decentralized decisions, smart machines with increased automation, improved communication capabilities and self-monitoring, self-analysis, and self-diagnostic capabilities. Interconnection involves integrating the Internet of things (IoT) and large-scale machine-to-machine communication (M2M) to facilitate interaction between people and machines. Information transparency provides the operators with the required information for decision-making. Technical assistance helps with decision-making and problem-solving as well as with difficult and unsafe tasks. Decentralized decisions are the ability of the systems to make decisions on their own and perform tasks as autonomously as possible.
The fourth industrial revolution has enabled automation and computerization of routine tasks as well as safer working environments. Unfortunately, this has cost some people their jobs. Contrary to this, however, additive manufacturing has led to the creation of new job opportunities. However, most of the available jobs require a workforce with specific skills, and therefore the unskilled workers are being faced out. Employees require to refresh their technical education and skills to adapt to and embed the new and changing technology in their work for them to retain their jobs. An example of this is in mobile technology, where switchboard operators have become obsolete, and there are new jobs such as app development.
The disruptive technologies have led to the altering and disruption of the work categories, and government needs to invest in their educational and social welfare systems. Engelke (2018) determined a need to open space for innovation of policies and experimentation. The governments should treat their employees as important assets to improve the long-term productivity and innovation in the economy. The significant investment in high-quality education, long-term skills, and flexible social safety programs will enhance investment in disruptive innovations. Global policymakers should incorporate people into the tech sector to improve competition and create opportunities for the vulnerable populations in modern society.
The new technology has provided the convenience of having several methods and modes of communication and airing ideas and opinions using social media. It has also provided a means of faster and instant communication without being affected by distance. This is due to mobile technology advancements with the elimination of switchboards to connect calls between different regions. It has also provided a means of reaching more people within a shorter period of time. However, with modern means of communication, it is not as easy as before to convey emotions. Suri (2018) explained the foundation of golden century technology that has effectively improved communication. The foundational technology has improved technology to improve digital production. Vercruysse and Reid (2018) explained that technology inequalities have led to a digital divide that creates the differences between the varied demographics and their access and usage of information technology. The measurement of the access to ICT is ownership of the mobile devices and improved access to the Internet. The private sector and governments should develop strategies and approaches to overcome the digital divide to enhance long-term equality in developing innovations and technologies.
Suri (2018) noted that 5G and digital technologies had improved the growth of the digitalization of the modern industries. The telecommunication firms have improved software networking and cloud technologies that create an opportunity to transform modern industries. There is also a change in how people entertain, learn, communicate, relate, and understand. It has become easier to access educational and information resources, thus making learning more accessible. People can also store and retrieve data fast and efficiently due to digital services such as internet connectivity. Unfortunately, there are still some grey areas that are associated with the new technology. One of these is an invasion of privacy since connectivity requires tracking and sharing personal information. This sometimes leads to high insecurity levels due to cyber-crime.
In chemistry, atoms and molecules can be manipulated to come up with desired chemical compounds. In the biological field, cells and their genetic structure can be altered to form organisms with specific characteristics. This is known as genetic engineering. The DNA structures of organisms can also be altered to remove certain undesired characteristics. The revolution attempts to fuse biology, physics, and chemistry so that it’s impossible to know where one ends and the other begins. According to de Lorenzo (2018), the industrial revolution has improved the modern biotechnology sector leading to significant improvement in the health care sector. Biotechnologists can expand the capabilities of the industrial microbial processes by developing new genes and modifying genomes to align with the pre-defined production needs. Innovative bioprocessing is critical in improving biological systems, and modern technology has improved the level of metabolic engineering. For example, industrial revolution technology has created cell-free production systems that offer short-term solutions to overcome biological concerns such as reducing cell debris because of spontaneous lysis.
Moradi and Berry (2018) determined that the fourth industrial revolution has been critical in promoting healthcare development. Biotech is critical in developing efficient technology to develop good drugs as pharma is focused on innovations. The main driving forces for reshaping the development of drugs are computational biology and distributed development approaches. The use of supercomputers has helped shape biomedical problems as major computational problems to improve therapeutic development, promote the integration of data, and improve insights. The innovation of life sciences will integrate with most industries to reduce environmental impacts and improve yields across the economies.
Automation has led to a disruption in the labor markets. This has widened the gap between returns to capital and returns to labor. It has also caused divisions in the job markets in low-skill workers and high-skill workers, leading to a social imbalance/inequality since higher-skilled workers are preferred. The gap between the poor and the rich keeps on growing since those who benefit more are those who are dependent on capital as opposed to those who are dependent on the lower-skilled workers. According to Peccarelli (2020), the evolution of the economy has been influenced by the increase in automation, artificial intelligence, and the expansion of technological disruption that brings positive change. Economic revolutions were vital in promoting technological revolutions and the productivity of the firms in the economy. According to Lin (2021), the adoption of virtual technologies has improved the ability of companies to adapt to the changing environment and thus, improving the efficiency of business operations. The striking balance between automated technology and human understanding improves knowledge management and promoting technological revolution. Roy (2019) suggests a need to increase automation in businesses to grow middle-class markets. Expanding middle classes will continue to rely on increase automation to promote economic progress.
According to Gwata (2019), the 4th industrial revolution has been necessary for the reconfiguration of society to increase the integration of modern technology into the business process. However, it increased concerns about increasing higher unemployment rates as more companies were using technology and innovation. The education of modern employees helps to diversify the skillsets to enhance the compatibility of the digitalization of the companies and improving the competencies for the entrepreneurs. In business, the industrial revolution has affected customer expectations, product enhancement, collaborative innovation, and organizational reforms.
Torrance and Staeritz (2019) determined that businesses should transform their conservative business models to improve customer service optimization for the customers and the delivery of improved returns to the shareholders. The level of consumer engagement is higher, which lowers the barrier between the consumer and the business. This helps in improving product quality and service through customer reviews. There is higher accessibility of goods by the customer due to better communication and infrastructure technology. This has changed the way goods and services are delivered to the consumer. Smart devices with autonomous decision-making and controlling o business process capabilities like supply chains and minimal human input are being created.
To sum up, the book by the Fourth Industrial Revolution authored by Professor Klaus Schwab, the founder and executive chairman of the World Economic Forum, provides important information on the influence of the industrial revolution is changing the way of life, working, and interacting with each other. The fourth industrial revolution has led to a significant transformation of how people engage in work and improving operational efficiencies in the various disciplines, including modern society, science, communication, economy, and business. The fourth industrial revolution has brought about automation and made life much easier. It has created employment opportunities for some while making some lose out. People who can afford and access the digital world are better placed to gain more from technology. The implementation of virtual technologies has improved the ability of companies to adapt to the changing environment and thus, improving the efficiency of business operations. The creation of a strong balance between automated technology and human understanding improves knowledge management and promoting a technological revolution.
de Lorenzo, V. (2018, May 16). How biotechnology is evolving in the fourth Industrial Revolution. World Economic Forum. https://www.weforum.org/agenda/2018/05/biotechnology-evolve-fourth-industrial-revolution/.
Engelke, P. (2018, August 24). Three ways the fourth Industrial Revolution is shaping geopolitics. World Economic Forum. https://www.weforum.org/agenda/2018/08/three-ways-the-fourth-industrial-revolution-is-shaping-geopolitics/.
Gwata, M. (2019, August 5). To flourish in the fourth Industrial Revolution, we need to rethink these 3 things. World Economic Forum. https://www.weforum.org/agenda/2019/08/fourth-industrial-revolution-education/.
Lin, J. (2021, January 25). Knowledge is power: Why the future is not just about the tech. World Economic Forum. https://www.weforum.org/agenda/2021/01/knowledge-is-power-why-the-future-is-not-just-about-the-tech/.
Moradi, M. & Berry., D. (2018, November 1). 7 ways the ‘biological century’ will transform healthcare. World Economic Forum. https://www.weforum.org/agenda/2018/11/how-the-biological-century-will-transform-healthcare/.
Peccarelli, B. (2020, January 13). How businesses can thrive in the fourth Industrial Revolution. World Economic Forum. https://www.weforum.org/agenda/2020/01/the-fourth-industrial-revolution-is-changing-all-the-rules/.
