First Mondays: Final Thoughts – March 2016

Dickens to Davos: The Fourth Industrial Revolution – What It Means and How Business and Policy Leaders Can Respond

Thanks to all who participated in our March policy salon, where we tackled the issue that was top-of-mind for business and policy leaders at the World Economic Forum: The Fourth Industrial Revolution. These are our key distillations from the evening’s discussion.

The Fourth Industrial Revolution is characterized by the integration of cyber-physical systems, the “fusion of technologies that is blurring the lines between the physical, digital, and biological spheres." This includes developments in artificial intelligence, robotics, Internet of Things, autonomous vehicles and weapons, and 3-D printing, and crosses sectors from nanotechnology and biotechnology to materials science and energy storage. Progress is happening at an exponential rather than linear pace, disrupting every industry and precipitating the transformation of entire systems of production, management, governance. 

Is there really a Fourth Industrial Revolution? There is a perspective that the changes, no matter how fast or profound, are due to the evolution of the interconnectivity and network-building brought on by digitization. Thus, we are now reaping the benefits of the Third Industrial Revolution. The group discussed the need to be clear on terminology, especially definitions of technologies and processes, in order to understand which characteristics may be fundamentally different and what milestone might mark a fundamental shift to a new “revolution.”

Benefits will not necessarily “trickle down” to all. In every revolution, it is an unfortunate fact that jobs are lost and not all who are displaced will be able to make the shift to a new job that pays just as well or better. Retraining is a favorite refrain of business leaders who must make adjustments in order to stay competitive, and of politicians who must contend with angry, under- or unemployed constituents. Retraining is sometimes an option but can be difficult and highly variable, depending on the resources invested and participants’ potential for acquiring new skills. On the other hand, it is certainly true that technology has vastly improved the quality-of-life for billions of people around the world, increasing access to variety of goods and services and finding innovative ways to improve livelihoods, especially for rural populations and people with disabilities.  

Concerns about increasing inequality. One concern about the impact of the revolution is the division of gains between capital and labor. Recent trends suggest that small elites – the innovators, investors, and shareholders – will reap many of the financial benefits. In a political environment in which the safety net that mitigated some of the negative impact of the Second Industrial Revolution continues to fray, our leaders will need to exert the political will to prevent predatory corporate behavior and to reduce the externalized costs that often fall on the taxpayer. Business leaders, for their part, should focus on how to make the pie bigger for everyone, rather than how to take a larger slice. 

Power to the people. Technology has certainly provided the public with unprecedented access to information as well as a platform to make their voices heard. Digital platforms enable civic engagement to influence both the public and commercial spheres. For instance, consumers are able to post ratings for products and services publicly, which can prompt better service and a higher level of corporate responsibility. While the anonymity of social media tends to expose the worst of human behavior, collaborative platforms for social and commercial good (e.g., crowdsourcing, crowdfunding) have mobilized people to solve problems and exposed “the better angels of our nature.”

What can be done to mitigate negative effects? The group discussed the need to incentivize better behavior of corporations to ensure workers are not exploited and gains are spread more broadly and to raise productivity and employability of less-skilled workers. We need to have political will to address potentially egregious abuses from government (e.g., pervasive surveillance), to protect privacy, to guarantee network neutrality, to ensure data, security, and to regulate potentially destructive corporate behavior. We must also increase our digital inclusion efforts to ensure that all people have access to technology to avoid being left behind. 

Attack of the killer robots. Technological breakthroughs have enabled the development of autonomous technologies, such as artificial intelligence, self-driving cars, and autonomous weapons, aka “killer robots.” While it is possible to build technologically sophisticated systems, there is still a human judgement – call it “instinct” or tacit knowledge, the result of many years of experience – that is required and, in some circumstances, superior, especially where things don’t go as planned. We must think about the human element in terms of how we integrate these new technologies with our lives, how they can be beneficial to the human condition while mitigating the risks, what kinds of new jobs and training are needed.