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Jul 25, 2023

What Is The Fourth Industrial Revolution: Risks, Benefits & Responses

by Imed Bouchrika, Phd
Chief Data Scientist & Head of Content

Although the term “industrial revolution” may suggest the advent of steam-powered machines in assembly lines, economists maintain that there have been four specific periods in history than can be classified as such. Rather than a specific time period, an industrial revolution represents a turning point in wide-range technological advancement in industries. It underscores disruption in traditional activities. It highlights innovation at a time when everyone’s fixated on similar routines.

In his 2017 book, The Fourth Industrial Revolution, World Economic Forum founder Klaus Schwab posited:

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I believe that today we are at the beginning of a fourth industrial revolution. It began at the turn of this century and builds on the digital revolution. It is characterized by a much more ubiquitous and mobile internet, by smaller and more powerful sensors that have become cheaper, and by artificial intelligence and machine learning. (Schwab, 2017, pp. 11-12)

This article on the Fourth Industrial Revolution: what it means, how to respond, aims to provide the detailed characteristics of Fourth Industrial Revolution and discuss the technologies driving these ongoing changes in society. This article also expounds on the risks and advantages of 4th Industrial Revolution, along with strategies to help businesses cope with these changes.

The Fourth Industrial Revolution: Challenges, Opportunities, and Strategies for Adapting

What is the Fourth Industrial Revolution?
Technologies Driving the Fourth Industrial Revolution
Impact of the Fourth Industrial Revolution
Challenges and Opportunities of the Fourth Industrial Revolution
Strategies for Adapting to the Fourth Industrial Revolution

What is the Fourth Industrial Revolution?

According to Davis (2016), the Fourth Industrial Revolution can be summed up as “the advent of cyber-physical systems,” bringing new ways of integrating technology with human life and society at large. McGinnis (2019) further expounds on this Fourth Industrial Revolution definition by describing the Fourth Industrial Revolution as a way of deeply integrating the digital, physical, and biological worlds.

This revolution has also been defined by its technological impact on manufacturing and industrial processes. Advanced technologies, such as machine-to-machine communication and the Internet of Things increase automation in factories, improve communication, and allow for the production of smart machines capable of self-diagnosis (Moore, 2019). Schwab (2017) further states that the Fourth Industrial Revolution is where advances in technology have made it possible for the virtual and physical aspects of manufacturing to work together more smoothly.

The Fourth Industrial Revolution has been studied extensively as early as 2016. The World Economic Forum Annual Meeting in 2016, for instance, had the theme “Mastering the Fourth Industrial Revolution” (Marr, 2016). The Fourth Industrial Revolution has also been associated with “Industrie 4.0,” a national project initiated by the German government in 2011. The project refers to the intelligent integration of machines and processes using information and communication technology (What is Industrie 4.0, n.d.). This strategy aims to ensure that Germany’s industrial sector is fit for future manufacturing (Klitou et al, 2017).

The advanced technologies and key impacts of the 4th Industrial Revolution can be better understood with an overview of the revolutions that preceded it.

The First Three Industrial Revolutions

According to Schwab (2017), industrial revolutions can be distinguished by the emergence of new technologies and innovative ways of seeing the world, which in turn trigger significant changes in economic systems and society in general.

As such, the First Industrial Revolution refers to society’s shift from an agrarian economy to large-scale, machine-powered manufacturing. This shift was made possible through the use of new materials, such as iron and steel and new energy sources such as steam. Originating in Great Britain, this revolution had a major impact on manufacturing, transportation, and communication in Europe and eventually the world, with the invention of new machines, improved labor structures, and the increased use of science in industrial processes (Industrial Revolution, 2020).

The Second Industrial Revolution picked up where the First Industrial Revolution left off, starting at the end of the 19th century (Pouspourika, 2019). This period introduced more technological advancements to manufacturing and production, along with the widespread adoption of telegraph systems and railroad networks. This industrial revolution also marked the rise of electricity, which allowed factories to adopt modern production lines and increase productivity (History of Electricity, 2014). The expansion of these telegraph and railroad networks also facilitated the greater movement of ideas and people, resulting in a wave of globalization (Engelman, 2019).

Further advancements in technology led to the Third Industrial Revolution, also known as the Digital Revolution. This period, which started in the latter half of the 20th century, marked the shift from mechanical and analog technology to digital electronics. The period also saw the spread of personal computing and advanced communications technology, along with the mainstream adoption of the Internet. According to Rouse (2014), the Third Industrial Revolution ushered in the Information Age.

