The World Economic Forum Annual Meeting recently took place in Davos from 20 to 23 January. It brought together leaders from all sectors to discuss the theme “Mastering the Fourth Industrial Revolution.”
According to the World Economic Forum, the fourth industrial revolution is defined by disruptive technologies that blur the lines between the physical, digital, and biological.
From artificial intelligence and robotics to bioengineering and nanotechnology, the fourth industrial revolution is still in its nascence. But it is already transforming businesses, governments and entire populations. Disruptive technologies have the potential to solve many global challenges or exacerbate them. The debates taking place at Davos showed the polarizing possibilities embedded within the fourth industrial revolution, as seen in conversations centred around the workforce, sustainable development and the global economy.
The fourth industrial revolution and the workforce
Many of us have noticed the early benefits of the fourth industrial revolution. We walk through the electronic passport gates at Heathrow; see recommendations for items based on algorithms and access retail bank services from our smartphones.
As these technologies continue to make our lives more efficient, they displace low-skilled workers as well as white-collar ones (particularly those with routine functions.) In fact, the World Economic Forum predicts that over 7 million jobs will be lost by 2020 due to labour market changes.[i] And business leaders, such as Accenture CEO Pierre Nanterme, acknowledge the cumulative effect that has already taken place: “Digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000.”
However, the fourth industrial revolution will create new industries and opportunities for growth. Approximately 2 million jobs will be created in STEM-related fields and, by one commonly quoted account, 65% of children entering primary school today will end up working in job types that do not yet exist. And, with a number of studies showing the business benefits of a diverse workforce, many predict that the corporations that succeed will be the ones that focus on women and minority talent. According to the Canadian Prime Minister, Justin Trudeau, “Diversity is the engine of invention. It generates creativity that enriches the world.”
The fourth industrial revolution and sustainable development
With the ratification of the Sustainable Development Goals and COP21 Paris climate talks, the world has committed to an ambitious development agenda. Mobile phone penetration has improved lives through a number of applications, from financial inclusion, m-health and election monitoring.
The fourth industrial revolution has the potential to achieve these ambitious goals and potentially exceed them. Dileep George, an artificial intelligence researcher, asked Davos attendees to “imagine a robot capable of treating Ebola patients or cleaning up nuclear waste.”
However, the “digital divide”, between those who have access to transformative technologies and those who do not, will become even greater. And expectations are higher than ever for the private sector to engage as a key stakeholder in global development. “Leaders are beginning to realise that new business models can align profitability with social purpose, and this will become the norm in the years to come,” said Richard Branson. “I am eager to spread the message of business as a force for good and that we can create real change.”
The fourth industrial revolution and the global economy
Of course, much of the discussion at Davos centred around the global economy, as markets have been off to a shaky start in 2016. Impacts of the fourth industrial revolution have been apparent in the world’s largest economy, China, as it transitions from a manufacturing-based, state-sanctioned economy to one that is more open and driven by services. Leading economists, including Christine Lagarde and Nouriel Roubini, acknowledged the importance of this shift and rejected fears of a Chinese “crash landing.”
And with the collapse in oil prices, many are wondering about the future of energy, from oil to shale gas and renewables. Although oil prices are low, many believe that the fourth industrial revolution will enable renewable energy to compete with oil and other traditional sources of energy. “There has been a stunning development in the sharp decline of the price of renewables,” said Al Gore. “This decline in price will continue to the point where it will be the cheapest source of electricity everywhere.”
The fourth industrial revolution is just beginning but signs of it are emerging everywhere, from changes in the workforce to advances in sustainable development and shifts in the global economy. Perceptive leaders are taking note and preparing for a sea change that is already underway.