Fourth Industrial Revolution

The Fourth Industrial Revolution Is Here. Is Your Business Ready?

 

By Andy Zhulenev

This is the first part of the SVIC original series to discover the technology breakthroughs that go beyond automation of manufacturing and digitization of information.

The global economy is undergoing massive disruption. This “Fourth Industrial Revolution” brings us a world of cyber-physical systems, characterized by the merging of physical, digital, and biological realms in profound ways. Artificial intelligence (AI) serves as the primary catalyst of this transformation.

Thus, companies need a deep understanding of technological trends. And any organization that aims to succeed in this new era of continuously accelerating change will need to significantly adjust its approach to business.

This is the first in a series of articles analyzing the impact of this coming wave of technology advancements on today’s industry sectors. The intent is to support much-needed dialogue in the business world about this fundamental evolution and getting ready.

The exponential nature of technology advancements

Landline telephones took more than fifty years to be adopted broadly – but mobile technology took only ten years to become mainstream. It wasn’t so long ago that cellular networks were exciting high-growth businesses, billing each call by the minute – but now mobile operators offer fixed-rate monthly 4G plans with unlimited calling, leaving little room for differentiation. Along the way, once-prominent devices from Nokia and Blackberry have been replaced almost entirely by iPhone and Android smartphones, in just a few short years. In fact, today we don’t even need a phone to communicate with another person, no matter where in the world they are – we can video-chat for free from any Internet-connected computer.

These are just few examples of accelerating rate of technological change. New products in many other industries are also finding faster adoption, and becoming commoditized much more rapidly. The whole industry evolution timeframe from growth to decline is getting shorter and shorter.

Why is this happening? The explanation lies in exponential nature of technology advancements, and their continuously accelerating rate of change. A huge wave of emerging technologies is coming straight at us – Artificial Intelligence, Robotics, Virtual Reality, Nanotechnology, 3D Printing to just name a few. In fact, many of these technologies are integrating with one another, combining to deliver even higher value than they could on their own

 The cyber-physical world

The combination of several technologies, in and of itself, is nothing special. But in the revolution, we face today, technology breakthroughs go beyond automation of manufacturing and digitization of information. The science behind these technologies is now advancing to the point that researchers are capable of deconstructing and reproducing biological matter itself. Something unique and unprecedented is happening: the boundaries between physical, digital and biological worlds are breaking down – giving way to a new world of cyber-physical systems.

The impact of these fundamental changes is so significant that they’ve been the primary topic of discussion at the World Economic Forum for the past two years. Each of the previous industrial revolutions was associated with major breakthroughs in human enablement, through tools and methods that improved productivity and created completely new industries. For example, mechanical production initiated the transition from agrarian economies to product manufacturing. Mass production drove industrialization, and accelerated migration of people into cities. Automated production created a new class of knowledge workers, digitizing and automating many administrative functions. Cyber-physical systems are now bringing an even bigger magnitude of change to our current understanding of products and this change is happening much faster than ever before.

 

Digitization of products

Film-based photography has been replaced with digital photography. Music is now not only recorded and distributed digitally, but also produced via a digital technology. Many physical products have already been digitized as CAD/CAM drawings and product part data. But today’s manufacturing process still requires individual production of multiple parts, complex supply chains, and an assembly line to put together the finished product. However, as 3D-printing technology becomes more refined and affordable, we’ll soon be able to manufacture anything from a car to a house in a completely automated way, based on a digital product model that we can first fully realistically experience in virtual reality.

Digitization of the human body

The human body is rapidly becoming digitized, in the form of genetic data. As research has already demonstrated, genomic data will allow us to 3D-print new body parts based on a person’s unique DNA code. Biologically aging organs can be replaced or repaired, extending life expectancy multifold – and eventually making it possible to extend life indefinitely. Meanwhile, advances in bionics will enable us to complement our human body with non-biological components, further enhancing our physical abilities, and blurring the lines between physical and biological matter.

Digitization of human thinking

Artificially intelligent software is learning from humans every day, and will eventually become capable of every task a human brain can perform. At some point, it will be theoretically possible for any thought process initiated in a biological brain to migrate to a computing system, and continue to run within the software. Ultimately, the choice between biological or digital life may be one that every person can make freely.

