One of the biggest current issues in business is the impact of the impending ‘Fourth Revolution’. Preceded by the First Industrial Revolution transforming production with steam, the Second enabling mass production with electricity, and the digital Third still delivering unprecedented changes through information and communication technologies, the Fourth could have an equally transformative impact.
The Fourth Industrial Revolution will largely build on the progress made during the digital revolution of the last few decades, and was the focus of last year’s World Economic Forum Meeting. The term refers to a wave of emerging breakthrough technologies that experts believe will change how we communicate, do business, even how we live our lives.
With their almost fluid relationship with the physical, digital and biological spheres, it’s no stretch even for the most conservative of imaginations to recognise the opportunities in these technologies. Artificial Intelligence will help machinery learn and solve problems, the Internet of Things will integrate the physical world into computer-based systems and, while nanotechnology manipulates matter on a molecular level, biotechnology brings living organisms into the very heart of business to produce new products.
But what about the downsides?
All leaps in innovation are accompanied by challenges and threats – especially if their impact might be on a global economic scale. Although there is great potential in the Fourth Industrial Revolution, like those before it, to trigger significant increases in global income levels and improvements to quality of life, much of the focus in commentary has been on the potential dangers.
Although that’s little surprise – businesses will naturally want to understand and prepare to address any threats to their sector or service ¬– there are broader economic and social concerns too. Previous periods of a similar scale of industrial advancement and change have shown how inequality can emerge, between those who have access to technology and those who don't. This technological divide can have an impact on individuals’ or communities’ access to services, employment, culture, wellbeing support and quality of life.
Taking automation as an example, many believe various future jobs will be performed by computers or robots, and not humans. This could lead to high unemployment for those in manual or lower-skilled roles. But it could also mean that more people are needed in higher-skilled, safer roles, boosting incomes and quality of life for those who are suitably qualified. This risks other injustice, as the gap between low and high-income households widens.
Concerns for business
It is this level of uncertainty about the nature and scale of impact that worries businesses. Even the most well-informed companies are unsure how the technologies at the heart of the revolution will affect them precisely, and that may make them reluctant to invest until they know more.
What is almost certain is that the rise of these technologies will permanently change customer behaviour. As consumer expectations and business transparency grow, there will be demands for much greater engagement between companies and their customers. And this will affect how all industries manage the design, marketing and delivery of all their products and services.
The professional services sector is no exception and, as it relies on effective consumer interaction to build trust and relationships, it's understandable that the impending scale of impact – on communications and client expectations – is a concern. Although organisations are rightly preparing to support their clients in managing the opportunities and risks to their business, they’re also allowing themselves to be open to any benefits for their own firms.
Business v. Tech
Very few business managers would suggest that technology has had only a limited impact on their own operations. But it’s often the auxiliary or supplier functions that most often need to respond to innovation. Professional services firms have been among those benefiting from the advent of technology, particularly in the communication and transactional aspects of business.
It’s even had a widespread impact on the sector’s business models – global networks and associations are inconceivable without digital connectivity.
Technology has already enabled more complex organisations to bring modularity to their operations – firms can build their own bespoke business models, retaining in-house what’s essential, outsourcing what can be done most cost-effectively by specialists elsewhere. This has changed the supplier market, particularly in outsourced functions like marketing and accounting, where technical sector expertise needs to be accompanied by a nimble response to technological developments to create new ways of working.
Fin Tech and consumer convenience
For many, the anticipated rise of artificial intelligence (AI) brings the biggest uncertainties, as the scope of its capabilities and its viability are disputed. As an industry actively applying technology to improve financial services, financial technology (Fin Tech) is thought to be one of the main areas where AI might most immediately affect the business environment –particularly for professional services. And it’s growing at notable rates – research by Accenture found that global investment in Fin Tech firms rose by ten per cent in 2016, to $23.2 billion. Finance is one of those industries most likely to be an early beneficiary of technological change as, like publishing, its services are made of information rather than physical goods.
Fin Tech aims to draw insight from consumer behaviour to enhance services, and AI could help unlock much larger markets, more cost-effectively. Personal finance applications are already using AI to help people manage their money based on their patterns of behaviour.
It will be for regulators and professional firms to monitor and respond to the needs of sectors that have already embraced the digital economy, and that are likely to be early adopters of technological developments like Fin Tech and AI.
How do businesses respond?
To determine whether such technological progress is good for the global economy rather than just enabling businesses in certain markets, it's important to look at the differing ways in which companies might respond.
Many commentators, including scientists involved in research and development, are worried about the implications for industries dependent on traditionally low-skilled, manual jobs. From automation in manufacturing operations to autonomous self-driving vehicles replacing professional drivers, the potential benefits are too considerable for many to ignore. But the social cost in terms of unemployment and obsolescence may weigh too heavily on policy-makers for it to be widely enabled by governments and embraced by industry stakeholders.
While there is little appetite and little to be done – short of a global ban on research – to stop technological progress, it makes sense to look for ways that emerging technologies can be used to help business without harming humanity. Increasing productivity and workplace wellbeing are not incompatible.
‘The real question is what to do with the technology’
As historian and best-selling author Yuval Noah Harari explained in a recent interview with the Guardian, the way in which you use the technology will largely define the result:
‘You can’t just stop technological progress ...the real question is what to do with the technology. You can use exactly the same technology for very different social and political purposes.’
Harari, author of the internationally-acclaimed Sapiens and Homo Deus: A Brief History of Tomorrow, gave an example:
‘If you look at the twentieth century, we see that with the same technology of electricity and trains, you could create a communist dictatorship or a liberal democracy. And it’s the same with artificial intelligence and bioengineering. So, I think people shouldn’t be focused on the question of how to stop technological progress because this is impossible. Instead the question should be what kind of usage to make of the new technology.’
Businesses are finding ways to use technologies to build on their strengths, identifying and responding to business-critical weaknesses. The potential is in using the technology to help not only with the efficiency of day-to-day operations, but also with more strategic responses to opportunities.
Like those successful entrepreneurs emerging from previous industrial revolutions, the beneficiaries of the Fourth will not be those who simply have the technology now, but those who make imaginative use of the technology for the future.