Getting the Fourth Industrial Revolution Right
April 11, 2023
Getting the Fourth Industrial Revolution RightDownloads
How do we maximize the benefits of the dawning digital age? The first step is building the foundation for an open and honest public-private dialogue.
Our contemporary world is the result of a series of industrial revolutions.
Starting in the late 18th century, the First Industrial Revolution harnessed the power of steam to mechanize production and transform transportation. Then, as the 19th century gave way to the 20th, the Second Industrial Revolution created a new world by unleashing the power of oil and electricity.
Building on these foundations, the Third Industrial Revolution used a more metaphorical form of power, the microchip, to drive the development of computers, electronics and telecommunications.
In many ways it is now almost impossible to imagine the world without the benefits brought about by these revolutions. It is also difficult to imagine the world without their drawbacks.
The dark side of industrial revolutions
Revolution is, by definition, a disruptive process. And industrial revolutions are no different.
While each of the first three industrial revolutions were instrumental in making the world a smaller and more dynamic place, they also had undeniably negative consequences.
Squalid conditions for many industrial workers, environmental challenges associated with carbon pollution, and inequities of the ongoing technological divide are just a few of the issues the world continues to face as the result of earlier industrial revolutions.
The promise and peril of the digital revolution
So as the world enters the Fourth Industrial Revolution, the digital revolution, it is worth exploring how humans can reap the benefits of new technologies without falling into the traps created by the mistakes of previous upheavals.
Over the past two decades, digitization and artificial intelligence (“AI”) have increasingly played a role in everything from communication technologies to manufacturing practices. But the recent release of new tools like ChatGPT is rapidly making the power of AI more visible.
That means ordinary citizens are confronting the practical aspects of the next step in the digital revolution, and they are developing a more sophisticated vision of what the onward march of digitization could mean for their lives and for the world.
As society builds on the consumer internet to create the industrial internet associated with digitization, we should think about what we have learned, or should have learned, about regulation of new technologies in the current millennium. After all, it has been over 15 years since Peter Fleischer, then privacy chief at Google, called on the world’s leaders to establish a “global internet privacy law” during a speech at UNESCO in Strasbourg, yet the world continues to struggle when it comes to how to handle privacy.1
A framework for realizing the benefits of digitization
With AI’s going mainstream, now is the perfect time to establish a framework for ensuring the world maximizes the benefits of the digital revolution while minimizing its negative aspects.
This is no small feat considering digitization is already influencing everything from the energy transition to healthcare to financial services to education. The key will be developing something that was essentially left out of previous industrial revolutions: a strong public-private dialogue.
But what should this dialogue look like? Recently, the World Economic Forum, in collaboration with FTI Consulting, Inc., released a white paper with actionable suggestions for fostering a conversation about how to best spread the benefits of digital technologies.2 The recommendations are diverse and include aspects designed to cultivate better distribution of digital innovations, lasting partnerships that deliver value to multiple stakeholders, and public policies that encourage further innovation.
The foundations of a public-private dialogue
The white paper makes specific suggestions for both public and private stakeholders, noting that the following five actions are particularly key to building an impactful exchange.
- Assess network capacity requirements to future-proof infrastructure and enable the application and distribution of digital innovations at scale.3
If there is one thing studying the history of industrial revolutions has taught us, it is that the future will be radically different from the present. Any dialogue needs to account for the potential impact of innovations like edge-computing, autonomous driving and industrial internet of things (“IoT”). Start with an understanding of current capacities before talking about other subjects.
- Foster ecosystem-wide partnerships to develop mutually agreeable value creation to accelerate the understanding and uptake of technologies to address important social issues.4
Broad partnerships can encourage the development of win-win scenarios. More importantly, the same broad partnerships can help uncover how digital solutions can be applied to important issues like health, education and climate change.
- Ensure agile policy frameworks that account for ongoing digital innovation and encourage investment in digital infrastructure. This must take account of the regulation that is already present in these highly regulated industries.5
It is no secret that overregulation can kill innovation, but in a rapidly changing environment, how do we know yesterday’s regulations are still doing what they were designed to do? Dialogue must focus on making policy agile so it can change with the times.
- Encourage open data standards and platforms to enable insight sharing between companies within and across industries that create better outcomes for customers and citizens.6
Competition drives innovation, but by creating an environment that helps everyone share important insights, both private companies and communities will benefit.
- Incentivize digitally enabled business models through government policies.7
Incentives are one of the most powerful tools governments have for influencing innovation. Any dialogue should focus on determining the right incentives to help ensure that digitization creates the greatest good.
The digital revolution is ready for its close-up
That the latest innovations are making things like AI a more obvious part of people’s daily lives means this is the ideal moment to discuss what we hope to get from the digital revolution.
Past industrial revolutions often proceeded without much open dialogue between the public and private spheres, resulting in individuals and even entire communities failing to reap the benefits of innovation.
However, when it comes to digitization, the places where business and government can successfully pool their intelligence, resources and capabilities will not only advance into the Fourth Industrial Revolution the fastest, but also deliver the benefits in a way that helps society the most.
1: Eric Auchard. “Google says world could use Asian privacy approach.” Reuters. (September 13, 2007). https://www.reuters.com/article/us-google-privacy/google-says-world-could-use-asian-privacy-approach-idUSN1340110220070914
2: “Digital Transition Framework: An action plan for public-private collaboration.” World Economic Forum, in collaboration with FTI Consulting, Inc. (January 2023). https://www3.weforum.org/docs/WEF_Digital_Transition_Framework_2023.pdf.
3: Ibid. at p. 7
4: Ibid. at p. 7
5: Ibid. at p. 7
6: Ibid. at p. 7
7: Ibid. at p. 7
© Copyright 2023. The views expressed herein are those of the author(s) and not necessarily the views of FTI Consulting, Inc., its management, its subsidiaries, its affiliates, or its other professionals.
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April 11, 2023
Senior Managing Director