All these areas of accelerating change are unified by one overarching trend: digital data is becoming the base for both the physical and biological worlds. Within the next thirty years, we will be able to precisely recreate biological processes in digital form, analyze them, visualize them, and ultimately reproduce any biological entity or physical product from digital data.

The impact of this shift cannot be overstated. It will fundamentally transform every industry, from IT-driven sectors like banking or insurance, to industrial and consumer product manufacturing, to biologically based industries like healthcare and agriculture. The breadth and depth of this cross-industrial impact will be unprecedented in technological history.

In his book The Fourth Industrial Revolution, World Economic Forum founder and chairman Klaus Schwab writes,

“We are at the beginning of a revolution that is fundamentally changing the way we live, work, and relate to one another. In its scale, scope and complexity, what I consider to be the fourth industrial revolution is unlike anything humankind has experienced before.”

The critical role of Artificial Intelligence

Among all the emerging technologies mentioned above, artificial intelligence (AI) will be the most important by far. To achieve breakthroughs in science, researchers will have to heavily rely on AI to augment their analytical and data processing capabilities. Businesses, too, will increasingly need to widely deploy AI solutions for automation and customer engagement, in order to remain competitive.

Just as we’ve already shifted from brick-and-mortar stores to e-commerce websites to mobile apps – along with AI recommendation engines that anticipate (at least some of) our needs – today’s website and touchscreen interfaces will soon be augmented with conversational AI, making natural speech de-facto the new User Interface (UI).

AI, as a field of science, has existed since 1956 – but the last years have witnessed several particularly significant breakthroughs. AI-powered image-recognition software can now match human vision capabilities; and Natural Language Processing (NLP) is now on par with human-level language comprehension.

Powerful AI technology platforms are currently available from IBM, Google and Microsoft, so it is simply a matter of time until these capabilities are applied to a wide range of business processes and consumer activities. What’s more, we’ve already started using some AI applications (so-called “narrow AI”) to supplement our cognitive and administrative capabilities. Personal assistants and chatbots can already hold simple conversations corresponding to the human capabilities level of a toddler and they keep improving day by day.

Just as, ten years ago, we would’ve had a hard time imagining that we’d all soon be carrying tiny internet-connected computers in our pockets, we may now have a hard time believing that AI will automatically handle many of our daily tasks within the next five years. But with continued acceleration in computing speeds – along with ongoing learning on the part of the AIs themselves – that is indeed the world we’ll soon be living in.

This idea is not as absurd as it sounds, when we remember the fact that computing power grows exponentially. Considering the expected increase in terms of affordable number of computations per second, experts estimate that computers will reach the processing capacity of a human brain by 2035.

At that point, the only way for humans to add value will be to become cyborgs with direct brain-computer interfaces (BCI). Humans as pure biological entities are likely to become obsolete.

If this scenario sounds far-fetched, consider the fact that we are, at this very moment, already cyborgs. We outsource many cognitive tasks to the smartphones in our pockets, without thinking of them as entities separate from us. In other words, humans without smartphones are becoming obsolete even now – and by 2035, the same will be true of humans without BCIs.

But even BCIs will be only an intermediate phase. By 2050, experts expect we will have reached the Singularity milestone, when General AI (i.e., AI that can successfully perform any intellectual task possible for a human being) will fully match human capabilities. One outcome of the Singularity is that our knowledge and thought processes will be able to be reproduced in digital form. From that point on, biological humans and cyborgs will not be able to compete with fully digital intelligences –  only aim to steer them in a certain direction.

If it’s true that we are only some 30 years away from the Singularity, then the rate of change we will witness in the coming five to ten years will be nothing short of astonishing. Emerging technologies’ impact on all industries will become even more drastic than it already is – and it will continue to accelerate far beyond the pace we see today.

Along the way, entirely new business models will fundamentally reshape the delivery of products and services, and the categories into which they fall. Entire industry sectors will be redefined, and many products and services will be commoditized in ways never seen before. Is your business ready?

In the following articles, I’ll explore the upcoming industry and employment transformation, and analyze how companies would need to change to stay ahead of the game.

Article written by Andy Zhulenev, VP of Innovation, Silicon Valley Innovation Center.

If you’d like to learn more about the Fourth Industrial Revolution and how to digitally trasform your businesses consider attending a Executive Immersion Program on Digital Transformation.

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