By Andrew Pickup, Senior Director, Communications, Microsoft Asia
During this year’s World Economic Forum in January, the Fourth Industrial Revolution was a theme that stood out above all others — allow me to elaborate.
Today, a fusion of technological advances that continue to blur the lines between our physical, digital and biological worlds means that we are now standing on the precipice of a new industrial revolution that will fundamentally — and dramatically — change the way we live, work, play, learn and communicate. This change will be massive in both its impact and opportunity — and larger than any of the three industrial revolutions that preceded it.
- The first Industrial Revolution began in 1784 and introduced steam power to mechanize processes, moving the world from handmade goods to machine-based production.
- The second Industrial Revolution came in 1870 and utilized electricity, which rapidly expanded global industrial output by enabling assembly-line mass production.
- The third Industrial Revolution started in 1969, with the advent of electronics and Information technology, has automated business processes across just about every industry.
Coined by Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, the fourth Industrial Revolution is characterized by the fusion of the physical, digital and biological worlds that is dramatically disrupting traditional industries, business models, systems and governance.
This revolution is gathering pace through a host of emerging technologies that are growing in both maturity and broad-scale adoption. These include the Internet of Things, Artificial Intelligence, Robotics, Virtual and Augmented Reality, Biotechnology, Machine Learning, Nanotechnology and 3D printing (to name just a few).
The disruptive nature of these technologies, coupled with their rapidly fallings costs, is causing concern in the boardroom. A 2015 KMPG survey of over 1,200 global chief executives from many of the world’s largest companies revealed:
- 74% fear new entrants disrupting their existing business model (highest of all CEO concerns)
- 72% are concerned about keeping current with new technologies (second highest CEO concern)
It is clear that Digital Transformation is the No.1 business challenge facing many companies today, regardless of their size, industry or geography. So how should you think about approaching the opportunities and challenges that Digital Transformation present? What framework and mindset should you adopt?
At first, it may be tempting to look at these new technologies and consider how they can be ‘bolted on’ to your existing business processes to generate incremental value. That is certainly one approach, but it is not typically successful and will not stand up to the competitive scrutiny of a new entrant that is wholeheartedly embracing the new technologies from scratch. A better approach is to step back, focus on the desired business outcome and how these new technologies can be deployed to deliver a fundamentally different experience.
Although Digital Transformation opportunities vary by industry, in general, there are four common, cross-industry themes:
- Engage Your Customers: How can your organization embrace digital technologies to create unique, compelling and differentiated customer experiences? For example, you can predict customer demand based on data intelligence and predictive modelling.
- Empower Your Employees: How can digital technologies transform the talents, skills and productivity of your people? For example, today it is often serendipitous at work when you discover someone else is producing something you need, or you find someone who has the solution to a problem that stumps you. Digital technologies increase corporate productivity by enabling greater information and people-related discovery across an organization.
- Optimize Your Operations: How can your organization adopt digital technologies to transform your operating models? For example, Machine Learning and the Internet of Things use millions of data points from processes and sensors to recognize patterns and improve operational efficiency.
- Transform Your Products: How can you transform the products your company offers through data intelligence? Companies everywhere are increasingly becoming data companies. From farming to finance, from New York City to New Delhi, businesses are using data to create new and more relevant products and services.
The dimensions described above are not new, but what has changed is the volume of data available and the role that ‘Systems of Intelligence’ — or digital feedback loops — now play, providing better insight from data and converting that into intelligent action.
The next decade will deliver massive, transformational change and huge opportunities for those that embrace these news trends and technologies.
The future is bright, and it is time for all of us to get ready for the fourth Industrial Revolution!
This article was first published on The British Chamber of Commerce website.