Roy, K. (2019, November 26). How is the fourth Industrial Revolution changing our economy? World Economic Forum. https://www.weforum.org/agenda/2019/11/the-fourth-industrial-revolution-is-redefining-the-economy-as-we-know-it/.
Schwab, K. (2017). The Fourth Industrial Revolution. New York, NY: Currency.
Suri, R. (2018, January 15). The fourth Industrial Revolution will bring a massive productivity boom. World Economic Forum. https://www.weforum.org/agenda/2018/01/fourth-industrial-revolution-massive-productivity-boom-good/.
Torrance, S., & Staeritz, F. (2019, January 15). Is your business model fit for the fourth Industrial Revolution? World Economic Forum. https://www.weforum.org/agenda/2019/01/is-your-business-model-fit-for-the-fourth-industrial-revolution/.
Vercruysse, J., & Reid, F. (2018, September 17). The fourth Industrial Revolution can close the digital divide. This is how. World Economic Forum. https://www.weforum.org/agenda/2018/09/how-do-we-close-the-digital-divide-in-the-fourth-industrial-revolution/.
Appendix: Copy of Sources
1.0 To flourish in the Fourth Industrial Revolution, we need to rethink these 3 things
05 Aug 2019. Munozovepi GwataFounder, Kukura Capital
Explore the latest strategic trends, research and analysis
Education is the primary tool for connecting people to the workplace. It is a building block that is used to aid employment. Employment, in turn, is the channel that allows people to be economically autonomous and to play an active role in the economy. However, in the context of the Fourth Industrial Revolution, the traditional avenues of employment are being challenged by the digitalization of the workplace. In certain industries, the labour force is being eroded by the integration of Fourth Industrial Revolution technologies, and in light of this entrepreneurship the second – and often forgotten – leg of employment needs to be urgently re-examined. A reconfiguration of our perception of education, employment and entrepreneurship can play a critical role in allowing people to build successful careers and businesses that are augmented and not threatened by these new technologies.
The evolution of education
Traditionally education has been monodisciplinary, and the further a person went along in their studies the more focused and narrowed those studies became. Subsequently people would obtain a narrow specialised skill set from a university, a college or a training programme, and this would qualify them to build trade in a specific field of interest. The perception was that the more specialised a person became the more economically valuable they would become. Just as a doctor who qualifies as a specialist in a certain field of medicine often earns more than a general practitioner, the same applies to other fields. Today, however, this perception needs to be reconfigured as the new developments in technology have disrupted how we must approach education.
In the context of the Fourth Industrial Revolution, there is a new demand to be an interdisciplinary and T-shaped person – that is, one who has an in-depth knowledge of a specific field, with sufficient knowledge in other fields outside their own specialisation. The skills that they acquire outside their area of specialisation offer complimentary knowledge that enables them to also enrich their field of expertise.
What is the Fourth Industrial Revolution?
One example is Jeff Bezos, one of the wealthiest people in the world. He specialised in computer science and worked on Wall Street for several years, allowing him to build a range of skills before he ventured into e-commerce. When he started Amazon in 1994 the internet was still a new emerging technology – and so even though he had a computer science background, he had to learn about the internet and further broaden his skillset. This new knowledge, paired with his computer science expertise, allowed him to build Amazon – a prime example of a company that was able to successfully capitalise on the benefits of the third industrial revolution.
How an evolution in education can transform employment
In order for people to benefit from the Fourth Industrial Revolution, they are going to have to broaden their skill sets and learn about these new technologies. The good thing is that the Fourth Industrial Revolution is making skill development is a more seamless and accessible process. With mediums such as search engines like Google, massive open online courses (MOOCs) like Edx and Coursea, podcasts and Youtube videos, a library of knowledge can be easily accessed. A reliance on linear monodisciplinary skillsets will restrict people’s ability to connect with the labour force as so many fields become augmented with technology and more interdisciplinary. Technology does not make people obsolete, but it does change the prerequisite for employment, as a retrospective look at the third industrial revolution demonstrates.
The relationship between industrialisation and employment during the third industrial revolution
The shift towards automatization and computerization in the workplace during the previous industrial revolution created many fears similar to those emerging today. Computers in particular wreaked havoc, with newspapers and magazines headlining the term “computerphobia”. The motivation behind integrating technology into business and society is to improve efficiencies and reduce the costs of goods and services, with the fundamental aim of improving people’s quality of life – and following the third industrial revolution, this was the result. Automatization and computerization allowed businesses to scale, new industries to be created and for the employment sector to expand globally. It also facilitated social developments; automization spurred many developing countries to grow into emerging economies. The third industrial revolution did not make human beings obsolete, but it did redefine the prerequisites of employment. Many employees had to undergo training to learn how to use the technologies being integrated into their companies, and there became an unspoken prerequisite that people must have a certain level of computer competency before they enter the workplace. Today, there will also be new prerequisites for the workplace, because industrialization shapes the employment sector. The benefit of the Fourth Industrial Revolution is that we have a much wider range of technology options to choose from, from social media to blockchain.
The future employee will be an entrepreneur
The indispensable employees of the Fourth Industrial Revolution will be those with a broad and complementary skillset. As the integration of technologies into businesses and the business process increases, employees will have to be able to facilitate this objective. This can be achieved in different ways; it could be a lawyer learning coding and blockchain technology to execute smart contracts, or it could be an employee offering to create and manage a social media page for their company to help increase its sales. Businesses will shift towards a flatter organisational structure, and therefore each employee will be expected to play a more active and involved role in their company. The Fourth Industrial Revolution requires that people become more entrepreneurial in their approach to employment, and this new spirit can be exercised indirectly by being an intrapreneur – an employee who works for someone else but embodies the entrepreneurial spirit of being innovative and seeking continuous improvement of the things around them – or directly as an entrepreneur.
Thanks to the technologies of today, entrepreneurship has become a more accessible source of revenue – starting and running a business can be achieved through a social media page, for example – and our perception of business should be reconfigured to match this transformation. Entrepreneurship traditionally was not a very accessible career option, as it was an expensive and extremely high-risk career path. However, with developments in technology and with third-party platforms such as Etsy, Shopify and Amazon, people have easier, low-cost means to sell and market their products and services. Entrepreneurship is shifting towards a low risk, high-return game versus a high-risk, low-return environment.
The Fourth Industrial Revolution has reconfigured our society in order to achieve its objectives of increasing the integration of technology into businesses and the business process. This has raised fears of social and economic problems, such as higher unemployment. A lot of these risks and fears can be mitigated by rethinking of how we perceive education, employment and entrepreneurship. These are closely interlinked and, if well-connected, form the key components for an ecosystem of sustainable economic development – and the best way to do so is to diversify education to give people broad skillsets that make them more compatible with the digitalization of the workplace, or with the competencies to become successful entrepreneurs.
2. Bend, don’t break: how to thrive in the Fourth Industrial Revolution
13 Jan 2020
The ‘move fast and break things’ ethos that epitomized Silicon Valley business culture for much of the 21st century’s first decade has fundamentally changed the global economy. For evidence of this, look no further than the French start-up, Guppy, which was launched in late 2018 to dredge discarded electric rental scooters out of the River Seine. In just one day this past summer, Guppy workers fished more than 50 shared mobility devices out of the river. Now, Paris is regulating its scooter fleet.
Guppy’s story is an allegory for modern-day businesses operating in a world in which it seems all of the old rules are meant to be broken. A new generation of businesses has upended entire industries by removing middlemen, flouting conventional processes and leveraging connectivity and automation in ways that have forced incumbent business leaders, regulators and the global workforce to rethink everything they once believed to be sacred. But the changes have not come without consequences. Many of the companies that pioneered the go-go tech culture that produced these breakthroughs are now the poster children behind calls for increased regulation, and – in some cases – have caused significant collateral damage.
The World Economic Forum has dubbed this unique period in the evolution of business the Fourth Industrial Revolution – a moment in time when increased automation, artificial intelligence (AI) and continued technological disruption will fundamentally change the way we live, work and relate to one another. Accordingly, just as we have seen with previous business revolutions, there will be many intended and unintended consequences that come with each step forward on this journey. The challenge, of course, for those of us living, working and forging a path through this period of radical change is how to stay on the right side of history when the rules of engagement are changing so rapidly.
