The Fourth Industrial Revolution Read online

  If Moore’s Law continues to develop with the same speed as it has been for the past 30 years, CPUs will reach the same level of processing power as the human brain in 2025. Deep Knowledge Ventures, a Hong Kong-based venture capital fund that invests in life sciences, cancer research, age-related diseases and regenerative medicine has appointed an artificial intelligence algorithm called VITAL (Validating Investment Tool for Advancing Life Sciences) to its board of directors.

  Source: “Algorithm appointed board director”, BBC: http://www.bbc.com/news/technology-27426942

  Shift 14: AI and White-Collar Jobs

  The tipping point: 30% of corporate audits performed by AI

  By 2025: 75% of respondents expected this tipping point to have occurred

  AI is good at matching patterns and automating processes, which makes the technology amenable to many functions in large organizations. An environment can be envisioned in the future where AI replaces a range of functions performed today by people.

  An Oxford Martin School study92 looked into the susceptibility of jobs to computerization from AI and robotics, and came up with some sobering results. Their model predicted that up to 47% of US jobs in 2010 were highly likely to become computerized in the next 10-20 years (Figure V).

  Figure V: Distribution of US Occupational Employment* over the Probability of Computerization

  * Distribution based on 2010 job mix.

  Source: Frey, C.B. and M.A. Osborne, “The Future of Employment: How Susceptible Are Jobs to Computerisation?”, 17 September 2013

  Positive impacts

  – Cost reductions

  – Efficiency gains

  – Unlocking innovation, opportunities for small business, start-ups (smaller barriers to entry, “software as a service” for everything)

  Negative impacts

  – Job losses

  – Accountability and liability

  – Change to legal, financial disclosure, risk

  – Job automation (refer to the Oxford Martin study)

  The shift in action

  Advances in automation were reported on by FORTUNE:

  “IBM’s Watson, well known for its stellar performance in the TV game show Jeopardy!, has already demonstrated a far more accurate diagnosis rate for lung cancers than humans – 90% versus 50% in some tests. The reason is data. Keeping pace with the release of medical data could take doctors 160 hours a week, so doctors cannot possibly review the amount of new insights or even bodies of clinical evidence that can give an edge in making a diagnosis. Surgeons already use automated systems to aid in low-invasive procedures.”

  In Erik Sherman, FORTUNE, 25 February 2015, http://fortune.com/2015/02/25/5-jobs-that-robots-already-are-taking/

  Shift 15: Robotics and Services

  The tipping point: The first robotic pharmacist in the US

  By 2025: 86% of respondents expected this tipping point to have occurred

  Robotics is beginning to influence many jobs, from manufacturing to agriculture, and retail to services. According to the International Federation of Robotics, the world now includes 1.1 million working robots, and machines account for 80% of the work in manufacturing a car.93 Robots are streamlining supply chains to deliver more efficient and predictable business results.

  Positive impacts

  – Supply chain and logistics, eliminations

  – More leisure time

  – Improved health outcomes (big data for pharmaceutical gains in research and development)

  – Banking ATM as early adopter

  – More access to materials

  – Production “re-shoring” (i.e. replacing overseas workers with robots)

  Negative impacts

  – Job losses

  – Liability, accountability

  – Day-to-day social norms, end of 9-to-5 and 24-hour services

  – Hacking and cyber-risk

  The shift in action

  An article from The Fiscal Times appearing on CNBC.com states that:

  “Rethink Robotics released Baxter [in the fall of 2012] and received an overwhelming response from the manufacturing industry, selling out of their production capacity through April …

  [In April] Rethink launch[ed] a software platform that [allows] Baxter to do a more complex sequencing of tasks – for example, picking up a part, holding it in front of an inspection station and receiving a signal to place it in a ‘good’ or ‘not good’ pile. The company also [released] a software development kit … that will allow third parties – like university robotics researchers – to create applications for Baxter.”

  In “The Robot Reality: Service Jobs Are Next to Go”, Blaire Briody, 26 March 2013, The Fiscal Times, http://www.cnbc.com/id/100592545

  Shift 16: Bitcoin and the Blockchain

  The tipping point: 10% of global gross domestic product (GDP) stored on blockchain technology

  By 2025: 58% of respondents expected this tipping point to have occurred

  Bitcoin and digital currencies are based on the idea of a distributed trust mechanism called the “blockchain”, a way of keeping track of trusted transactions in a distributed fashion. Currently, the total worth of bitcoin in the blockchain is around $20 billion, or about 0.025% of global GDP of around $80 trillion.

