i3 | June 02, 2019

It's a New Revolution

Gary Arlen

Get ready for the Fourth Industrial revolution, which will create a symbiotic relationship between humans and machines.

You’ve seen the convergence of technologies and familiar experiences creating unprecedented ways to act in daily life. Think of voice-activated shopping lists or playlists. You may have recognized “cobots” — collaborative robots that work with humans on a production line.

Maybe you’ve even encountered the first ventures into “precision medicine,” which uses big data to identify solutions such as immunotherapy for illnesses that involve the interaction of genetics and environmental factors.

Klaus Schwab, the founder and executive chairman of the World Economic Forum, calls such developments that mix physical, digital and biological factors “the Fourth Industrial Revolution.” He sees it as a “transformation unlike anything humankind has experienced.” While some aspects of this “fourth revolution” appear to be extensions of the digital revolution of the past 30 years, many ideas that seem like science fiction could come true (for good or bad, depending on your perspective) or become manifestations of “the singularity,” which conflates human/machine activities.

“One of the features of this fourth industrial revolution is that it doesn’t change what we are doing, but it changes us,” Schwab said.

Harnessed water and steam power. Cotton gin, steamboats, textile production. Economy moved from rural/agriculture to urban/manufacturing.

While Schwab laid out the basics of this fast-evolving industry overhaul — also dubbed “Industry 4.0” — enthusiasts and critics have also pounced on it. Some have used it as a forum to examine the symbiotic relationship between humans and machines. A few have delved into the “rights of robots.” Scholars and business analysts began looking at tax policies and other implications such as, “Should robots pay taxes?”

Others explored the mundane/routine realities of smart machines: if you tell your artificial intelligence (AI) voice-activated assistant to bring your sweater, the response will be interpreted in context, such as knowing it’s a cold day and you’re going to a casual event — hence you’ll want a warm, brightly colored garment.

Experts say the previous industrial revolutions took shape over many generations, while this fourth iteration is coming quickly after the digital revolution of 30 years ago. Others agree that we are in an age of “exponential, rather than linear” momentum.

Electrical power for mass production. Telephone, light bulb, internal combustion engine.

At the core of this revolution are technological breakthroughs in artificial intelligence, biotechnology, robotics, the Internet of Things, autonomous vehicles, 3D printing, nanotechnology, materials science, energy storage and quantum computing. Many of these capabilities are aided by improvements in network distribution, including high-speed wireless transmission, which makes inter-disciplinary collaboration more viable.

As Schwab explains, “Engineers, designers and architects are combining computational design, additive manufacturing, materials engineering, and synthetic biology to pioneer a symbiosis between microorganisms, our bodies, the products we consume and even the buildings we inhabit.”

Tim Hanley, senior partner and global leader of industrial products and construction at Deloitte says, “Humans can partner with machines to improve how work is accomplished.” Hanley believes that Industry 4.0 represents the fusion of digital and physical technologies and a real evolution in how humans and machines work together.

Digital devices, electronics and information technology. Personal computers, telecom networks, automated production.

“We can think of the interrelation of physical and digital technologies as an ongoing loop, in which connected physical assets create digital data and information that can be analyzed to allow for more responsive, informed decisions and actions back in the physical world,” Hanley says. On the biological side of the equation, “As machines can handle data intensive tasks and perform more sophisticated analyses, humans can use that information not only to make better decisions, but to do their jobs faster, more safely, productively and accurately.”

Hanley cites augmented reality as an early example of this fusion. It can speed up maintenance processes by enabling workers to retrieve manuals or instructions within their field of vision or allow experts at other locations to “see what I see” and provide training and step-by-step instruction.

He says one of the most valuable uses of machines is to “enable humans to focus on using their own, very human skills to find new opportunities for revenue growth and innovation.”

Is It Really Revolutionary?

Hanley adds, “While the Fourth Industrial Revolution is in many ways coming right on the heels of the digital revolution, it will continue to evolve as new technologies develop and mature.”

Fusion of technologies blurs lines between physical, digital and biological sectors. Augmented reality, collaborative robots, precision medicine.

Robert D. Atkinson, president of the Information Technology and Innovation Foundation, says this is not really a revolution. The current wave won’t be “any faster than the past technology waves at a similar period in the cycle. “If you were living in the 1840s, 1890s and 1950s, innovations were happening at what seemed like a really rapid rate,” he says.

Some skeptics maintain that Schwab’s declaration of a fourth revolution isn’t accurate. They see it as the fifth or sixth or seventh time that a technology breakthrough has been called a revolution: think “space age,” “atomic age,” “internet era” or “nanotech period.”

Atkinson, an economist, does foresee a next wave of activity “likely grounded in artificial intelligence, more flexible and capable robotics, autonomous devices, and new materials.”

