We are currently living in a world full of new technologies that seem to combine the physical, digital and the biological world. According to Professor Klaus Schwab, Founder, and Executive Chairman of the World Economic Forum, we are currently in the fourth stage of industrialization. Because of the limited knowledge we have concerning this stage he has published a book, detailing the fourth industrial revolution, and its uniqueness from the previous three stages.
The first stage was referred to as mechanization where the use of steam and waterpower was discovered. During the second stage, electricity and assembly lines were introduced. In the third stage, computer and automation became known. The fourth stage represents a combination of cyber-physical systems, the Internet of Things, and the Internet of Systems.
The fourth stage is basically the idea of smart factories whereby machines are augmented with web connectivity and connects to a centralized system that can view the entire production chain and make necessary decisions. According to Professor Schwab, we are in the initial stage of the fourth industrial revolution though ultimately it will change most of our jobs.
There are two scenarios expected to happen with stage four. There are the positive impacts and the negative consequences that will occur if the government and institutions are not ready to embrace the stage. On the positive impact side, the new technologies will have great potential to connect billions of people to the web and help in improving the efficiency of organizations and business. The technologies will also assist in regenerating the natural environment through more efficient asset management, potentially undo all previous damage caused during the industrial revolution. The potential risks of this stage are job loss that would ultimately result in new security concern and growth of inequalities. In U.S. alone, an estimated 47% of jobs are at risk due to automation.
Many experts have noted that the fourth stage will be beneficial to the wealthy more than the poor will. This is because low-skill and low-wage jobs will slowly disappear in favor of automation. On another positive note, some risks introduced by this stage are not new. Historically, industrial revolutions always start with greater inequality followed by periods of institutional and political change. For instance, during the commencement of the industrial revolution in the 19th century, there was a huge polarization of power and wealth, which was followed by about 100 years of spread democracy, progressive taxation, trade unions, and development of social safety nets.
Changes are always very hard to embrace. The current social, political, and business structures might seem not ready to absorb changes necessary in the fourth stage. One thing for sure, these changes are inevitable. According to Professor Schwab, the change is so profound that based on the perceptive of human history, this is the only time faced with greater potential or promise peril. He further notes that his worry lies in decision makers often being caught in the traditional linear thinking.
In stage four, business leaders will have to adopt new ways of thinking, away from traditionally done and include ideas and systems that have never been considered. Business leaders will have to discover the right investment in training and potentially disruptive R&D investments.
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