Technologies Driving the Fourth Industrial Revolution

Unlike the previous industrial revolutions, there is no one technology that can define the Fourth Industrial Revolution (Carter, 2019). The following are commonly cited technologies behind this revolution.

Blockchain

Blockchain has been described by Klaus Schwab as “the heart of the Fourth Industrial Revolution.” (Gil-Pulgar, 2016) Blockchain technology works as a shared, fixed ledger for recording transactions and tracking tangible and intangible assets in a business network (What is Blockchain Technology, n.d.).

The technology collects data in groups or blocks that are chained together as each block’s storage capacity is filled (Blockchain Explained, n.d.). One of the key features of blockchain technology is that it makes an irreversible timeline of data, as each block is always stored chronologically. Transactions remain visible to all users in the network, and these cannot be changed or altered once added to the shared ledger. This linear, linked structure prevents users from making changes to transactions, making the system tamper-proof (What is Blockchain Technology, n.d.).

One application of blockchain currently gaining traction is Bitcoin. Experts have explored the potential of Bitcoin and blockchain technology in the shift to a new economic system under the Fourth Industrial Revolution. According to Blockchain co-founder Nicolas Cary, Bitcoin and blockchain can prove crucial to the shift to the circular economy, due to Bitcoin’s ability to perform frictionless, transparent financial transactions without the need for intermediaries (Gil-Pulgar, 2016).

Moreover, the technology has gone beyond digital currencies to become the framework of some business and financial solutions. For instance, the use of blockchain technology for legal contracts and banking is starting to gain popularity.

Source: Cambridge Judge Business School

Artificial intelligence

Although it is not exactly a new technology, artificial intelligence (AI) is considered a key driver of the Fourth Industrial Revolution. The technology has greatly progressed in recent years, powering devices such as drones, virtual assistants, and self-driving cars (Schwab, 2016). Furthermore, according to Schwab in his article ‘The Fourth Industrial Revolution: What It Means, How to Respond,’ the progress of AI has become possible through the growth of computing power and the availability of huge amounts of data.

As a component of Industry 4.0, AI has also made a significant impact on manufacturing. AI is considered the brain of this new era of industry, improving industrial processes in smart factories by facilitating “the synergetic collaboration between humans and robots.”

Virtual reality

Like AI, virtual reality (VR) is starting to gain widespread adoption today. VR refers to the use of simulation and computer modeling to allow a person to interact with a three-dimensional environment. Motion sensors allow the user to interact with this environment in real-time (Virtual reality, 2020).

The earliest applications of VR systems and devices involved automobile industry design, military training, and flight simulation, but the technology has also proven to be useful in manufacturing processes. For instance, using VR technology, plant managers can simulate different assembly line configurations to identify potential workplace hazards (Brand, n.d.). The technology is also commonly used by companies to provide contextual training without compromising employee safety.

Source: IDC Worldwide Augmented and Virtual Reality Spending Guide

Robotics

Robotics and AI are two technologies that are inherently connected (The Role of AI and Robotics, 2019). Though many early robotic devices were pre-programmed with a series of movements, newer robots can now use artificial intelligence to improve their current programming.

Additionally, Carter (2019) states that next-generation robotics will allow society to more quickly and safely act on digital insights on physical spaces. Advancements in the technology have given rise to increasingly advanced robots with enhanced dexterity and senses.

Internet of Things

One of the technologies that facilitate the connection between the physical and digital worlds is the Internet of Things. Through IoT technology, physical objects are able to connect and exchange data with other objects using sensors and the Internet. Companies also use IoT technology and smart devices to collect and analyze data on consumers.

Though the most common use of IoT is in smart homes, the technology has also been used in medicine, healthcare, and supply chain management. For instance, technologies dubbed “Internet of Medical Things” or IOMT are now considered essential in the monitoring and prevention of chronic illnesses (Steger, 2020).

Biotechnology

Biotechnology continues to evolve in the age of the Fourth Industrial Revolution. According to Schwab (2017), the technology is “redefining what it means to be human … pushing the current thresholds of lifespan, health, cognition, and capabilities.”

Advancements in biotechnology have resulted in the development of new microorganisms, allowing scientists to genetically reprogram and repurpose bacteria and yeast (de Lorenzo, 2018). According to de Lorenzo, contemporary biotechnological processes have also successfully created new biomaterials through these engineered microorganisms.

Other technologies that drive change during the Fourth Industrial revolution include:

3D printing
Innovative materials
Big data
Energy storage devices
Renewable energy sources

Impact of the Fourth Industrial Revolution

The Fourth Industrial Revolution is expected to make an impact on many aspects of society, just like the first three industrial revolutions. Below are details on the changes brought about by the Fourth Industrial Revolution.