He adds, “The conventional economics view of innovation, is that innovation is linear in nature, something that happens regularly.” He explains, “technological innovation appears to follow a pattern of repeating ‘S-curves’ with waves of technology emerging and then stagnating before the next new wave.”

“This is what Joseph Schumpeter argued when he wrote that, ‘each of the long waves in economic activity consists of an industrial revolution’ and the absorption of its effects,” he adds. Atkinson evaluates this process to mean that, “We are closer to the end than the middle of the current digital technology S-curve, but that the next innovation grounded in more connected, autonomous and smart technologies will gain real momentum sometime in the next decade and begin to show in the productivity statistics.”

He concludes, the next tech wave “will be so powerful that organizations and people will be compelled to buy them en masse.” He is particularly enthusiastic about artificial intelligence, with its potential for “learning, understanding, reasoning and interaction.”

“Exponential innovation would mean that economic growth rates should be increasing exponentially,” Atkinson says. “But it is highly likely that the pace of change over the next decade will increase arithmetically — and that will mean that organizations that don’t cope will be at greater risk of death.”

The biggest impact will be on producers — adopting technologies that boost efficiency and replace workers. But there is no doubt that these technologies will make consumers lives easier — a robot to mow the lawn and put away the dishes, AI to act as a personal concierge, or much better health care and awareness of our health, Atkinson predicts.

Meanwhile, Hanley of Deloitte believes Industry 4.0 is revolutionary. “It represents a shift in the way smart, connected technologies interconnect, communicate and drive action among themselves, organizations and people. Beyond businesses, it affects society as well: how people relate to each other and their daily lives, using smart technologies to drive how they communicate, work and live.”

“Do Tanks”: The Centers for the Fourth Revolution

To expand understanding, the World Economic Forum is opening Centers around the globe, characterized as “do tanks” rather than “think tanks.” The first Center for the Fourth Industrial Revolution (C4IR) debuted in San Francisco in 2016, with subsequent locations in Tokyo, Beijing, and, in October 2018, Maharashtra, India; more sites are being planned.

High-tech, health care, financial and utility companies, as well as government organizations are underwriting the public-private initiative. Based on analysis by Klaus Schwab from the 2016 World Economic Forum. WEF characterizes the Centers as platforms “for interaction, insights and impact,” enabling “multi-stakeholder dialogue and concrete cooperation on governance challenges and opportunities presented by advanced technologies.” Among the goals of each center is to develop “an agile and human-centered model of technology policy development and implementation.”

What if Machines Get Too Smart?

Inevitably, the “rise of the robots” (the title of a 2016 book, as well as of a 1994 videogame) raises concerns about technology’s impact on jobs and life in general. Some activists are calling for a “kill switch” to turn off machines that threaten human activities.

Atkinson of ITIF believes, “The last thing in the world we should worry about are machines that are out of control. Any company that makes a machine that is out of control is a company that will be out of business.”

Schwab says, “A world of customer experiences, data-based services, and asset performance through analytics requires new forms of collaboration, particularly given the speed at which innovation and disruption are taking place.”

The shift from simple digitization (Third Revolution) to innovation based on combinations of technologies (Fourth Revolution) “is forcing companies to re-examine the way they do business. The bottom line, however, is the same: business leaders need to understand their changing environment.”

Regulatory Implications

Government involvement is already looming in the global march toward the Fourth Revolution, ranging from tax policy to security and safety to labor rules.

Atkinson asks, “The key question for any government is, what side are they on? You are either for advancing the pace and scope of this next tech wave — which won’t happen fast enough without government help — or you want to limit and constrain it,” he explains. Governments that try to restrain technology “will see their economies lose to governments that do the former.”

Deloitte’s Hanley recently analyzed how Industry 4.0-related technologies will affect business models and in turn tax policy. At the very least, he asks, “How can the analysis itself be valued and taxed if the process is automated, and the work not performed by humans?”

Deloitte’s Hanley recently analyzed how Industry 4.0-related technologies will affect business models and in turn tax policy. At the very least, he asks, “How can the analysis itself be valued and taxed if the process is automated, and the work not performed by humans?”

“Building an understanding of the ways the Fourth Industrial Revolution will change what businesses do will help policymakers figure out how best to adapt to the changes,” Hanley concludes.

Schwab has also voiced concerns about society’s ability to integrate digital and human factors.

“Inequality represents the greatest societal concern associated with the Fourth Industrial Revolution,” he says. “This helps explain why so many workers are disillusioned and fearful and why middle classes around the world are experiencing a pervasive sense of dissatisfaction and unfairness.”

“The changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril,” Schwab wrote. “My concern is that decision makers are too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future.”

Gary Arlen

July/August 2019 Issue Cover

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