The Fourth Industrial Revolution —most commonly known as Industrie 4.0—; is “the current trend of automation and data exchange in manufacturing technologies” (Wikipedia). Its main characteristic is the introduction of smart factories; or machines with embedded web connectivity that are part of a larger system that visualizes the entire production chain and makes decisions on its own.
While a neat transition from the Third Industrial Revolution might lead people to consider Industry 4.0 as an extension of it; the Fourth Industrial Revolution is no such thing. The fast-as-lighting pace of innovation heralds the transformation of entire systems of production, management and governance.
FOURTH INDUSTRIAL REVOLUTION: TECHNOLOGICAL ADVANCES
THE INTERNET OF THINGS
It is a network of physical devices, means of transport, infrastructure, among other things; which use embedded technology to share information with each other or the internet. According to Jim Chase, of Texas Instruments: “The Internet of things creates an intelligent, invisible network fabric” which we can control, sense and program. Chase also stresses that the true promise of this network is “when invisible technology operates behind the scenes dynamically responding to how we want ‘things’ to act”.
We live in an increasingly connected world. Instances where we work with people across the world to develop ideas that are not geographically close to us are now a common occurrence. Because of this, Data Management has become more and more dynamic; thus making Cloud Computing the technological basis for the provision of data.
But what exactly is Cloud Computing?
It is “a kind of internet-based computing that provides shared processing resources and data to computers and other devices on demand”(Wikipedia). In other words, Cloud Computing allows us to process and store data in third-party data centers, rather than our hard-drives. This is especially useful for managing shared information.
Why is it a key resource in the Fourth Industrial Revolution?
- Improves network agility.
- Is cheaper.
- Enables users to access systems regardless of their location or preferred electronic device.
- Is easier to maintain.
- Incorporates resource-charing; thus allowing for centralization and peak-load capacity; as well as improvements in utilization and efficiency.
- Enables performance monitoring; as well as scalability and elasticity.
- Improves productivity and security.
They are “systems of collaborating computational elements that control physical entities, generally using feedback from sensors they monitor” (Bagheri, 2015). A CPS consists of a physical asset and its digital twin; which is basically a software model that mimics the behavior of the physical asset.
As Bagheri notes; the real value of CPSs is “using [them] to analyze the IoT data, then using the information that results to make informed decisions”.
POTENTIAL IMPACT OF THE FOURTH INDUSTRIAL REVOLUTION
For the first time in history, we are announcing an industrial revolution, rather than analyzing it after it happened. This represents opportunities as well as challenges. Firstly, because it opens a window for various companies and research institutes to shape the future of our world. Secondly, because we are living an unprecedented period in history; where a technological revolution will completely transform how we live, work, and relate to one another. We know things will change; what we don’t know is how exactly that will unfold, all we can do is predict. Let’s take a look at the potential effects of the Fourth Industrial Revolution.
IMPACT ON BUSINESS
The introduction of the technologies that underpin the Fourth Industrial Revolution has disrupted the existing industry value chains in many industries. These technologies have transformed how we serve certain needs; as well as increased the competition within certain industries. As was the case with the previous industrial revolutions; innovative competitors are able to oust household names by utilizing equipment that allows them to improve the quality, speed or price at which they deliver value.
Furthermore, changes on the demand side of things have also occurred. Transparency and consumer engagement have increased; and new patterns of consumer behavior have appeared. Consequently, companies have had to innovate the way they design, market and deliver their goods.
All in all, the Fourth Industrial Revolution is having four major effects on business:
- Customers are the pillar of the economy, which spins around improving customer service.
- New digital capabilities can enhance physical products and services, thus increasing their value. Furthermore, new technologies and data analysis make assets more durable and easier to maintain.
- Innovation on collaborative work.
- As new global platforms and business models emerge, old companies are rethinking their culture and structure.
IMPACT ON GOVERNMENT
New technologies and platforms will close the gap between citizens and government. The former will be increasingly able to voice their opinions and coordinate civil efforts away from the knowing eye of the government. Consequently, the later will face more and more pressure to change their current approach to public engagement and policymaking; even as they develop technologies that permit them to have a more pervasive control of the population.
The Fourth Industrial Revolution is forcing governments to shed the bureaucracy and become agile. It is moving so fast that government regulatory agencies do not have the time they formerly had to evaluate develop necessary regulatory frameworks. Finally, the national and international security landscape will change dramatically. As we mentioned on our article about the Third Industrial Revolution; the development of “digital ecosystems” among resistance and extremist groups has molded the emergence of cyber warfare. As autonomous and biological weapons become easier to use, individuals and small groups are now capable of causing mass harm.
IMPACT ON PEOPLE
The Fourth Industrial Revolution is shaping to be as much of a reformation process to us as it is for the global economy. Klaus Schwab, an expert from the World Economic Forum says that it will completely change our identity and all the issues related to it
Schwab goes on to ponder if the “inexorable integration of technology in our lives” could relieve us of capacities that are intrinsically human. He adds that constant connection may deprive us from the time to pause, reflect and engage with others.
All in all, the way we perceive privacy will perhaps suffer one of the hardest blows. As tracking and sharing information becomes the norm; fear of losing control over our data will intensify in the future. Finally, there is the possibility that the evolution of biotechnology and artificial intelligence will lead to augmented versions of ourselves.
FOURTH INDUSTRIAL REVOLUTION: CAPITAL VS LABOR
One of the most important debates regarding Industry 4.0 is the one regarding inequality.
The introduction of digital technology has brought undisputed benefits to the life of the common citizen. However, technological innovation on the supply side of industry has put millions of job at stake.
On one side, we have enhanced efficiency and productivity thanks to automation; thus contributing to lower prices, new markets and economic growth in the future. On the other, the possibility of exacerbated inequality threatens to disrupt the very thing we are striving to achieve.
Automation has obliterated the need for labor in certain industries and has significantly diminished it on others. As a result, millions of workers have been displaced from their jobs. In the future, this can have two possible outcomes:
- Abysmal inequality.
- An increase in safe and rewarding jobs.
The result will most likely be a combination of the two. However, a second question arises. Automation across the economy will result in the need for more skilled employees.This will then result in a segregation of the work force into “low skill/low pay” and “high skill/high pay” sectors; and thus, more wealth and income inequality.
We are already seeing this effect of the Fourth Industrial Revolution. Technology has been the reason why incomes have recently failed to grow in high income countries. An increasing demand for highly skilled workers has in turn decreased demand for less prepared ones. This results in a job market with a strong demand at both ends and a void in the middle.
This article is the latest of a series about the different Industrial Revolutions. For more information about mankind’s progress through technological innovations, check out these articles:
- The Dummies’ Guide to Industrial Revolution
- Second Industrial Revolution: The Technological Revolution
- Third Industrial Revolution: The Digital Revolution