Government

The Fourth Industrial Revolution brings new ways for citizens to engage with their governments. A study on the Fourth Industrial Revolution by Lee et al. (2018) states that new technologies are making the decentralization and redistribution of power possible. As such, governments and leaders must now adjust their methods of policymaking and public engagement (Lee et al., 2018).

Moreover, technologies such as digital analytics, the Internet of Things, and blockchain provide citizens with new tools to improve accountability and reduce corruption in governments (Carter, 2019). Simultaneously, these technologies give governments new powers for exerting control over populations and digital infrastructure (Schwab, 2016).

Carter (2019) also states that governments will be faced with the challenge of finding the best ways of regulating emerging technology companies. This is especially true as these companies start to operate on an increasingly global level.

Business

Understandably, the technologies of the Fourth Industrial Revolution also bring numerous disruptions to business and industry. Businesses now have the ability to offer more personalized, more connected experiences to customers, and consumers have adjusted their expectations of companies and brands as well (McGinnis, 2020). In addition, these solutions have fostered better team integration and collaboration to positively affect performance.

Major shifts are also being seen as innovative businesses are able to outpace more well-established competitors in providing value to consumers, thanks to access to digital platforms for development, research, and marketing (Schwab, 2016). Aside from changes in customer expectations and product enhancement, Schwab (2016) opines that the Fourth Industrial Revolution brings changes to collaborative innovation and hastens the digitalization of current business models.

According to Klynge (2019), AI, big data, and the Internet of things have also resulted in the development of new business models. These technologies also provide numerous opportunities to improve collaboration and innovation across the globe.

Source: Salesforce State of the Connected Customer Report

Work

Disruptions brought about by the Fourth Industrial Revolution can also be felt in the workplace. Increasing automation and the widespread adoption of AI in the workplace have resulted in many jobs becoming outdated, but, simultaneously, the adoption of these technologies has resulted in the creation of new job categories (McGinnis, 2020). According to Van Dam (2017), jobs of the future will come with titles such as “Driverless Car Engineer,” “Big Data Analyst,” “Drone Instructor,” and “Robot Coordinator”.

In this vein, Carter (2019) maintains that AI systems are more likely to automate routine tasks rather than completely take the place of human workers. As such, new categories of jobs created by the Fourth Industrial Revolution will also require new skills. These skills include basic digital literacy as well as soft skills, like creativity, that machines are unable to easily replicate. Workers may also have to engage in lifelong learning to acquire diverse skills and remain employed (Runde et al., 2019).

Aside from the implications of AI on the human workforce, Carter opines that the nature of work will change due to the growth of remote and virtual work and the gig economy. Small businesses focused on artisanal, bespoke services will also continue to grow, to meet the needs of the “tech elite.” (Katz, 2014) Because of these software risks in the Fourth Industrial Revolution, project management and PMOs have relied on sophisticated software solutions to influence various outcomes, from operational efficiency to customer satisfaction.

Society

In his book The Fourth Industrial Revolution, Klaus Schwab posits that the revolution has a significant impact on human life and society. For instance, Schwab (2017) predicts that the Fourth Industrial Revolution will change the way people identify themselves, as well as people’s sense of privacy and consumption patterns.

On a larger scale, Davis (2016) highlights three major societal implications of the Fourth Industrial Revolution: inequality, security, and identity. For instance, the potential of the Fourth Industrial Revolution to increase unemployment may drive economic inequality in society. Davis (2016) also emphasizes that increasing inequality results in security concerns for citizens, in the form of segregation and social unrest.

The growing use of the Internet of Things and cloud technology has also led to issues of privacy and security of individuals. Schwab (2016) predicts that issues involving loss of control over personal data will only intensify as the Fourth Industrial Revolution continues.

Challenges and Opportunities of the Fourth Industrial Revolution

While the benefits of Fourth Industrial Revolution impact many aspects of society and industry, these changes also pose some challenges. The following sections discuss these challenges along with opportunities for overcoming them and maximizing the potential of the Fourth Industrial Revolution.

Government

The Fourth Industrial Revolution poses a number of important challenges to governments, particularly in the policy-making and regulation of new technologies. According to the United Nations, governments can confront these challenges by leveraging new technologies to modernize and strengthen existing systems and institutions (Industry 4.0, 2018). The U.N. also stresses that governments, along with companies and society-at-large, must work towards developing a sustainable model for adapting to the Fourth Industrial Revolution.