A great example of this very real-world challenge is playing out on the global stage in the area of digital taxation. France introduced a new digital tax this past July, which applies a 3% levy on revenues from digital services earned in France by companies with more than €25 million ($28 million) in French revenue and €750 million euros ($838 million) worldwide.
In introducing the new law, France has joined a group of 20 countries throughout Europe, including Austria, Belgium, the Czech Republic, Italy, Spain and the UK, that have either announced or published proposals to introduce digital services taxes. Now, the Organization for Economic Cooperation and Development (OECD) has gotten in on the act, with a new proposal to create an international framework to guide how and where these digital taxes should be implemented.
What is the World Economic Forum doing about the Fourth Industrial Revolution?
From a purely economic standpoint, there is some logic to these tax proposals. As ever-larger portions of our collective consumption are transmitted digitally, the idea of taxing these transactions based on the location in which they are consumed rather than the location where they originate is fairly logical. In practice, however, the idea of dozens of different nations enacting their own tax laws to capture revenue from multinational tech companies with locations all over the world is a recipe for massive conflict.
As a case in point, the Trump administration responded to France’s digital tax with the threat of a 100% tariff on French Champagne, cheese and other goods.
The global trade standoff was eventually averted, but the uncertainty still lingers for multinational technology companies who have been left juggling a global patchwork of new digital tax laws, potential government standoffs over said tax laws and the constant need to project future growth accurately while all of the inputs keep changing.
And that’s just one line item on the tax ledger. Add the barrage of new regulatory requirements coming from all corners, the constant development of new technologies and the mounting need for new skillsets to manage it all and the scale of the challenge starts to become clearer.
We’ve been on the front lines of this revolution at Thomson Reuters. Our core client base of tax and accounting and legal professionals have seen their industries fundamentally disrupted by new technology and rapid-fire regulatory change. For some, the process has been painful. For others, it has created huge opportunities. The difference between the two: agility.
In the field of law, for example, where the billable hour has been under pressure for decades and a steadily-growing crop of alternative legal service providers has entered the marketplace and made a considerable dent in the revenue streams of the establishment, the leading firms have been largely unaffected by the changes because they have evolved their businesses. That process includes everything from adopting the latest AI tools to make the legal research and discovery process more efficient, to offering specialized services to help clients manage the crush of new regulatory requirements they all face.
Across countless examples, the one universal truth we continually see proven as we march through the early days of the Fourth Industrial Revolution is that start-ups and incumbents who have the agility to seize new technologies and scale rapidly to adopt new ways of doing things are the ones who thrive – no matter what comes around the next corner.
Ultimately, the secret to thriving in an environment in which everyone appears to be moving fast and breaking things is not to break at all, but to stay flexible enough to bend when the rules of the game keep changing.
3. Three ways the Fourth Industrial Revolution is shaping geopolitics
24 Aug 2018
The unprecedented technological transformation taking place today — a period of exponential change labelled the Fourth Industrial Revolution — is not isolated from geopolitical affairs. Indeed, geopolitical competition, especially among the world’s powers, is a major driver of technological disruption; in turn, this disruption is affecting the geopolitical landscape.
Technology has long been an ingredient in how states gain, use or lose power. But today, three interconnected elements — innovation, talent and resilience — increasingly determine whether states are well-positioned to advance their own security and wellbeing.
1. Innovation is (still) power
States understand that leadership in tech-driven innovation translates into economic and military power and, therefore, into geopolitical power. As such, global competition for tech-sector leadership is intense, not just because of the clear economic benefits but also because of the potential security payoff it can bring. Fierce competition drives states to invest in innovation and continues to play a critical role in the production and scaling of breakthrough technologies.
Fears of being left behind on the (literal) battlefield are a major reason why the world’s great powers spend heavily on emerging technologies. They hope that doing so will provide security and power in an insecure world. For decades after World War II, for example, the US government spent billions of dollars on its scientific-technical research apparatus (with Silicon Valley a clear beneficiary), largely out of fear that not doing so would cause it to lose the Cold War. This apparatus, which combined scientific research and entrepreneurial aplomb, allowed the US to enjoy a first-mover advantage throughout the Cold War and long after.
Technological development has played an obvious role in warfare. The Maxim gun, rifled cannon, the airplane, poison gas, napalm and nuclear weapons are but a tiny fraction of the multitude of modern battlefield inventions. Looking forward, inventions arising through advances in nanotechnology, biotechnology, artificial intelligence and more will upend warfare from logistics to weaponry. Like their predecessors, the most important of these inventions will give the first movers a (temporary) geopolitical advantage. And, like their predecessors, once invented they cannot be un-invented — humankind will have to live with them forever.
2. Talent is power
As chronicled annually by organizations such as the World Intellectual Property Organization (WIPO) and very recently by this author and colleagues at the Atlantic Council, the bulk of the world’s new and disruptive technologies are produced in a relatively small handful of countries. Societies that manage to create or attract critical masses of talented people (inventors, entrepreneurs, scientists, engineers, researchers) and give them the tools and environments to be creative have, in the long run, come out ahead.
Although there is no single template for a successful tech environment, all examples have some combination of vibrant public investment in scientific research and development (R&D), high-quality educational systems, relatively easy access to investment and venture capital, a strong startup culture, and the protection of intellectual property.
Understanding the intense global competition in this space, policymakers in various countries have both copied and, in some cases, improved upon the American template for their own purposes. High-quality scientific research is by no means confined to the US; all innovation leaders invest a substantial share of their GDP in R&D. Israel and South Korea are currently the world’s leaders, with each investing more than 4% annually.
Nearly all serious contenders for innovation leadership are improving their university tech transfer systems, a long-standing strength of the American system. Many, if not most, are devising creative ways to create and import talented people from abroad. Start-up Chile, created in 2010, is a public accelerator that offers entrepreneurs from anywhere in the world a one-year working visa, seed funding, training, mentorship and more. This model has since been copied by many other countries.
The US remains the world leader in tech-driven innovation, but other countries are gaining quickly. In a report published last year, this author and colleagues at the Atlantic Council argued that while other countries are rising, the US must share the blame for its own relative decline. American policymakers have allowed several irreplaceable drivers of innovation to erode. The quality of American infrastructure, for example, has declined considerably with little serious attention paid to upgrading it to 21st-century standards.
Other public investments have also fallen; most critically, the funding for higher education and public research and development — the basic science that underpins all technological development. It also goes without saying that the current political climate in the US surrounding immigration is an anathema to the goal of attracting and retaining top global talent.
3. Resilience is power
Innovative systems create productivity-enhancing technologies that, in the long run at least, benefit society. However, many people are left on the outside looking in, because they live in regions that are adversely affected by technological disruption and/or because they don’t have the skills to participate. Ignoring this reality will create neither a robust economy nor a healthy society.
Some societies are in a better position than others to both benefit from disruptive technology and to limit its negative impacts. The world’s leading innovators have often invested the most in resilience-based strategies designed to maximize the odds of their citizens prospering from disruptive change. Yet in the face of the Fourth Industrial Revolution, the question is whether these societies are sufficiently well prepared.
The likely answer is no, which means we can expect more upheavals in the future. If inventive mechanisms designed to tackle the economic and political challenges that follow from technological disruption are absent, societies risk becoming less rather than more stable.
As technologies disrupt industries and alter or even eliminate entire categories of work altogether, states will need to adapt their educational, workforce and social welfare systems. The bad news is that the (fairly) comfortable systems that were built for the high industrial era are no longer templates for the future.
The good news, however, is that there is considerable space for policy innovation and experimentation. Governments that treat their workforce as their greatest asset will benefit in the long term. Investing in high-quality education, life-long skills training and upgrading, and a flexible but robust social safety net, will pay off for those countries willing to make such investments. This is one area where the US, as the world’s leading innovator, risks falling behind: university education is increasingly expensive for its citizens, its system of skills training lags well behind leaders such as Germany, and its social safety net is wafer-thin.
Policy-makers the world over must find ways to bring more people into the tech sector. Unfortunately, it’s an exclusive club: regardless of country, workers are disproportionately male and drawn from the wealthier strata of society. Governments need to do a better job of equipping women, racial and ethnic minorities, and people from lower socioeconomic strata with the tools needed to compete in this sector and the opportunities to do so.
