Risks and Opportunities in the Fourth Industrial Revolution

I’m a fan of technology and an optimist about its potential. But realizing technology’s potential requires a deep understanding. There’s a problem with the promise of “digital supply chains,” and with a lot of the promise of the Fourth Industrial Revolution and deep technology. A lot of those technologies—especially AI and blockchain—depend on exactly re-creating reality in the virtual world, and then keeping that copy of reality up-to-date in real time.

Anybody with any inventory experience understands exactly how difficult this is. Considering the impact that having inventory off by a little can cause to customer service levels, imagine the impact of AI and blockchain on erroneous data. The cost of errors in terms of computing power and energy and misallocated resources seems likely to jump exponentially if we continue on this path of trying to create a mirror of reality in our digital machines.

The biggest risks and opportunities occur at three stages that really should be viewed together as an ecosystem:

1. The Digital-Physical Interface: How data about the real world enters the digital sphere is the most problematic step when it comes to digital technologies. Subjectivity is the greatest obstacle. Consider how your service-providing employee takes notes—everyone from doctors to secretaries has to decide what gets passed into information systems, and how it gets phrased. The massive numbers of medical codes are one way to try to bring precision to this step, yet such complexity has created a heavy administrative burden. RFID and drones can help track physical inventories. Nevertheless, much work needs done to develop new techniques for how the physical reality converts to (and from) the digital sphere.

2. Digital Sphere: Once information passes into the digital sphere, its integrity and security become important issues. Hacking has already become a plague, with theft of intellectual property and denial of service becoming serious problems. Ransomware attacks have been in the news quite a bit lately, and seem likely to increase, and expect the issue to become worse with an upcoming Presidential election. Blockchain holds the promise of transparency, integrity, and security, yet in its current form is too energy intensive to be used widely, and needs more standardization.

3. Human Sphere: There’s a severe talent shortage for people trained and educated to work with digital technologies. Everything from programming to basic spreadsheet skills or even the ability to use basic computer and smart device functions are skills that most workers lack. The digital revolution is already held back by the lack of skills in the workforce. The future will address this with continuous training on technology and also the development of AI and other methods of making it easier for technology to interface with humans in a more intuitive manner.

The new “deep technologies” of the Fourth Industrial Revolution are often compared to past technologies such as electricity and the internet. This is a mistake. Past innovations didn’t make our decisions for us, and past innovations didn’t determine how we would view the data required to inform those decisions. Deep technology must be managed as an ecosystem where all the components interact—smart researchers are already looking at the interrelationships between these three areas.

We are entering new territory where, to succeed, we must fundamentally understand how we as human beings think about our world and our relation to our technology. Smart companies will focus on innovation in these three areas in order to gain a competitive advantage.