  Positive impacts

  – Increased financial inclusion in emerging markets, as financial services on the blockchain gain critical mass

  – Disintermediation of financial institutions, as new services and value exchanges are created directly on the blockchain

  – An explosion in tradable assets, as all kinds of value exchange can be hosted on the blockchain

  – Better property records in emerging markets, and the ability to make everything a tradable asset

  – Contacts and legal services increasingly tied to code linked to the blockchain, to be used as unbreakable escrow or programmatically designed smart contracts

  – Increased transparency, as the blockchain is essentially a global ledger storing all transactions

  The shift in action

  Smartcontracts.com provides programmable contracts that do payouts between two parties once certain criteria have been met, without involving a middleman. These contracts are secured in the blockchain as “self-executing contractual states”, which eliminate the risk of relying on others to follow through on their commitments.

  Shift 17: The Sharing Economy

  The tipping point: Globally more trips/journeys via car sharing than in private cars

  By 2025: 67% of respondents expected this tipping point to have occurred

  The common understanding of this phenomenon is the usually technology-enabled ability for entities (individuals or organizations) to share the use of a physical good/asset, or share/provide a service, at a level that was not nearly as efficient or perhaps even possible before. This sharing of goods or services is commonly possible through online marketplaces, mobile apps/location services or other technology-enabled platforms. These have reduced the transaction costs and friction in the system to a point where it is an economic gain for all involved, divided in much finer increments.

  Well-known examples of the sharing economy exist in the transportation sector. Zipcar provides one method for people to share use of a vehicle for shorter periods of time and more reasonably than traditional rental car companies. RelayRides provides a platform to locate and borrow someone’s personal vehicle for a period of time. Uber and Lyft provide much more efficient “taxi-like” services from individuals, but aggregated through a service, enabled by location services and accessed through mobile apps. In addition, they are available at a moment’s notice.

  The sharing economy has any number of ingredients, characteristics or descriptors: technology enabled, preference for access over ownership, peer to peer, sharing of personal assets (versus corporate assets), ease of access, increased social interaction, collaborative consumption and openly shared user feedback (resulting in increased trust). Not all are pr
esent in every “sharing economy” transaction.

  Positive impacts

  – Increased access to tools and other useful physical resources

  – Better environmental outcomes (less production and fewer assets required)

  – More personal services available

  – Increased ability to live off cash flow (with less need for savings to be able to afford use of assets)

  – Better asset utilization

  – Less opportunity for long-term abuse of trust because of direct and public feedback loops

  – Creation of secondary economies (Uber drivers delivering goods or food)

  Negative impacts

  – Less resilience after a job loss (because of less savings)

  – More contract / task-based labour (versus typically more stable long-term employment)

  – Decreased ability to measure this potentially grey economy

  – More opportunity for short-term abuse of trust

  – Less investment capital available in the system

  Unknown, or cuts both ways

  – Changed property and asset ownership

  – More subscription models

  – Less savings

  – Lack of clarity on what “wealth” and “well off” mean

  – Less clarity on what constitutes a “job”

  – Difficulty in measuring this potentially “grey” economy

  – Taxation and regulation adjusting from ownership/sales-based models to use-based models

  The shift in action

  A particular notion of ownership underlies this development and is reflected in the following questions.

  – The largest retailer doesn’t own a single store? (Amazon)

  – The largest provider of sleeping rooms doesn’t own a single hotel? (Airbnb)

  – The largest provider of transportation doesn’t own a single car? (Uber)

  Shift 18: Governments and the Blockchain

  The tipping point: Tax collected for the first time by a government via a blockchain

  By 2025: 73% of respondents expected this tipping point to have occurred

  The blockchain creates both opportunities and challenges for countries. On the one hand, it is unregulated and not overseen by any central bank, meaning less control over monetary policy. On the other hand, it creates the ability for new taxing mechanisms to be built into the blockchain itself (e.g. a small transaction tax).

  Unknown impacts, or cut both ways

  – Central banks and monetary policy

  – Corruption

  – Real-time taxation

  – Role of government

  The shift in action

  In 2015, the first virtual nation, BitNation, was created using blockchain as the foundation identification technology for citizen’s identity cards. At the same time, Estonia became the first real government to deploy the blockchain technology.

  Sources: https://bitnation.co/; http://www.pymnts.com/news/2014/estonian-national-id-cards-embrace-electronic-payment-capabilities/

  Shift 19: 3D Printing and Manufacturing

  The tipping point: The first 3D-printed car in production

  By 2025: 84% of respondents expected this tipping point to have occurred

  3D printing, or additive manufacturing, is the process of creating a physical object by printing it layer upon layer from a digital 3D drawing or model. Imagine creating a loaf of bread, slice by slice. 3D printing has the potential to create very complex products without complex equipment.94 Eventually, many different kinds of materials will be used in the 3D printer, such as plastic, aluminium, stainless steel, ceramic or even advanced alloys, and the printer will be able to do what a whole factory was once required to accomplish. It is already being used in a range of applications, from making wind turbines to toys.