Global governance will be a challenge
As with previous revolutions, the technologies emerging from the Fourth Industrial Revolution are arriving well ahead of the rules and standards needed to govern them. There is little global consensus about how to regulate the impact of technologies or indeed whether they should be regulated at all.
To craft a robust, enforceable, global tech regulation regime there must be sufficient evidence that a specific technology has enough of a downside to require oversight. There is very little chance that such evidence will exist at the time of the technology’s invention. It took decades for scientists to discover that chlorofluorocarbons (CFCs) were destroying the ozone layer, for instance. Even when a technology has clearly negative repercussions, as is often the case with new battlefield technology (think nuclear weapons), global agreements to constrain their use require states’ political willingness to enter into them. Most critically, that requires the participation of the great powers, who, not coincidentally, are often the least incentivized to play along.
The result is a global system wherein the incentives align with the creation and spread of new technologies — including lethal technologies — but not with the oversight of them. While every generation faces this reality, the risks become greater because technologies become more powerful over time. In the military realm, greater power means greater lethality: the musket and the hydrogen bomb are two very different things. And even when new technologies deliver economic or social benefits, as with the CFCs example, they can, and frequently do, deliver some nasty surprises.
This is why the intelligent governance of technology at a global level is among the most important tasks we will face this century. Despite the difficulties in crafting robust, international tech governance regimes, it is imperative that governments do just that.
Bilateral negotiations between the major powers on a host of tech-related issues can have a real and productive effect on governance, given their importance to the global economy and to technological production. So too can multilateral forums such as the World Trade Organization, the Group of Twenty(G20), WIPO, the International Telecommunication Union (ITU) and many more.
Although global politics makes it very difficult and sometimes impossible for such organizations to lead the creation of robust and enforceable global rules, states can and do turn to them for the development of new standards and norms for thorny tech governance questions in areas such as genetic engineering or artificial intelligence.
4. How biotechnology is evolving in the Fourth Industrial Revolution
16 May 2018
Victor de Lorenzo
When modern biotechnology emerged in the late 1970s, it was first applied in the health sector, with the onset of recombinant DNA. One decade later, the same molecular approaches reached the agricultural and food industries, not without controversy. Finally, biotechnologists started to enrich the capabilities of industrial microbial processes by bringing new genes to live catalysts and modifying their genomes to fit pre-specified production needs. Though such operations were deemed as genetic engineering, in reality the engineering aspects were more metaphor than reality. Instead, what we might call genetic bricolage (i.e. trial-and-error) dominated the field quite successfully for a long time.
However, the arrival of systems biology by the end of the 1990s, and the emergence of synthetic biology in the early 2000s, completely changed the game of designing microorganisms, and even higher living systems, as agents for industrial-scale transformations of feedstocks of diverse origins into valuable products. Microorganisms capable of producing a variety of chemicals of industrial importance, including dicarboxylic acids (succinic acid and adipic acid), diols (1,3-propanediol and 1,4-butanediol), diamines (putrescine and cadaverine) and many others have been developed. Some bacteria and yeast long known by the industry can now be genetically reprogrammed and repurposed, for example to produce lipids serving as biofuel precursors. Even non-natural chemicals such as gasoline and terephthalic acid can now be produced by metabolic engineering.
Furthermore, contemporary biotechnology has produced biomaterials including polysaccharides (microbial cellulose), proteins (spider silk), and even formerly synthetic polymers (polylactate and poly[lactate-co-glycolate]) by fermentation of engineered microorganisms. Some strains have been successfully designed to produce polyhydroxyalkanoates, a family of diverse biopolyesters, for applications in environmentally friendly packaging, medicine and smart materials.
Moreover, innovative bioprocessing is increasingly developed based on the unusual properties of extant biological systems (e.g. extremophiles) to run fermentations, for example in seawater and non-sterile conditions. Not in vain, systems-guided metabolic engineering was selected by the WEF as one of 2016’s top 10 emerging technologies.
However, despite these successes, the chemical and manufacturing industries are still largely reluctant to adopt bio-based transformations and bio-inspired practices that could take over many extant oil-based processes. The limiting factor is the difficulty of converting laboratory-scale operations into economically viable, industrially-sized equivalents. The instability of live catalysts, the consumption of large volumes of water and difficulties in downstream processing have deterred what in many cases would otherwise be a welcome transition in the methods of production.
So is advanced biotech restricted to producing just small amounts of high value-added molecules? To overcome the impasse for the Fourth Industrial Revolution, various issues need to be addressed, both on the biological and industrial sides. Genomic and phenotypic stability of live catalysts is paramount for matching the efficiency of bioprocesses to those already existing in the purely chemical realm. This is not just a technical problem, but a fundamental scientific question that needs to be addressed. The interplay of stress versus chromosome constancy (including implanted genetic devices) under production conditions must be investigated at large, and new approaches for its control developed.
In the meantime, cell-free production systems may offer an interim solution to the challenge of predictability. Additional biological questions such as gene expression under non-saturating water conditions, physiology at very high cell densities and minimization of cell debris due to spontaneous lysis will surely help to make bioprocesses more appealing to big industry.
But the challenges are not only biological. They are also found on the process engineering side. In contrast with the spectacular advances of recent years in genomic editing, basic fermentation methods have remained largely the same since the ancient Egyptians produced beer. An aqueous nutrient medium in a pot or barrel is inoculated with an active agent and left to evolve until the desired transformation occurs, or until the desired compounds are generated.
Modern engineering has been able to control fermentation to an extraordinary degree, and has certainly extended bioreactor types towards much more sophisticated designs. But most industrial bioproduction still relies on vessels filled with a considerable volume of water-based, sterile media inoculated with a single monoculture of the adequate strain. Productivity is then measured in grammes per litre.
There is ample room for improving this state of affairs, by encouraging investigation into how some natural systems produce compounds in large amounts. For instance, couldn’t we get inspiration from the awesome productivity of cows’ udders or rubber trees, as we design a different type of bioreactor with very little water, sterile functioning and easy operation? What is the engineering logic that makes these systems so efficient?
There is much to learn from such optimally evolved biological reactors, beyond just trying to adapt biological catalysts to already existing platforms. Production at the site of need or at the point of care also demands new concepts for generation of biomolecules in miniaturized, portable settings, that will surely differ from what we have now.
Finally, modern biotechnology has much to offer for overcoming the alienation between the global industrial metabolism and the geobiochemical cycles of the biosphere. Waste from unchecked industrial, agricultural and urban development has generated large amounts of greenhouse gases, non-degradable plastics, micropollutants, major unbalances of nitrogen and phosphorus, and an unmanageable volume of lignocellulosic residues.
The global environmental microbiome could become our main ally for reconnecting such anthropogenic waste with the cycling of elements that operates our planet. If a few chemical reactions (e.g. the Haber-Bosch process for nitrogen fixation) were able to change the ecology of our planet, we may also explore ways of mitigating our impact by deploying large-scale bio-based interventions aimed at restoring former environmental balances and creating new ones.
Of course, this would not be a mere academic experiment but a multi-tiered mission involving many stakeholders and requiring careful governance. Yet, in view of the phenomenal environmental challenges that the next generation faces, inaction and business-as-usual surely pose the highest risk.
5. 7 ways the ‘biological century’ will transform healthcare.
Among the many disruptive forces that the Fourth Industrial Revolution promises to unleash is a revolution in healthcare. We’re entering the century of biology – in which up-to-now crude interventions in our genetic makeup will become far more sophisticated, allowing us to fine-tune our essential biological structure.
These changes will scare some, excite others, and generally raise questions that cannot be answered. Category 5 change, you might say. As well as the philosophical implications, there are practical ones, too, as healthcare worldwide undergoes a total transformation.
Here are our predictions:
1. Death will be optional. The Hayflick limit describes the theoretical restrictions on human life, partially based upon the length of one’s telomeres (roughly 125 years of age). To put it another way, cell death is simply a defect in our genes. This defect may be remedied by techniques that are now beginning to make effective medicines for once intractable diseases.
2. Biotech, like pharma, will be displaced. Forty years ago, the founding of Genentech heralded a new era, one overlooked by pharma. Biotech grew to become a more efficient, highly powerful way to develop drugs, while pharma continued down the same path, now operating with a productivity lower than the cost of capital. Two driving forces will again reshape drug development: computational biology and distributed development.
