Fourth industrial revolution 2018: the global race for domination heats up

The question whether we’re at the brink of a fourth industrial revolution has been answered: we are. The questions that remain: how to create value, get prepared and address the many challenges in what could end up to be an evolution instead of a revolution in the current global context?

Though the notion of this fourth industrial revolution isn’t new and has been a core topic in many countries and territories across the globe, the inherent acceleration of Industry 4.0 as the fourth industrial revolution is often called, is moving beyond the sheer technological, human and societal dimension.

Following three decades of decline in the manufacturing sector of Western and other economies, governments and private companies are adopting technologies of the fourth industrial revolution to resuscitate manufacturing and create R&D and management jobs in their home countries (PR HSRC, see below)

Since the second half of 2017 and the beginning of 2018 there is another acceleration that can’t be overlooked concerning the fourth industrial revolution: countries and territories are stepping up their efforts in the global race which Industry 4.0 also is.

Let there be no mistake about this: even if the theme of the World Economic Forum 2018 is the creation of a shared future in a fractured world with getting ready, being prepared and skilling up for the fourth industrial revolution in this shared future view taking center stage, the notion of a fractured world is at least as important and the fourth industrial revolution is more than a race, it’s a fierce global fight for a piece of the pie.

Fourth industrial revolution - global dominance and power race - altering competitiveness of nearly all industrial sectors across the world and changing dynamics in commerce and global economic balance of power

The changing global context in which the fourth industrial revolution happens

Ample themes which seemed more obvious to tackle from a ‘shared future’ perspective a few years ago such as employment, climate change, the workforce, the state of distrust and the need for collaboration in a world of globalization, today clearly have a different context.

Moreover, despite being a global phenomenon the fourth industrial revolution in reality obviously always was a race between countries and territories across the world to change the face and future of production, manufacturing and so forth. The stakes are high, the race for Industry 4.0 leadership has accelerated and the differences in views and approaches and political agendas are clearer than ever.

Since we started reporting on digital transformation and the various aspects of Industry 4.0 there have never been so many announcements from virtually all countries and territories seeking a leading stake of the big Industry 4.0 pie about their fourth industrial revolution readiness, need to boost efforts and Industry 4.0 strategies as now.

It is not all politics. Differences are easier to overcome and a shared future easier to achieve when looking at the challenges at hand and the realities in countries with different strengths, weaknesses, priorities and fourth industrial revolution capabilities and readiness degrees.

Moreover, the key Industry 4.0 consortia are striving towards closer collaboration and effectively reach these goals, in relation with, but at the same time away from political agendas.

Fourth industrial revolution – or a less revolutionary evolution after all?

A key question that remains is how important this fourth industrial revolution will be. Let’s face it: in more than one area the fourth industrial revolution is more a continuation of the third industrial revolution.

IP networks and protocols (which still is key in the transformation of several industries) along with the starting integration of IT and OT (which is far from finished), robotics and so forth strictly speaking are really part of ongoing evolutions of what has been dubbed the third industrial transformation. One can also hardly claim that Big Data, the IoT (Internet of Things) and AI are new.

Sure, adoption accelerates and the intertwining of several technologies and advent of new ones leads to what could be called a faster evolution- or is it revolution?

The first two industrial revolutions were revolutions. The third one also, albeit in a lesser degree so far and it is more than justified to wonder whether the fourth one isn’t more an evolution than a revolution: namely industries leveraging technologies that exist, evolve and are joined by new ones.

It’s the reason why we always talked about Industry 4.0 from the perspective of how it has been conceived. Speaking about revolutions is easier than assessing if they really are revolutions. Yet, despite these considerations it’s clear that the impact of the elements of the firth industrial revolutions is going to be big, certainly from an investment perspective.

The fourth industrial revolution technology market

Previously we reported on some drivers, evolutions and spending patterns in the Industry 4.0 market until 2022 whereby the mentioned research focused on the technologies which are traditionally classified as being part of the fourth industrial revolution and were expected to result in a $152.31 Billion Industry 4.0 technology market by 2022.

Among these technologies were, on top of Industrial IoT which is really an essential part of the whole Industry 4.0, Logistics 4.0 and Whatnot 4.0 vision and reality, industrial robotics, cybersecurity, 3D Printing, advanced human machine interfaces, Big Data, artificial intelligence, Augmented Reality and Virtual Reality.

How much is really 4.0 here? Industrial robotics isn’t new. True, now we speak about advanced industrial robotics (whereby IoT is never too far away and we see collaborative robots too). Cybersecurity isn’t new. True, there are new forms and approaches in cybersecurity (e.g. in combination with AI) and there is still a lot of work regarding cybersecurity in critical (infrastructure) environments where networks and the increased connectivity of IoT once more typically play a role (and the number of attacks concerning industrial systems are on the rise).

From a technological viewpoint it’s especially in the integration of various technologies that important fourth industrial revolution evolutions occur and are expected

Yes, 3D Printing is relatively. What is less new but part of the fourth industrial revolution is additive manufacturing which is broader than 3D Printing. Augmented Reality (AR) and Virtual Reality (VR) promise quite some innovation in industrial transformation as do technologies this particular study didn’t look at, from digital twins and blockchain to new technologies in areas such as energy, biotechnologies, composites, transducers (actuators and sensors) and so forth.

