The global economy is on the cusp of profound changes that are comparable in magnitude to the advent of the first industrial revolution, the development of assembly line production, or the invention of the micro-chip. Technological advances are permitting ever greater levels of automation. Meanwhile, the near universal ownership of smart devices in many parts of the world is leading to a degree of interconnectedness that was previously unimaginable.
Previous industrial revolutions have been driven by rapid advances in automation and connectivity, starting with the technologies that launched the First Industrial Revolution in 18th century England through to the exponential increases in computing power of recent decades. The same two forces that resulted in the previous three industrial revolutions are leading us rapidly to another. The first is extreme automation, the product of a growing role for robotics and artificial intelligence in business, government and private life. The second, extreme connectivity, annihilates distance and time as obstacles to ever deeper, faster communication between and among humans and machines.
We expect artificial intelligence (AI) to be a pervasive feature of the Fourth Industrial Revolution. Extreme automation via AI will increasingly automate some of the skills that formerly only humans possessed. Where AI could be poised to make the biggest gains is in big data processing, potentially including the processing of language and images, which have thus far been off-limits for computers to understand. Extreme automation could allow more robots and AI to produce output, analyze results, make complex decisions, and adapt conclusions to environmental factors.
Extreme connectivity enables more universal, global and close-to-instant communication. It is giving rise to new business models and is opening up economic supply in ways previously not possible. Indeed, the creation of Uber, the taxi-hailing smartphone app, was only made possible by the explosive increase in portable Internet-enabled devices. Supply effectively created its own demand. Services like Facebook, WhatsApp, Pinterest, Snapchat, Twitter, and Instagram have come to play a pivotal role in the social interaction of citizens around the world.
Extreme automation can also be coupled with extreme connectivity, allowing computing systems to control and manage physical processes and respond in ever more “human” ways. This represents a democratization of the ability to communicate between and among governments, corporates, humans, and machines. The advent of “cyber-physical systems” may allow robots and AI, via extreme automation and connectivity, to “cross the chasm” between the technosphere, the natural world, and the human world.
These developments, will have significant implications for investors, the global economy and the relative competitiveness of developed and emerging nations. In particular, four areas will be critical to determine success in the Fourth Industrial Revolution: availability of capital to finance labour automation and substitution, availability of skilled resources able to manage the new technologies and business models, the development of adequate support infrastructure and ecosystem and, finally but equally important, the development of suitable legal frameworks. In this context flexibility and ability to adapt will be key for individuals, institutions and governments alike.