At the intersection of life sciences and supercomputers is computational biology, the use of biological data to frame biomedical problems as computational problems. This has already begun to reshape therapeutic development and is poised to induce a seismic shift in data integration and a new era of disease insight.
In parallel, the next wave will be led by a distributed labs around the world, including China and other regions; medicine will be no longer dominated by the US and Europe. The regulatory environment in the US and Europe makes clinical trials somewhat difficult, and for good reason. However, China has a more open view of regulation in many new areas of medicine, coupled with the world’s largest market for most diseases and medical procedures.
3. Our relationship to disease will fundamentally change. Today, our ability to manipulate genes is in its infancy. Nonetheless, dozens of diseases that once were a death sentence are becoming treatable. As our understanding of genes deepens rapidly, less invasive techniques will emerge, starting with native gene control using the body’s own biology to cure disease, rather than inserting genes and hoping. Further, the emergence of in utero and pre-conception gene sequencing enables the elimination of many congenital birth disorders by sorting rather than editing – sex may even evolve to be solely for recreation, not procreation. Expect a massive in-vitro fertilization (IVF) company to emerge in China that will challenge Western ethics.
4. The future of medicine belongs to smaller, nimbler organizations. According to a recent paper that analysed 121 blockbuster drugs (which made more than $1 billion sales per year) between 1980 and 2010, 87.6% were marketed by a major pharmaceutical firm. However, 24.7% were originated by a non-major firm and licensed to big pharma, 37.1% were originated by a non-major firm and acquired or merged into big pharma, and 4.1% were licensed from an academic institution. Thus, 65.9% or two-thirds of all blockbusters originated outside of big pharma. The pharmaceutical industry will continue to exist, as it sheds research jobs and consolidates. However, as capital becomes more available and talent more fluid, smaller organizations will be able to launch new products without big pharma.
5. Previously unimaginable wealth will be created. Let’s say that you are the entrepreneur who owns the rights to telomere extension, mentioned above. If you sell this process at an average of $1 per day to 3 billion people, that amounts to $1.1 trillion a year in revenue. It could also be a completely different innovation, such as the development of human augmentation, instant sleep, instant learning, or something just now having its “eureka” moment in the cramped quarters of a Tokyo graduate student’s lab. We predict that the world’s first trillionaire will be a biotech or healthcare entrepreneur. Healthcare accounts for over 20% of the economy in the US, and due to its entrenched bureaucracy, it is a market ripe for disruption. Expect future tycoons to emerge from this chaos.
6. Drugs will get smarter. The joke in venture capital circles is that you can triple your company’s valuation by adding cell or gene therapy, immune-oncology or artificial intelligence to your elevator pitch. However, many breakthroughs will emerge from less dramatic advances, including drug delivery technologies such as Sensulin’s “stimulus-responsive drug delivery” platform. This technology enables a once-a-day insulin, versus the four to eight injections typically required by patients with type 1 diabetes.
In the year 2000, during the Human Genome Project, the cost of sequencing a human genome was $100 million. Today, the cost is $1,000, or a mere $99 if you only want a partial sequence. Expect similar exponential leaps forward in the coming decades, where all drugs are personalized.
7. Life sciences will permeate most industries. The tools of biology enable previously unimaginable impact in even some of the most distant industries including, for example, a fascinating company that uses microbes to replace toxic chemicals in the extraction of metals, increasing yields and reducing environmental impact. The company is well-capitalized, and their technology is a “no-brainer” for mining and metals companies. We believe these techniques will ripple across supply chains worldwide, in surprising ways.
The end result?
For the coming biotech wave, the change to our lives will be dramatic. What is certain is that new winners and losers will result. We foresee great leaps in human health, the mitigation of today’s chronic diseases, a great number of new jobs created and massive leaps forward in quality of life.
But change will come at a price. Societal conventions will be challenged, increasing inequalities that tear the very fabric of our societies. Perhaps most poignant, this change will make us question what it means to be human. What happens in a world where disease is avoidable? Where death is optional?
Preparing for the future
We do not pretend to have all of the answers, but let us ask this crucial question: what must we do in the next decade, to prepare for the coming biotechnology wave?
6. Knowledge is power: why the future is not just about the tech
25 Jan 2021
As virtual and physical worlds become increasingly interdependent, knowledge – and how we manage it – will become the secret ingredient to manage the situation. And thrive.
Virtual technologies are swiftly becoming intertwined with our physical world, and companies need to adapt. But that doesn’t simply mean replacing humans with robots or relying on artificial intelligence (AI) to make all of our decisions.
This is because technology, though powerful, is just part of the equation. In fact, human intelligence will be one of the most valuable assets in today’s Fourth Industrial Revolution (FIR), and companies may flounder if they fail to strike the right balance of automated technology and human insights.
This comes down to knowledge management. When leading teams of both humans and machines, executives need to understand the two major types of knowledge – implicit and tacit – and how to utilise each type best.
How have we got here?
“The Fourth Industrial Revolution creates a world in which virtual and physical systems of manufacturing cooperate with each other in a flexible way at the global level,” wrote Founder and Executive Chairman of the World Economic Forum Klaus Schwab in his 2016 book The Fourth Industrial Revolution.
In the same book, he coined the very term, writing: “We are at the beginning of a revolution that is fundamentally changing the way we live, work and relate to one another.”
Like the previous three industrial revolutions, the FIR will fundamentally change the way we live and how businesses operate. Preceding revolutions have brought us everything from steam engines and mechanisation, to electricity and mass production. Most recently, the third added digitalisation and computers into the mix.
The FIR it is already inspiring seismic shifts across many industries. Critically, it will see the convergence of our physical experiences with rapidly advancing technologies, such as AI, machine learning, virtual and augmented reality, robotics, bio-engineering and cloud computing.
It will blur the boundaries between the online and offline, the technological and the biological – think real-time automated speech recognition, disaster rescue drones, genome editing, and AI-powered customer service chatbots.
While many describe the FIR as a virtual revolution, that’s only half the story. At its heart, the FIR is also a knowledge revolution – going forward, we will rely on a combination of human and machine intelligence to create truly transformative businesses, services and products.
Do you really know what knowledge is?
To succeed during the FIR, business leaders first need to understand how knowledge works. In a nutshell, there are two types: explicit and tacit.
Explicit knowledge can be easily articulated, quantified, codified, shared and programmed. For example: company manuals, research reports, white papers, how-to videos and data sets. They are programmed into routine tasks and procedures, and then assigned to machines.
By contrast, tacit knowledge is much harder to pin down. It’s intangible, ranging from insights gained through personal experiences to accumulated expertise and even basic instincts.
For instance, a veteran sales representative may naturally sense that they can close a deal, while a doctor may have a gut instinct to order a diagnostic test for a disease that doesn’t match a patient’s symptoms.
Humans can easily pass explicit knowledge to machines, but it is significantly more challenging, if not impossible, for a machine to internalise and replicate tacit knowledge.
That said, tacit knowledge does not have to exist in a silo.
We can capture some tacit knowledge through interviews, training, mentorship, workshops, and forums. A company can then transcribe, analyse and organise the insights using AI speech recognition software to create a valuable bank of institutional knowledge and train new employees.
Managing knowledge will dictate business success
How we manage knowledge will impact every aspect of business operations, from route procedures to training, high-level decision-making and customer service. Naturally, many people have resisted the FIR, fearing that robots or automation will render humans redundant. But in reality, only the nature of our roles will change.
Over the last 15 years, technology eliminated 800,000 jobs in the UK, yet created 3.5 million new positions. Notably, these new jobs paid £10,000 more per year on average than those that were lost, adding some £140 billion to the UK economy, according to a study by Deloitte UK.
AI and machines took over routine, repetitive tasks informed by tacit knowledge, elevating humans to positions that required intelligence, creativity, experience, instinct and talent – implicit knowledge.
Noting the significance of this shift, Schwab wrote: “I am convinced of one thing – that in the future, talent, more than capital, will represent the critical factor of production.”
Of course, knowledge management takes different forms depending on the industry. For example, in banking, companies have already automated routine processes like deposits, transfers, and even common customer service inquiries.
Meanwhile, humans handle high-level transactions and complicated customer service issues.
