In the 18th century it was water and steam power, in the 19th century it was electricity and mass production, and in the 20th century it was computerization. So what comes next?

The answer is the fourth industrial revolution or Industry 4.0, as some prefer to call it. Whichever moniker you use they all denote the network of cyber-physical systems, the Industrial Internet of Things (IIoT), and the Internet of Services.

In essence, it is the idea of smart factories in which machines are enhanced with web connectivity and connected to a system that can frame the complete production chain and ultimately make intelligent decisions on its own.

Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum, has published a book entitled The Fourth Industrial Revolution in which he explains how this industrial revolution differs from the previous three in that they were chiefly characterized by dramatic advances in technology.

 These innovations have the potential to connect millions more people to the internet which will dramatically improve the efficiency of businesses and organizations all over the world. Likewise, these technologies also have the potential to protect and regenerate the natural environment through better resource management, potentially even repairing the damage caused by previous industrial revolutions.

Potential Risk

But despite the many benefits of Industry 4.0 there are also serious potential risks. Professor Scwhab explains his concerns that businesses may be unable or reluctant to adapt to these new technologies and that governments may fail to utilise or regulate these technologies appropriately. In his book he suggests that the resulting technological disruption will create significant new security concerns, and that improper management could result in deepened inequality.

For example, as automation becomes more extensive, machines and computers will replace human workers across a host of industries, from farm-hands to stock-brokers and accountants to drivers. One source estimates that as many as 47 per cent of U.S. jobs are at risk from automation.

Numerous experts argue that the fourth industrial revolution will disproportionately benefit the rich over the poor, especially seeing as most low-skill, low-wage jobs will be superseded by automation. However, this is not a new phenomenon. Industrial revolutions have historically always caused increased inequality followed by periods of political change. The industrial revolution of the 19th century initially caused a massive disparity in wealth and power, which was then followed by a century of change that included the expansion of suffrage, trade unions, progressive taxation and the development of the welfare system.

It is fair to say, then, that our existing social, political and business structures may not be prepared or currently capable of dealing with the disruption that a fourth industrial revolution necessitates, and that radical changes to the very framework of our society may be inevitable.

“Innovation Shaping Our Future”

Schwab explains, “The changes are so profound that, from the perspective of human history, there has never been a time of greater promise or potential peril. My concern, however, is that decision makers are far too often caught in traditional, linear (and non-disruptive) thinking or too absorbed by immediate concerns to think strategically about the forces of disruption and innovation shaping our future.”

If businesses are to capitalize on this revolution, business leaders will have to actively work to broaden their perspective from what has traditionally been done, and incorporate ideas and systems that have never been considered before. They must begin to question all of their current practices, from rethinking their business strategies and models, to discerning the most prudent investments in training and potentially disruptive innovative investments.

We are already witnessing the beginning of the fourth industrial revolution. And we must adapt to its ever-changing environment and embrace the challenges it poses if we are to thrive in the new industrial revolution.