However, from a technological viewpoint it’s especially in the integration of various of these technologies that important evolutions are expected. The autonomous decisions which can be made by the cyber-physical systems in Industry 4.0 in the end are a combination of several technologies. Or take the expected rise of Intelligent ERP where blockchain, AI and IoT change the face of ERP.

With the fourth industrial transformation as a whole not having reached the peak of hype yet, Industry 4.0 technology investments keep increasing. According to research that was announced on January 16th, 2018 even to a pretty whopping $214B by 2023. That would make this fourth industrial transformation market or, if you prefer, Industry 4.0 market, from the technological perspective, bigger than the cybersecurity market.

According to the press release about the research, conducted by US Homeland Security Research, the Industry 4.0 market (again, from the technology perspective) would outweigh the cybersecurity market by 33 percent by 2023 to be precise.

We must say that some of the names of companies that are dominating the Industry 4.0 technology market strike us as a surprising but here as well the same question goes: what technologies do we talk about and how do we look at the fourth industrial revolution?

What is clear is that the research solely focuses on manufacturing and that, on top of the classic technology drivers (Industrial IoT, Big Data analytics, advanced industrial robots, artificial intelligence and – the demand for – predictive maintenance) a major growth is expected in the manufacturing industry whereby the press releases mentions the focus of the US government on manufacturing, the EU’s well-known fourth industrial revolution frameworks and policies, fierce global competition in the manufacturing sector, the opportunities to enhance production processes, automation in high labor cost countries to compete with low labor cost countries and to not get behind with regards to those countries and territories investing in Industry 4.0 technology (it is a global race of hard competition and geopolitical shifts boosting that global race indeed), government initiatives, the list goes on and mentions the essential benefits of Industry 4.0.

A quote from the press release that couldn’t be clearer about the stakes of the global fourth industrial revolution race and how it already affects and will continue to affect geopolitics in the eyes of US Homeland Security Research: “the 4th Industrial revolution is set to swiftly alter the competitiveness of nearly all industrial sectors across the world, as well as change long-held dynamics in commerce and global economic balance of power”. Global economic power indeed.

The fourth industrial revolution market overall: value

Of course the spending with regards to the technologies of the fourth industrial revolution as we’ll call it nevertheless are far from the only indicators of value. When broadening the scope and looking at the economic impact, R&D, the indirect consequences of leveraging ‘smart technologies’ to reach some of those shared goals and more.

When the Made Smarter Review was published in October 2017, as a thorough analysis to advice the UK government on a plan to, essentially enable the UK to play a more important role in the fourth industrial revolution race, the report didn’t just do a great job in looking at the value that could be achieved, it also mentioned the strengths of the UK industry, the challenges and so forth in order to reap the fruits of what the World Economic Forum identified a as a $100 trillion opportunity for both industry and society through the adoption of digital technologies.

By 2025 the fourth industrial revolution is expected to create a value of $3.7 trillion

Aside from the fact that we still see recommendations and questions popping up regarding the need to step up fourth industrial transformation efforts in the UK and the question whether the country is ready for that fourth industrial transformation whereby it seems that other priorities in the UK have silenced the attention for this great piece of work that the ‘Made Smarter Review’ document is, there is another number the World Economic Forum has put forward and shows the expected value of the fourth industrial revolution: $3.7 trillion.

That is the value that is expected to be created by the fourth industrial revolution by 2025 through the leverage of IoT, additive manufacturing, AI and all the other mentioned technologies and evolutions. 

And that is what this race is all about. When looking at the geopolitical conditions, the race for domination in this fourth industrial revolution that is at the source of genuine fierce competitive fights, the priorities of leaders and lack of leadership in so many countries, the lack of skills, the real situation in the field regarding Industry 4.0 evolutions and the fact that so many challenges lie ahead and miss a shared approach (from the many global risks to the distrust among workers) and the fact that Industry 4.0 isn’t taking place as fast as many have predicted, $3.7 trillion of value seems like a dream rather than a realistic expectation.

Between predictions and realities: fourth industrial revolution barriers and the key role of people

On the flip side, as we wrote previously, industry efforts are there and the number of patents in the scope of the fourth industrial revolution is rising. But there are too many factors of uncertainty, slowing down elements and societal challenges to address in a world that has changed dramatically in hardly two years’ time.

People, consumers, workforces will dictate what happens. And perhaps that’s the main promise of the fourth industrial revolution: transformation and innovation with people in mind, including a direct link between production and consumer. Yet, that is not for tomorrow.

All the rest is wait and see as far as value and predictions is concerned and assess, prepare, prioritize and don’t get lost in the hype but start in a staged way, without overlooking future transformation and innovation but also without overlooking the reality that for most organizations it’s still early days and common sense, low-hanging fruit and immediate benefits, prevail.

Maybe the press release about the World Economic Forum 2018 offers the additional food for thought. Quoting Founder and Executive Chairman Klaus Schwab: “Our collective inability to secure inclusive growth and preserve our scarce resources puts multiple global systems at risk simultaneously. Our first response must be to develop new models for cooperation that are not based on narrow interests but on the destiny of humanity as a whole”.

Great statement but the destiny of humanity as a whole doesn’t seem to be the priority of many who are stepping up the pace of the fourth industrial revolution race. On the other hand, the topic of the Industry and Business Agenda, “Contributing to the shaping of new industry ecosystems and helping industry and government leaders prepare for the Fourth Industrial Revolution” might lead to some good intentions.

Top image: Shutterstock – Copyright: Jirsak – All other images are the property of their respective mentioned owners.