Trading has followed a similar trajectory. While machines can handle basic trades, analysts with extensive tacit knowledge manage complex trading strategies and input the actual data points – what, when and how much to buy and sell – to programme trading algorithms in the first place.
Managing knowledge in education
In the education field, there’s also massive potential for better knowledge management.
Schools could potentially automate learning objectives that revolve around explicit knowledge – be that multiplication tables or chemistry principles – as well as administrative tasks, paperwork, lesson planning, inventory management and prep work.
This would then free up overworked teachers so they could focus on more intuitive tasks, such as fostering critical thinking, creativity, personal feedback, practical training, coaching, mentorship and real-world career training.
Conversely, the healthcare industry depends on tacit knowledge – it is incredibly complicated to codify years of medical training as many symptoms, diagnoses, treatments do not follow expected patterns. And the cost of bad data is human lives
However, AI could be applied to diagnostics. For example, humans can train machines to read test results and X-rays and then offer a preliminary diagnosis before a human doctor makes a treatment recommendation.
No matter the industry, if business leaders truly understand and manage tacit and explicit knowledge, they will be able to optimise their operations, create better products and services, and ultimately thrive during the Fourth Industrial Revolution.
7. The Fourth Industrial Revolution will bring a massive productivity boom
Will the Fourth Industrial Revolution deliver on its promises? Is it simply hype, or will it be a massive engine driving productivity gains, economic growth, and business success?
Lessons of the past
Nokia Bell Labs researchers have analyzed historical data from previous industrial revolutions to model and forecast the potential impact of the next one.
During both the First Industrial Revolution (which was fueled by iron and steam engines) and the Second (which was powered by electricity, steel, chemicals, and telecommunications), productivity boomed. Starting around 1870, these two revolutions sustained a Golden Century of progress. The 1940s and 1950s, in particular, brought massive gains in the United States and elsewhere.
Then what happened? The Third Industrial Revolution arrived, ushering in the Information Age. Massive, world-changing innovations emerged in computing, the internet, mobile communications, and much more. Yet instead of revving up again, the productivity engine sputtered. In fact, since 1970, productivity growth has fallen to roughly one-third the rate of the previous 100 years.
If all the hard work, innovation, and investments in technology over the past half century have failed to pay off in productivity, what does this mean for the huge investments already taking place in the Fourth Industrial Revolution infrastructure?
A pessimist would say we should skip it and put our money elsewhere.
But I am an optimist. I absolutely believe that we are on the cusp of not just a technological revolution, but a productivity revolution. It will bring benefits for people everywhere, make our planet more sustainable, and provide new opportunities for businesses of all kinds.
Fortunately, Nokia Bell Labs’ research concurs with this view.
The causes of revolution
In analyzing what made the Golden Century of 1870 to 1970 possible, it becomes clear that four physical infrastructure technologies provided the underlying foundation for growth: energy, transportation, health and sanitation, and communication.
These fundamental technologies were important on their own, but two other factors were essential for accelerating growth. The first was when the diffusion – or adoption – of each technology was widespread enough to reach a tipping point. The second was a network effect: the technologies needed to work in tandem to drive growth. Only when all four technologies were widely diffused did fast growth happen.
Next, the research looked at today’s technologies. It found emerging digital equivalents that align with the four technology foundations of the Golden Century:
– Digital energy: combining smart power grids and smart meters into platforms that dynamically match energy generation and demand from both new and traditional sources.
– Digital transport: moving people and goods across oceans, skies, and land autonomously.
– Digital health: remotely enabling connected health care from anywhere.
– Digital communication: connecting billions of people and things, allowing them to interact in new ways.
A fifth foundational technology – digital production – was added to these. It will bring a paradigm shift, from centralized mass production to distributed, localized production, combining edge cloud computing and 3D printing to create goods in near real time.
Forecast for growth
By calculating when these digital technologies could reach their tipping points and by applying historical formulas, Nokia Bell Labs has projected a significant productivity jump, as much as 30% to 35% in the U.S., starting at some point between 2028 and 2033. This is a similar leap to the 1950s and could add approximately $2.8 trillion to the U.S. economy. Similar gains are anticipated in India, China, and other nations.
The widespread deployment of high-capacity, low-latency 5G networks is a major catalyst to the digital infrastructure of the future. This reality is not far off. Wide trials are taking place this year that could lead to full commercial 5G deployments in 2019. The U.S., China, Korea, and Japan are at the forefront of these efforts.
5G and cloud technologies will underpin and accelerate the digitalization of industries. In turn, this will create opportunities across nearly every segment of the economy, from health care to transport, energy, and beyond. Telecommunication companies that take the path to 5G now, and focus on software-defined networking and the cloud, have a massive opportunity to benefit from serving these industries during their transformations.
As in each of the previous industrial revolutions, such gains come with economic trade-offs and elicit new challenges. An obvious concern is the implication for skills development as the workforce transforms. Policy work is also urgently needed, as the UN Broadband Commission reported, both between governments and within countries. It must determine how the public sector can help identify and realize the benefits of digitalization, primarily by providing a framework for collaboration across different sectors of the economy.
Such work between governments, technology companies, and the emerging digital industries is an essential building block for realizing the massive potential of the Fourth Industrial Revolution.
This includes not just the economic potential, but also the personal and social benefits: making life better, preserving our planet’s resources, and giving people more time and freedom to connect with each other and the things they enjoy.
After all, these are the greater good that technology is meant to serve.
8. The Fourth Industrial Revolution can close the digital divide. This is how
17 Sep 2018
Julian Vercruysse , Civil Engineer, Mott MacDonald
Fergus Reid, Strategy Consulting Analyst,
The Annual Meeting of the New Champions is fast approaching, and with it comes one of the greatest celebrations of technological innovation, for which information and communication technology (ICT) is the backbone.
However, against all expectations, ICT as deployed today has been shown to exacerbate age-old inequalities, giving rise to the term “digital divide”. This refers to disparities between different demographics with regards to ICT access and use.
To measure this phenomenon, the most widely used type of metrics focus on measuring access to ICT: ownership of mobile phones, access to the internet, etc. With the percentage of people who own mobile phones surpassing the percentage with access to clean water, and the number of internet users having tripled to 3.2 billion between 2005 and 2015, you could be forgiven for believing that the digital divide is disappearing.
Yet, as ICT access reaches saturation point in developed countries, a new digital divide is becoming discernible: a gulf based on digital skills, on security concerns, and on motivation. This has been defined as a “second-level” digital divide – where the impact ICT has on one’s life is influenced by “soft” inequalities rather than physical access alone.
This can be seen when data is disaggregated based on factors such as education, age and household income. Analysis of such data shows that not only is this second-level digital divide persisting, it is worsening.
The information indicates that, if ICT is left uncontrolled, its effect on society is likely to be “more regressive than redistributive due to current or prior socio-economic inequalities”. Planned interventions may well be required to address this, which in turn depend highly on effective measurement tools.
The Network Readiness Index (NRI) is a good example of this new kind of framework. Created by the World Economic Forum, in partnership with INSEAD and Cornell University, the NRI assesses a country’s capacity to “leverage ICTs for increased competitiveness and wellbeing”. Although the NRI has a well-rounded approach, the authors of the NRI acknowledge that their measurement of impact is still a work in progress as the NRI does not account for areas that do not “directly translate into commercial activities”, such as e-health.
In response, the Centre for Future Infrastructure at the University of Edinburgh has developed the ICT Performance Index (IPI) to provide a more holistic assessment of the digital divide. We build on Amartya Sen’s capability approach, which measures development by assessing the freedoms one acquires to live the life one wishes to. Following this paradigm, the impact of ICT should not be related to the promotion of the technology (i.e. increase in access or usage), but rather on what freedom is enabled by the technology. For example, one should not measure the number of computers available in a school but rather what these computers enable the students to achieve. These achievements will tend to be the fulfilment of a need – for instance, to provide better employment prospects, or greater financial stability.
However, needs – being highly subjective – are constantly changing and extremely diverse, so how can one develop a national ICT strategy to tackle this growing inequality? And equally importantly, how can one measure the effectiveness of such a strategy? We attempted to answer these questions by identifying common themes across highly successful ICT policy strategies from a number of countries.