Likewise, economic experts emphasize the important role governments play in adapting to the Fourth Industrial Revolution. Schwab (2017) suggests that technologies of the Fourth Industrial Revolution can help governments modernize and strengthen existing systems while improving accountability and transparency. Schwab further states that a government’s ability to adapt will determine its survival, especially at a time when technology increasingly empowers citizens.

The rapid pace of change of the Fourth Industrial Revolution also encourages the concept of “agile governance,” where governments and regulatory agencies work together with business and civil society. In this way, governments can protect public interests while supporting innovation (Schwab, 2016).

Businesses

The technologies associated with the Fourth Industrial Revolution have also changed consumers’ expectations. Customers now expect connected experiences when dealing with businesses, including contextualized engagement and tailored engagement based on previous interactions (McGinnis, 2020).

To meet these expectations, businesses can focus on making the most of technologies, such as the Internet of Things to collect quality data from customers. However, Salesforce Chairman and Co-Chief Executive Officer Marc Benioff (2016) claims that cultivating a culture of trust with customers remains essential to maximizing the potential of the Fourth Industrial Revolution. As such, companies must be completely transparent on how they use customer data.

Environment

Experts in sustainability and innovation have also explored emerging technologies’ potential in solving various environmental challenges. According to PWC’s 2018 report, “Fourth Industrial Revolution for the Earth: Harnessing Artificial Intelligence for the Earth,” AI presents numerous opportunities for addressing the planet’s environmental issues, including climate change, ocean health, and water security.

For instance, potential AI applications for addressing climate change include using machine learning to match energy demand and energy generation in real-time (Herweijer et al., 2018). This can decrease unpredictability in power supply while increasing the efficiency and balancing of renewable energy.

Another use of AI in addressing environmental issues is in monitoring and conserving habitats. For instance, the company Blue River Technology uses AI and computer vision to detect the presence of invasive weeds and eliminate these (Herweijer et al., 2018).

Global politics

Klynge (2019) states that the increasing influence of technology on society promotes the disruption of established institutions and democracies. Klynge further emphasizes that the growing reach of digital platforms has some geopolitical ramifications that contribute to a more fragmented landscape.

Several global organizations have created initiatives in response to this challenge. For instance, to strengthen international cooperation in the Fourth Digital Revolution, the U.N. has created a High-Level Panel on Digital Cooperation composed of representatives from governments, industry, and civil society. (United Nations, 2018).

Strategies for Adapting to the Fourth Industrial Revolution

The Fourth Industrial Revolution is poised to make significant impacts on various aspects of industry and society. Businesses that want to survive the Fourth Industrial Revolution must rethink their strategies for workforce management. According to Ebony Frelix, executive vice president and chief philanthropy officer at Salesforce.org, businesses must work with governments in upskilling workers and using nontraditional methods for building skills (McGinnis, 2020).

Zvika Krieger, co-leader of the World Economic Forum’s Center for the Fourth Industrial Revolution, also adds that companies would do well to change the mix of soft skills in their employees. This is important given the increasing need for skills like critical thinking and creativity in workplaces that have been affected by AI and automation.

Meanwhile, on a global scale, organizations such as the United Nations, the World Bank, and the World Economic Forum have already established initiatives for addressing the challenges brought about by the latest industrial revolution (Klynge, 2019). For instance, the World Economic Forum’s Centers for the Fourth Industrial Revolution promote agile governance and explore digital solutions for maximizing the impact of the Fourth Industrial Revolution (Centre, n.d.).

Source: World Economic Forum The Future of Jobs Report

Moving Beyond the Fourth Industrial Revolution

Even in the midst of the Fourth Industrial Revolution, industry and economics experts have already begun speculating about the Fifth Industrial Revolution. For Salesforce founder Marc Benioff, the Fifth Industrial Revolution will involve saving the planet using technologies of the Fourth Industrial Revolution “for the good of the world,” with companies appointing their own Chief Ethical and Human Use Officer (Lauchlan, 2019).

Similarly, IT experts surmise that the Fifth Industrial Revolution or Industry 5.0 will refocus priorities back to humanity (Joseph, 2020). As such, this industrial revolution will place greater importance on human intelligence and prevent periods of stagnation such as Engels’ pause. Experts also expect this period to be marked by stronger connections between business and purpose, with sustainability-minded brands gaining more traction (Gauri & Van Eerden, 2019). In brief, this poses a positive aspect to the importance of the Fourth Industrial Revolution; what it means, how to respond by providing hope for the planet and its inhabitants.

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