The last few Industrial Revolutions have drastically altered how we interact with the world and each other – the Fourth one promises to be no different.
In this article, we look both at the disruption this era is bringing and the business opportunities that come with it.
The First Industrial Revolution (1760 – 1840) used water and steam power to industrialise production. The Second (1870 – 1914) used electric power to create mass production. The Third (1950 – 2015) used electronics and information technology to automate production. Now a Fourth Industrial Revolution is building on the Third, the term first coined by Klaus Schwab, the Founder and Executive Chairman of the World Economic Forum who stated it would be, “characterised by a fusion of technologies that blur the lines between the physical, digital, and biological spheres.” The Fourth Industrial Revolution sees these technologies being used in parallel, working together to form complex solutions that are transforming the world as we know it.
Three key attributes make The Fourth Revolution unique: velocity, scope and impact. In terms of velocity, the Fourth Revolution has no precedent in history because of the speed of its evolution. In a single decade we have achieved the level of transformation the first three revolutions took hundreds of years to achieve.
Next is scope. In the previous periods we have seen new technologies emerging in one location and then gradually being adopted by the rest of the world. In this revolution, we see new transformative technologies cropping up in every industry, in every country across the globe in a very short space of time.
The final differentiator is impact – how much have these technologies impacted our business and personal lives? As the number of devices in the Internet of Things increases, the structure of everyday life is changing – we are now connected anywhere and everywhere.
With this level of change come both challenges and opportunities. What should businesses expect from this revolution?
With headlines claiming that Artificial Intelligence will soon replace the human workforce, it’s easy to get caught up in the man vs machine rhetoric. The fact is, these new technologies will be just as beneficial to the human race as electricity or running water – a tool for global growth.
More than anything, the main threat to business is the inability to upskill or reskill fast enough. According to Salesforce’s guide: Navigating the Fourth Industrial Revolution, “By 2022 no less than 54% of all employees will require significant re-skilling or upskilling.”
The simple solution is to be proactive in upskilling your workforce in new technologies, or to design roles that can still take advantage of their existing skills in the new business format.
B2I or Business-to-Individual, is becoming the new catch-all term that covers how both B2C and B2B firms should think about doing business in the Fourth Industrial revolution.
In the B2C world, the customer is thought of only as a consumer, often grouped and ‘anonymised’ under homogeneous segments. In B2B, individuals disappear behind enterprises and we forget that the key decision makers are still just individual people. By switching to B2I we recognise that the success of a company is decided by their ability to build relationships with individuals - either as consumers or as key players in the enterprises you want to do business with.
With the Fourth Industrial Revolution the amount of individual data created every day is growing exponentially. This means that individuals (private or corporate) expect your business to know their needs and preferences, precisely and intuitively. It’s about changing our mindset from “know-your-customer” to “know-your-individual.”
If we think in these terms, then trust between individuals and our brand is imperative to creating good business. A study from Walker found that “by the end of 2020, experience will overtake price and product as the key brand differentiator.”
We must understand that behind every click, every tweet, the billions of connected devices, and zettabytes of data is an individual. By engaging in a digital-first strategy and applying these technologies, we switch to catering to the needs of a single individual, which is much more powerful than targeting a demographic.
According to Salesforce, “60% of companies have not yet made the digital transformation leap necessary to compete effectively in the future.” It is this lack of digital-first strategy across all industries (including education, local government and aviation to name a few) that will be the biggest stumbling block for many businesses in the Fourth Industrial Revolution.
According to a report from Entrepreneur, “by 2021, companies who implement a digital-first strategy will take 1.8 trillion annually” from those who do not. The emerging technologies that characterise this revolution (including cloud computing, edge computing, Artificial Intelligence, Machine Learning and APIs, to name a few) must be implemented across the business to compete in a fully connected world.
Already, companies like Volkswagen and ŠKODA, Netflix and IKEA are among the early adopters of these technologies and have contributed to their becoming mainstream and commercialised.
For example, Volkswagen and ŠKODA’s electric car sharing service “WeShare”. This sustainable, shared mobility solution connects the fleet of electric cars to the ‘Internet of Things,’ through remote control from the driver’s smartphone. These car manufacturers have provided a fully connected and sustainable solution and have remained relevant when most people are told to cut down on traditional car travel due to climate change.
Other examples showcase the many business benefits of early adoption, such as faster time-to-market and intelligent marketing through predictive analytics. Both of these benefits can be seen in Netflix’s AI-powered personalised recommendations that learn the movie likes and dislikes of its users over time. It is this level of personalisation that has made Netflix the leading streaming platform globally.
IKEA has demonstrated that businesses who tap into digitally transformative technologies such as augmented reality can aid customers through the buying process. Their IKEA Place app uses such software to show you how their products would look in your home. The app has been downloaded 2 million times since 2017.
How to start your digital transformation
When looking at digital transformation you must first assess your company’s current position, what challenge are you facing right now? Below are some of the most issues we come across in businesses who are investing in digital transformation:
Our advice would be to take a step back and a] revise your digital transformation strategy and ensure that it is still aligned with the direction of the business, b] analyse your technology ecosystem and create a blueprint of what needs to be done and in what priority or sequence in order to start materialising the strategy, and c] look for smaller but impactful projects to test the blueprint and secure those quick wins that will prove value and gain the buy-in from key stakeholders across the business.
Using a specialised consultant who has experience in your industry and/or type of business may be a wise option to get you back on the right track, especially if you don’t have the required skills and/or breadth of resources internally.
For more information on where to start, see our blog:8 questions to answer before starting a digital transformation overhaul.
Same as all the other revolutions, the Fourth Industrial Revolution is first and foremost about change. And with the momentum this revolution brings, what we need to remember that it’s not about adopting one technology, rather it’s about adopting a new way of doing business.
If you would like to find out more about implementing a digital transformation strategy, we can help. Give us a call or email us at Salesforce@coforge.com
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