First, they had a holistic approach. The digital divide affects all facets of society, and as such, a solution must have an equally holistic approach. Yet frameworks that measure the effectiveness of digital policy solutions do not encourage such an approach. This is in part due to the notion of compensability, whereby poor performance in one dimension can be offset by high performance in another dimension. Hence, policymakers are not encouraged to fix the problem, as they can simply enhance or even maintain their strong performance in their area of expertise. Compensability is a by-product of the most popular aggregation method: the arithmetic mean. This is a major stumbling block of many existing assessments of the digital divide, including the NRI.
In contrast, geometric aggregation minimizes compensability by taking the root of all the components multiplied with each other. Due to the multiplication, weaknesses are highlighted, as any poor performance will undermine the whole index, which is exactly what is needed to bridge the digital divide. Policymakers would need to target every area where digital technology permeates society, rather than focusing on a select few.
The second common theme of successful digital policy strategies is their ever-evolving nature. The countries analysed had on average a new strategy every five years to reflect the highly dynamic ICT sector. However, performance measurement tools are much slower to evolve. We have identified new facets of the digital divide that are not being measured by the major indices such as digital security. As societies become increasingly dependent on digital infrastructure, the importance of digital security, both at an individual and institutional level, becomes increasingly important.
These new principles have been applied to the IPI, which resulted in the shuffling of ICT performance rankings. Countries with well-rounded e-societies, such as Estonia, have risen to the top, while previously well-performing countries, such as the UK, have plunged in the rankings due to their poor performance in specific areas.
Such areas include the low percentage of ICT enrolment in tertiary education – 4.14%, compared with 8.35% for Estonia – hinting towards a potential lack of future homegrown talent to maintain Britain’s e-society. The comparison with Estonia offered potential solutions to this UK problem, including ICT-related apprenticeships that would especially benefit individuals from more deprived socio-economic backgrounds, which tends to be a demographic left out of the information society.
As the world hears about the latest groundbreaking technologies at the meeting in Tianjin, we should each be asking: how will we ensure that this excitement translates to a more egalitarian society? Without a more holistic approach to measuring and thus tackling the digital divide, the benefits of the Fourth Industrial Revolution will only reach the privileged, resulting in an ever more unequal society.
How is the Fourth Industrial Revolution changing our economy?
26 Nov 2019
Katica RoyCEO and Founder, Pipeline Equity
The Fourth Industrial Revolution (4IR) upends current economic frameworks. Who makes money – and how – has changed. Demographics have changed. Even the skills that brought our society to where we are today have changed. Leaders must account for these transformations or risk leaving behind their companies, their customers and their constituents.
The top three economic frameworks in most urgent need of a 4IR overhaul include income generation, labour force participation and gross domestic product (GDP) measures. Let’s unpack these concepts one at a time and redefine what they mean as we advance bravely into the Fourth Industrial Revolution.
Making money in a world of increased automation
The global middle class will play an influential role in how we make money in the future. Today, more than 50% of the world’s 7.7 billion people live in middle-class households.
Wealth divisions and rates of middle-class growth differ from region to region. More advanced economies such as Europe and Japan see their middle-class markets growing by 0.5% each year. Rising economies, namely China and India, are expanding their middle classes at 6% each year. Perhaps most striking, however, will be the maturity of Asia’s middle class, which will soon constitute 88% of the world’s entire middle class.
The implications of these changes mark an inflection point in world history: no longer do the poor make up the majority of the world population. That title now belongs to the middle class – who also provide the majority of demand in the global economy.
Despite the anticipated disruption and uncertainty of workers of nearly all skill levels, one thing remains clear: Workers are increasingly turning to alternative work arrangements like side hustles, freelancing, independent contracting and gigging.
In monetary terms, the size of the world’s gig economy exceeds $200 billion in gross volume, an amount that’s expected to more than double to approximately $455 billion by 2023.
The majority (more than 75%) of those currently generating income through alternative work arrangements do so by choice. For 86% of females in the gig economy, freelancing provides more than an opportunity to make a living – it’s an opportunity to receive equal pay.
Only 41% of female freelancers believe traditional work arrangements would offer them pay equity. This finding presents massive potential as the average gender pay gap is 16% at the global level; closing it and moving towards gender parity could unlock $12 trillion from the world’s economy.
What’s fuelling the global gig economy?
A host of factors contribute to the rise of the gig economy, including increased globalization, advancements in technology and static educational and institutional inertia that can’t keep pace with changing workforce demands.
It’s not only the alternative workforce that is impacted by these factors. Workers in every industry – women and men – will experience the transformation brought about by the 4IR, if they haven’t already.
Approximately 50% of companies worldwide predict that automation will trim their current full-time workforce by 2022. And, by that same year, researchers expect at least 54% of employees will need re-skilling and upskilling to complete their jobs.
The future economy cuts straight through the heart of gender equity
We cannot deny the role technology will play in the future of work. Indeed, the future of work is technology. However, no conversation would be complete without addressing how technology and the future of work affect half of the world’s population: women.
Never mind issues of fairness, or the fact that women make up 39% of the labour force and are the majority of university students in 97 countries. Failure to view the future of work in tandem with gender equity compromises the efforts of businesses and governments to prepare for the dynamic new economy.
Automation will replace 11% of the female labour force but only 9% of the male labour force over the next two decades. The explanation is simple: despite their making up less than half of the global labour force, many jobs often held by women (secretaries, cashiers, and fast-food workers) are 70% more likely to be replaced by automation.
These data contrast narratives put forth by the media that tend to portray technology and robots as overtaking “men’s work”.
In addition to “high risk” jobs, high paying jobs in technology are leaving women behind in the future of work. Information and communication technology (ICT) specialists are four times more likely to be male than female, and only 24% of ICT graduates in 2015 were women. An analysis of companies working with open-source software, for example, found that only 15% of their software authors are women.
Women are the majority of university students in 50% of the world’s countries at a time when we are experiencing a global labour force shortage of 40 million workers.
Considering the changing workforce and the advancement of technology, gender gaps in technology fields should send a signal to leaders. It doesn’t help that men earn higher returns on their digital skills than women, either. Something needs to change.
Measuring success in the fourth industrial revolution’s digital economy
As we examine how the Fourth Industrial Revolution will transform the global economy, it’s important to consider how we measure its success. We currently rely on GDP as an indicator of economic growth. GDP calculates a country’s production of physical goods, and policymakers use it to inform decision-making.
GDP works well as a performance indicator in a manufacturing society, but in a world of increased reliance on services and technologies, GDP fails to accurately capture the intricacy of the economy.
In the past 30 years, $1 put towards digital technology investment increased GDP by $20, whereas $1 put towards non-digital investment increased GDP by only $3. By 2025, nearly a quarter (24.3%) of global GDP will come from digital technologies such as artificial intelligence and cloud computing. But how accurate are these estimates if they fail to capture the value of intangible assets such as networks, data, services and intelligence?
Depending on GDP as a measure of success in the Fourth Industrial Revolution will adversely affect policy decisions because technology as a product has a deflationary effect.
Instead of GDP, we should measure the health of our economy by what MIT calls GDP-B, where B estimates the benefits we obtain from digital goods and services. Analysts can calculate the value of B by determining how much money people are willing to pay to use zero-price digital services (such as Wikipedia, Instagram or Google Maps).
And just as the UN provides a gender lens to its global measurements (the Gender Development Index and the Gender Inequality Index), so too should we add the gender lens to the digital economy’s GDP-B. After all, if 50% of our population is thriving while the other 50% is struggling, can we call that progress?
The Fourth Industrial Revolution for leaders
To adapt to the wave of changes that are transforming our economy, policy and business leaders should consider the following guidelines to ensure no one, male or female, is left behind.
First, we need to redefine work in the context of the digital economy. What constitutes work in an expanding gig economy? What social protections are in place to keep workers healthy? What about keeping them safe as they work from remote and informal environments?
Second, we must remember the changing labour force demographics and create solutions to support the workforce of the future.
Third, governments and businesses must take action now to proactively retrain their workforce. For example, the US government could re-skill more than three-quarters of its technology-displaced workforce with a $19.9 billion investment and generate a positive return via taxes and lower welfare costs.
Finally, we must apply the gender lens to all decision-making going forward – and not only because it’s the right thing to do. Gender equity is a $12 trillion global economic opportunity. So when we collect data, let’s gender-disaggregate it. And when we train and re-skill workers, let’s ensure women and girls aren’t being left behind.
