Fourth Industrial Revolution
What Is the Fourth Industrial Revolution?
In previous revolutions, people enjoyed an increase in their physical capabilities (Revolutions 1 & 2) and mental capabilities (Revolution 3). Tractors, sophisticated industrial machinery, computers and the internet all contributed to maximizing and enhancing the natural human capabilities. This has resulted in an explosion of productivity and economic capacity around the globe in ways that have never existed before.
The Fourth Industrial Revolution (4IR) is best understood in the ways in which the technologies are leveraging the human work and life in general. The technologies and innovations of the 4IR replace many human workers where the previous revolutions enhanced and maximized peoples natural abilities. Artificial Intelligence, Automation, Robotics, Internet of Things (IoT), Self Driving Cars/Buses/Trains, Blockchain and On-Demand Economies are dramatically disrupting the world as it has been known.
4IR technologies and companies are quickly rewriting the rules of the marketplace, manufacturing, supply chain, pricing power, enterprise longevity to name just a few areas that are changing. Companies, investors, entrepreneurs and employees would be well advised to take note and plan for the impacts of these technologies on their current and future professional prospects.
For Established Companies
Established companies face the challenges of disruptive technologies and On-Demand companies taking significant market share. The average lifespan of a publicly traded company has dropped from 75 years to just 15 years. Smaller private companies can expect even more pressure on their livelihoods in the coming years.
Technology juggernauts like Amazon, Uber, Apple, Mircosoft and Salesforce (among others) have rewritten the business playbook for competition, user experience, pricing power and customer loyalty. A seamless, competitively priced, well thought out experience is no longer a differentiator it's the minimum barrier to entry.
Established companies also need to address the disruptive impact of the On-Demand + Platform companies which are breaking and reorganizing every marketplace. These On-Demand companies are killing the traditional firms around the world in favor of freelancers, direct from suppliers and self-service technologies at lower prices.
There is also the question of the technologies companies would be wise to start deploying proactively to ensure long term viability of the company, employee security and shareholder value.
The Fourth Industrial Revolution has placed startups in a challenging and lucrative place in history. It has never been easier to launch a billion dollar company in history and never harder to launch a multi-million dollar one. Caught between creating the technologies and innovations of the future and paying the bills of today has forced many startups to make difficult trade offs.
Creating innovative businesses which are not perpetually addicted to raising money from investors to stay in business will be critical in gaining durable market share. Companies at the same time are being forced into a constant game of catch up to create the most innovative and distributive technologies which are inherently unprofitable at the beginning.
As a result, startups have to develop business model that provide them a clear path to participate in the market place of the future but have the same clear path to near term profitability. Startups that are based in raising more money only to attain their growth are placing a significant amount of their risk management outside of their control.
Startups of all sizes and market segments would be wise to start planning and creating strategies that mitigate their risk by creating business models which have a solid mixture of the new technologies and established business principles.
Investors have the most to gain and at the same time the most to lose from the changes of the Fourth Industrial Revolution. Investors have the ability to deploy their capital as they see fit but the often off-hands approach to enterprise management of portfolio companies can leave them flat footed in a quickly changing investment landscape.
Hedge Funds, Private Equity, Venture Capital and individual investors would be wise to evaluate how their portfolio companies will fair in the fast paced era of disruptive technologies. How able is the management to pivot if needed? Will the business or industry be around in its current from in the next few years? Are the companies in the portfolio fundraising addicts?
At the same time, investors should ensure that are participating in the technologies of the future prudently.
For Employees, Freelancers and Everyone In-Between
There has never been a more unstable time for people in the workforce. New technologies are rapidly redefining how "work" is and more importantly will be understood in the future. Blue and White Collar occupations alike are being redefined by automation engineers who are programming, designing and testing programs to replace every task oriented function.
Worker of all backgrounds have to take a serious look at the needs of the future workplace so that they don't end up not only unemployed but being unemployable. The development of alternative non-traditional skill sets will be a defining factor for many companies as they decide who to cull, hire and promote.