In every historical period, Industrial Revolutions transformed ways of life. The Fourth Industrial Revolution is the era where data and artificial intelligence set the course of society and the economy.
Technology has undoubtedly set the pace for human progress with changes that transformed societies and economies, marking real changes in epochs.
In the First Industrial Revolution -which began in the mid-18th century- the great protagonist was the steam engine powered by coal. This was the driving force that allowed the push towards industry, as it replaced old artisanal tools with more productive machinery and replaced human and animal energy with machines. Mechanization marked this era. All this allowed the creation of large industrial conglomerates, primarily in food and textiles, and later in steelmaking and mining. It was the time of the rise of the bourgeoisie, the emergence of the working middle class, and urbanization on a large scale with factories as the center of community life.
The Second Industrial Revolution began in the mid-19th century and extended until the beginning of World War I. This was a time when new forms of energy such as oil emerged. The modernization of transportation was another significant technological development, with the railroad as the protagonist and larger, faster steamships. These means facilitated the transport of greater numbers of people and goods over long distances and in less time. The principles of the scientific method also began to be adopted in factories, primarily in assembly lines, the platform for mass production: at the beginning of the 20th century, Henry Ford mass-produced the innovative Ford Model T, a gasoline-powered car. All these changes allowed for the emergence of a new type of company characterized by inventory production, low costs, and pyramid organization. Other iconic inventions of the time include the telegraph, telephone, and cinema.
The onset of the Third Industrial Revolution is marked approximately in the second half of the 20th century, marked by experimentation with atomic energy and materials such as plastic. Demand-driven production and the logic of discard define this era. It is the era where organizations transcend borders and grow into global multinational corporations. But it is also called the “Digital Revolution” because it laid the foundations for what is to come: in the 1950s, the development of microelectronics began. Computing grew with increasing prominence, and information that was previously consumed or transmitted in analog form was replaced by digital means. This revolution laid the groundwork for the exponential digital transformation to come, in which companies seek to improve operational processes, create new business models, and integrate customer experience through technology.
The Fourth Industrial Revolution refers to the present moment. The term was first mentioned in 2011, relating it to the changes brought by ICTs (information and communication technologies), especially the internet. Also known as Industry 4.0, the major change of this new era is that never before had such high levels of intercommunication and data exchange been achieved.
In his book on this revolution, Dr. Klaus Schwab describes it as: “Characterized by a much more mobile and global internet, by smaller and more powerful sensors, and by artificial intelligence and machine learning.” Indeed, it is the great era where Silicon Valley sets the pace, with Google, Apple, Facebook, Amazon as major players, radically transforming the way people live, work, communicate, and realizing everything that began in the mid-20th century.
The main factors of change include the decreasing cost of computing, connected devices, and the ease of implementing artificial intelligence algorithms. It is the era where “X as a service” or “everything as a service” abounds, meaning that every technological resource or activity can be contracted as a service and accessed via the cloud. 5G, robotics, and the Internet of Things contribute to the development of autonomous devices, intelligent assistants, and all kinds of innovations that transform the physical, digital, and even biological worlds.
Although sometimes the Fourth Revolution and the digital revolution seem to be confused, there are three differentiating factors: the vast volume of information handled, the high variability of this information, and the speed at which it needs to be processed to ensure high-quality standards. In fact, we are producing data exponentially: the volume of data we create, capture, copy, and consume increased by almost 5000% over the last decade, while IDC forecasts that the data generated in the next three years will far exceed that of the last 30 years.
All this raises customer expectations, demanding quick responses, personalized and intelligent service. Data is precisely the fuel for artificial intelligence to improve service models. Machine learning algorithms can analyze variables and improve business performance, for example, by anticipating customer needs.
But looking at technologies in isolation does not provide a significant advantage in achieving this scenario; the interrelation of these technologies with strategic goals and alternative perspectives is key. To align with the demands of Industry 4.0, companies need to migrate from a transactional model to a relationship model, built around services and experiences that have data at their core.
In this context, the main message is that companies need to have organized data, understand the customer, and understand what need the offer addresses, what the ecosystem is, and how to optimize the company’s information flows to align with it. Before digitalizing, it is necessary to organize; this is the mandate of the era for businesses.
By Julio Cesar Blanco – August 30, 2022