The challenges of the Fourth Industrial Revolution have the potential to expand the economic pie for all and bend the arc of history toward inclusion. We have the choice to be stronger because of it.
10. Is your business model fit for the Fourth Industrial Revolution?
15 Jan 2019
Simon TorranceManaging Director, FoundersLane
Felix StaeritzFounding Partner and CEO, FoundersLane
As the Fourth Industrial Revolution becomes ever more pervasive, we have good and bad news for leaders of incumbent businesses in all sectors and all geographies.
We spent a large part of last year analysing the performance of the business models of the world’s leading companies. By “business model” we mean the overall, interdependent system by which an organization creates value for customers and captures value for itself. This includes its propositions, products, resources, processes, revenue streams and cost structures.
The bad news first: there is an urgent need to transform traditional business models. The good news: there are ways of slicing up this seemingly elephantine task into bite-sized chunks.
In this article we provide a 10-point checklist for doing so, including one action that is proving particularly effective in fast-tracking the necessary change.
Let’s look at the bad news from our research in more detail:
⦁ Fewer than 10% of companies’ business models are economically viable as the world digitalises. Private surveys of CEOs confirm this sentiment.
⦁ The most successful business model today – in terms of customer value, revenue growth rates and market valuation – is the digital platform business model. Seventy percent of the world’s top 10 most valuable companies (Amazon, Apple, Alibaba, Microsoft et al) and 70% of the $1 billion+ “Unicorn” startups (Didi, Airbnb et al) operate this model, yet fewer than 2% of other companies do.
⦁ Digital platform business models are forecast to mediate up to 30% of global economic activity by 2030, yet fewer than 5% of traditional companies have a coherent platform strategy that is integrated with their corporate strategy.
⦁ On average, fewer than 10% of the board members of incumbent organizations fully understand the economics of digital platform business models.
⦁ Incumbents in all sectors are investing more and more in digital – to keep up with customer demand and increased competition (not least from platform players) – but fewer than 15% of those companies are seeing any financial return at all on their digital investments. Internal innovation efforts, hackathons, accelerators and incubators are not proving successful enough in improving performance today.
⦁ As a result, the vast majority of leaders today lack confidence that their organizations are ready to harness the changes associated with the Fourth Industrial Revolution.
Clearly, the imperative to transform incumbent business models and be able to compete effectively in a hyperconnected world has never been stronger. But transforming what is an interdependent system of people, processes and technologies, a complex mix of tangible and intangible assets that have been optimized to serve customers and deliver returns to shareholders in a certain way over many years is not easy.
The good news is that there are 10 steps that leaders can take. None of them is easy, but we have found that the last one helps fast-track the achievement of the others.
The 10 point checklist for a business model fit for the Fourth Industrial Revolution
1. Do your Board and Executive Team fully understand the economics of digital platform business models?
Many leaders today don’t know what they don’t know. Digital platforms are a relatively new phenomenon and few have experience of operating them. If platforms are likely to mediate 30% of global economic activity by 2030, everyone should understand how they operate so they can be clearer how to copy, compete or collaborate with them. It’s time to rapidly and thoroughly re-educate all leaders. Few organizations have done so.
2. Do you have a bold platform strategy in place, integrated into your corporate and digital strategy?
Once leaders understand the new opportunities and threats, they can properly include platform thinking into their corporate growth strategy. This will require careful engagement of and communication with shareholders. Five years ago, Chinese company PingAn said it was no longer an insurance company, it was a “technology company with financial services licenses”. It executed on a platform strategy and is now worth considerably more than its erstwhile competitors.
3. Have you reallocated at least 10% of your capital and resources to platform business models?
Time to put your money where your mouth is and properly invest in business models that deliver better value for all stakeholders. Today, most companies have tinkered with digital experiments and arms-length investments. Capital reallocation is the best way of turning strategy into reality.
Wal-Mart recently made bold moves to compete by investing heavily in acquiring platform businesses Jet.com and Flipkart. Naspers, a 100-year-old South African publisher, invested $33 million in platform business Tencent, a stake worth over $100 billion today. Based on this experience, it then invested in creating and operating its own digital platform businesses, worth far more than its traditional publishing operations.
4. Have you created a synergistic portfolio of old and new business models?
Amazon became so powerful by redesigning its whole business “system” with platform thinking. All aspects of its business support and reinforce each other. Buying Whole Foods not only created a new way of deepening relationships with certain consumers, it also created a new, internal customer for Amazon’s Web Services division (AWS). AWS’s Internet of Things marketplace drives innovations for its smart home device business, which drives demand for its e-commerce services.
5. Have you re-conceived your company’s purpose for the 4IR?
Platform business models enable organizations to serve customers without having to invest in traditional assets; they focus on facilitating high value interactions between multiple parties (Airbnb owns no property, Facebook develops no content, developers create apps for Apple). This changes the potential scope of what an organization can achieve, and the speed. Are you a “manufacturer of medical equipment”, or is your purpose to cure cancer by orchestrating an ecosystem of actors to do so? Uber’s purpose is to “move people from A to B”. It competes with car manufacturers but makes no cars.
6. Are your leaders open to cannibalizing parts of your core business?
Enabling third parties to serve your customers is often counterintuitive for businesses. Schibsted, a Norwegian media company, invested heavily in online marketplaces which seemingly would cannibalize its traditional classifieds business. Instead it helped them create a new digital business, on a global scale, worth far more than their previously local and asset-heavy business model. Steve Jobs was originally against allowing others to create apps for the iPhone. If he had prevailed Apple would not have become the world’s most valuable company.
7. Does your organization have pervasive competence in software, data, AI?
In his new book Smart Business, Ming Zeng, the Chief Strategy Officer of Alibaba, describes how the company invests heavily in optimizing all activity with software, data and machine learning: using algorithms to optimize every exchange, replicating human decision-making with software, and letting data flow inside and outside the organization via APIs and standards. The aim is for most operational decisions to be made by machines, so the company can adapt more rapidly to market demand. Skills in these areas are in short supply today of course, but the returns are significant if you can attract them.
8. Have you created new metrics to guide your business?
Often company metrics are short-term and backward looking. They focus on measuring the success of the dominant existing business model but not on enabling new business models. Digital platforms often take three years to take shape, five years to get traction, and eight years to achieve critical mass. Traditional CFOs (and shareholders) are not used to the success drivers of powerful digital business models like these, so understanding the new types of metrics is critical.
9. Do you have a truly “ambidextrous organization” in place: with different units focused on “optimizing the legacy” and “inventing the future”, holding equal power and status?
Building on the last point, it takes a long time to transform a legacy business model, due to cultural barriers, entrenched organizational structures and, of course, existing metrics. Few organizations have leaders with the combination of vision, digital expertise and personal power of Jeff Bezos to drive fundamental change down from the top within an incumbent business. Best practice today is not to try to fight against natural human resistance to change. Better to bypass it.
While the core business is being optimized, invest in a separate business unit with the power to invent the future with new business models, new metrics, new people. Crucially it must report directly to the CEO and not be trapped within an “innovation unit” inside the legacy organization. It needs oxygen, resources and power to breathe and succeed.
10. Are you leveraging proven tech entrepreneurs to build new digital ventures in areas that are strategically relevant to your business?
And finally, a step which shouldn’t really be last – it can and should be implemented first, in parallel with the others. If the definition of innovation is the process of taking ideas from inception to impact, and the impact you are looking for is 10x rather than 10%, then the method we have found most successful in catalyzing this level of value creation and transformation for a traditional corporate is to partner with proven tech entrepreneurs within a joint venture (JV) vehicle to rapidly grab new market opportunities.
Entrepreneurs are unlikely to want to work directly for an incumbent corporate, but they value their assets (customers, cash, IP, networks). So, incentivized by an equity-based JV structure, entrepreneurs can leverage these assets to rapidly grab new, strategically relevant market opportunities before others do.
If the vehicle is designed effectively, in a way that reduces corporate risk and enables a level of control, it becomes a win-win-win: for the corporate (to mitigate disruption and transfer knowledge), its shareholders (to generate new value) and for the growing network of successful tech entrepreneurs looking for their next opportunity (without having to deal with rapacious VCs).