  Over time, 3D printers will overcome the obstacles of speed, cost and size, and become more pervasive. Gartner has developed a “Hype Cycle” chart (Figure VI) showing the various stages of different 3D printing capabilities and their market impact, and plotting most business uses of the technology as entering the “slope of enlightenment”.95

  Figure VI: Hype Cycle for 3D Printing

  Source: Gartner (July 2014)

  Positive impacts

  – Accelerated product development

  – Reduction in the design-to-manufacturing cycle

  – Easily manufactured intricate parts (not possible or difficult to do earlier)

  – Rising demand for product designers

  – Educational institutions using 3D printing to accelerate learning and understanding

  – Democratized power of creation/manufacturing (both limited only by the design)

  – Traditional mass manufacturing responding to the challenge by finding ways to reduce costs and the size of minimum runs

  – Growth in open-source “plans” to print a range of objects

  – Birth of a new industry supplying printing materials

  – Rise in entrepreneurial opportunities in the space96

  – Environmental benefits from reduced transportation requirements

  Negative impacts

  – Growth in waste for disposal, and further burden on the environment

  – Production of parts in the layer process that are anisotropic, i.e. their strength is not the same in all directions, which could limit the functionality of parts

  – Job losses in a disrupted industry

  – Primacy of intellectual property as a source of value in productivity

  – Piracy

  – Brand and product quality

  Unknown, or cuts both ways

  – Potential that any innovation can be instantly copied

  The shift in action

  An example of 3D printing for manufacturing has been recently covered by FORTUNE:

  “General Electric’s Leap jet engine is not only one of the company’s bestsellers, it’s going to incorporate a fuel nozzle produced entirely through additive manufacturing. The process, popularly known as 3-D printing, involves building up layers of material (in this case alloyed metals) according to precise digital plans. GE is currently completing testing of the new Leap engines, but the benefit of additive manufactured parts has already been proven on other models.”

  Source: “GE’s first 3D-printed parts take flight”, Andrew Zaleski, FORTUNE, 12 May 2015, http://fortune.com/2015/05/12/ge-3d-printed-jet-engine-parts/

  Shift 20: 3D Printing and Human Health

  The tipping point: The first transplant of a 3D-printed liver

  By 2025: 76% of respondents expected this tipping point to have occurred

  One day, 3D printers may create not only things, but also human organs – a process called bioprinting. In much the same process as for printed objects, an organ is printed layer by layer from a digital 3D model.97 The material used to print an organ would obviously be different from what is used to print a bike, and experimenting can be done with the kinds of materials that will work, such as titanium powder for making bones. 3D printing has great potential to service custom design needs; and, there is nothing more custom than a human body.

  Positive impacts

  – Addressing the shortage of donated organs (an average of 21 people die each day waiting for transplants that can’t take place because of the lack of an organ)98

  – Prosthetic printing: limb/body part replacements

  – Hospitals printing for each patient requiring surgery (e.g. splints, casts, implants, screws)

  – Personalized medicine: 3D printing growing fastest where each customer needs a slightly different version of a body part (e.g. a crown for a tooth)

  – Printing components of medical equipment that are difficult or expensive to source, such as transducers99

  – Printing, for example, dental implants, pacemakers and pens for bone fracture at local hospitals instead of importing them, to reduce the cost of operations

  – Fundamental changes in drug testing,
which can be done on real human objects given the availability of fully printed organs

  – Printing of food, thus improving food security

  Negative impacts

  – Uncontrolled or unregulated production of body parts, medical equipment or food

  – Growth in waste for disposal, and further burden on the environment

  – Major ethical debates stemming from the printing of body parts and bodies: Who will control the ability to produce them? Who will ensure the quality of the resulting organs?

  – Perverted disincentives for health: If everything can be replaced, why live in a healthy way?

  – Impact on agriculture from printing food

  The shift in action

  The first use of a 3D-printed spine implant was reported by Popular Science:

  “[In 2014], doctors at Peking University Third Hospital successfully implanted the first ever 3-D-printed section of vertebra into [a] young patient to replace a cancerous vertebra in his neck. The replacement vertebra was modelled from the boy’s existing vertebra, which made it easier for them to integrate.

  Source: “Boy Given a 3-D Printed Spine Implant, Loren Grush, Popular Science, 26 August 2014, http://www.popsci.com/article/science/boy-given-3-d-printed-spine-implant

  Shift 21: 3D Printing and Consumer Products

  The tipping point: 5% of consumer products printed in 3D

  By 2025: 81% of respondents expected this tipping point to have occurred

  Because 3D printing can be done by anyone with a 3D printer, it creates opportunities for typical consumer products to be printed locally and on demand, instead of having to be bought at shops. A 3D printer will eventually be an office or even a home appliance. This further reduces the cost of accessing consumer goods and increases the availability of 3D printed objects. Current usage areas for 3D printing (Figure VII) indicate several sectors related to developing and producing consumer products (proof of concept, prototype and production).